India Internet Action

A lot has been happening of late in the Internet space in India. First, bought JobsAhead for Rs 40 crore (just under $9 million). Then Rediff announced 1 GB mail space. Next, eBay bought Baazee for Rs 230 crore ($50 million). A couple days ago, the leading portals got together to form an industry association. and targeted 100 million users by 2007, up from the current 17 million. So, is this a renaissance of the Indian Internet?

I think each of the four events needs to be seen independently. Monster needed to grow its presence and bought out one of its two competitors. JobsAhead was profitable, having clocked Rs 15 crore in revenue and Rs 3 crore in profit for the year ended March 31. eBay needed to get into India at some point of time. It was quite clear for some time that Baazee was going to be part of eBay’s predatory food chain as it expands internationally – the only thing not clear was the time and price. The price is not as high as it seems. Over $20 million was invested into Baazee., some of it is presumably still left. Baazee was the only one in its space, and had built a nice business.

Rediff had little option but to match Google on the disk space ofer, if it was going to keep a significant chunk of its user base, considering the Gmail invites floating around. What is still needs to do is to match Google on the features. It couldn’t possibly have waited till Google formally launched. The industry association is a good thing – at least there will be some lobby power to make the government do sensible things when it comes to things like bandwidth prices and duties on computers.

So, each of the events has a rationale – it just turned out that they cascaded together in the past month. The Indian Internet has a long way to go to match China. The online advertising market is only about $10 million, though expectations are that it could double in the coming year. eCommerce volumes are also quite small. What the Indian Internet is not necessarily buyouts but innovations to make the Net a utility in our lives. That needs the complete commPuting ecosystem to be rethought — the need is for low cost access devices, a broadband infrastructure at affordable prices, and relevant applications and content. There are only minor indications that all of these are happening.

But hopefully, the recent developments will once again see entrepreneurs and venture capitalists getting excited about the space. Because that’s more the new ideas and thinking will emerge.

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Rajesh Jain

An Entrepreneur based in Mumbai, India.