[India] 2 million, 5 million, what's the difference?

["Irfan Khan" <KhanIA@super.net.pk>]

11 Dec 2000  
 

2 million, 5 million, what's the difference?
Plenty, say analysts who complain varying estimates of Internet users 
in India upsets dotcoms' business strategies 

[NEW DELHI] 

Discrepancies over the estimated number of Internet users in India is 
upsetting the business strategy of many a dotcom company, say 
software industry watchers and analysts. 

"If you do do not know what your potential market is going to be in 
terms of numbers, how will you draw up any business plan?" said 
Vineet Narang, vice president of New Delhi-based FCS Software 
solutions. 

Studies by established market research agencies indicate the number 
could vary anywhere between two and five million. "The discrepancy is 
because there is no clear definition of the Internet user," said 
Mohan Krishna, research director with the Indian Market Research 
Bureau (IMRB). 

An IMRB survey, which only counts core users -- those who use the 
internet at least once a week for 30 minutes and for more than just 
sending an e-mail -- says there are 2.2 million Internet users in 
India. Another survey by Gartner (India) puts the number at 3.1 
million, while a third by NASSCOM, an association of software 
companies counts 4.8 million. 

According to IMRB, other studies have counted people who have used 
the Internet just once in the past three months, which is why their 
figures are higher. Sometimes, the number of Internet users are also 
hyped up intentionally -- "just to keep the market going," Mr Krishna 
said. 

Clueless 

However according to Mr Narang, the recent shake-up in the Indian 
dotcom sector can partly be attributed to people rushing in to launch 
websites and portals without a clue about who their customers or 
audiences are. 

"Most people launched portals thinking they will click. So you had a 
plethora of portals offering you-name-it services and no or fewer-
than-expected takers, making all business plans go awry," Mr Narang 
said. 

But even if one resolves the debate of numbers, "the figure of two to 
five million users is still too small to sustain the number of people 
launching e-business", said Arvind Mahajan, head of e-business 
strategy and consulting at Price Waterhouse Coopers. 

According to Nikhil Nath, who heads a venture capitalist firm in New 
Delhi, the first mistake made by a number of dotcom companies was 
thinking that the user base could "sustain a multitude of sites and 
portals". 

A number of dotcoms also misjudged the number of people who would use 
the Internet for services like shopping, Mr Nath said, adding that 
the credit card base in India was too small to replicate the e-
commerce success seen in the US, he said. "I know a lot of people who 
would like to use the Net for shopping but are afraid of the security 
aspects." 

VCs wary 

All these factors add up to make venture capitalists wary of 
financing dotcoms which have "no concrete business models and plans 
based on specific numbers and figures", Mr Nath said. 

The indications are that venture capitalists will go slow on their 
investments in Indian dotcom ventures untill Internet becomes 
available on television. "It could take at least five years, as India 
will take time to get used to the new medium and shopping without a 
visit to the markets," said Mr Nath. -- AFP 
 


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