Many of India's e-ntrepreneurs are trying to clone Yahoo!. Only one will succeed.

By Sanjiv Rana

It was meant to open the door to profits on the Net. But for those of India's e-Biz players who have opted for this model, the portal is opening a gateway to doubts, instead. At last count, there were 27 portals in India-and this is growing at the rate of a couple of new portals every week-competing for customers and the advertising revenue that drives this form of e-Biz. From broadband biggies like rediff.com and 123india. com to narrowcasting niche operators like indiaworld.co.in and Itspace.com, they are all betting on the ability of the portal to attract large swathes of surfers, again and again, so that these potential customers for advertising and on-line purchase of products can be served up to e-marketers and e-tailers-for cash.

But are they betting smartly? Or are they blindly following a global trend that saw established global portals like Yahoo! turn in profits of $25 million on revenues of $303 million in 1998? By definition, a portal should be able to attract huge traffic. After all, it is meant to be a single-source starting-point for surfers to launch their journey into the Net. The portal offers one-click links to a variety of content hosted all over the Web-from news to shopping sites, from weather-reports to travel-advisories, from stockmarket quotes to horoscopes, from business to pleasure. In addition, it also gives the user the opportunity to run searches, set up free e-mail accounts and home-pages, and chat.

Of course, none of India's portals is looking for profits-yet. Whether they're horizontal-spanning the breadth of the Net-or vertical-going deep into specific subjects-right now, they're all concentrating on building traffic. One reason for not being profit-driven yet is that many of them are being funded by venture capitalists and angels-rediff.com has given equity stakes to Bill Draper, Intel, and Warburg-Pinkus, for instance-which has eased pressure on their cash-flow. Agrees Rajesh Sawhney, 37, Deputy General Manager (Corporate Media), The Times Of India Group, which runs the portal indiatimes.com: ''At present, our main thrust is on eyeballs. We are looking for reach by aggregating a large number of services for prospective customers.''

But the fact remains that portals are already proving to be back-breaking businesses-even if the objective is nothing but attracting customers. For, the very breadth of the portal makes it difficult for one player to differentiate its service from another-a situation in which the honours go either to the first-mover, or to the biggest brand.

According to Sunil Rajshekhar, 45, Director, Times Interactive, the initial investment for setting up Indiatimes came to around Rs 20 crore; the running cost per year adds up to another Rs 7-10 crore. Rediff's CEO Ajit Balakrishnan estimates that his portal will suck up Rs 100 crore over the next 4 years-and he is not even thinking about profits at the moment. Adds Pradeep Phadke, 39, Head (Marketing and Customer Care), ETH Internet, which has set up an education services portal: ''You can limit the start-up costs because the major element involved here is just the hosting aspect. But once the site grows, the running costs in terms of content upgradation through hired employees, as well as further infrastructure investments in terms of more powerful servers can really shoot up.''

Worse, even as their costs mount, portals must differentiate their offerings to stand out. So, India's portals are already waging a battle against commoditisation.There are various ways to differentiate. Some portals, like AltaVista, Yahoo!, and Excite, rely on the efficiency of their search-engines to keep Net surfers hooked. Assuming that one of the main reasons surfers get onto the Net is to surf, this is a major pull factor. Says Padma Chandrasekaran, 37, Vice-President (On-Line Services), Satyamonline: ''As you mature in the business, the directory or the search-engine facility becomes less important than the other contents, and the service that you provide assumes more importance.''

Of course, content and service are differentiators. But the first-mover's advantage is even greater. Says K.R. Mani, 26, Indiaworld's spokesperson: ''While the basic requisites for a successful portal are rich content, easy downloadability, and good navigational flow, the early-entrant advantage cannot be discounted.''

Thus, while speed of access, ease of use, and smartness of design are being used as weapons, so are sticky facilities-those that have customers returning regularly-like chatrooms, community-sites, and news updates. Another emerging trend is customisation, whereby the portal enables each user to choose only those features that she wants, and dump the rest. For example, Samachar, Indiaworld's news-site, offers a personalised newspaper.

DIFFERENTIATION STRATEGY

In their heart of hearts, though, the 15-and-odd players attempting to occupy The Gateway To India slot know that they cannot be everything to the universe of Web users. Says Rediff's Balakrishnan: ''The growth of Rediff can only happen through the Indianness, if you like, of its services.'' It is a known fact that most Indian sites still do not draw sizeable proportions of traffic from within the country (for instance, 66 per cent of Rediff's user-base is NRI surfers). These users tend to use the established American portals and sites on the Net-but visit the India-related sites on the Web for news and information. Rediff's 12 million page views per month and Indiatimes' 10 million are minuscule when compared to Yahoo!'s 310 million.

The India-specific generalised portal space is dominated by 5 players: Rediffusion's rediff.com, 123india.com, indiatimes. com, satyamonline.com, and indiaworld. com. The last boasts of Khoj, a search-engine for Indian sites-like its counterpart, 123india. These 2 players were Indian pioneers who started off as search-engines and evolved into portals. Today, they are the leading search-engines for Indian sites. Rediff, on the other hand, started off as a news-site, and developed into a leading portal, with a pioneering play into e-Commerce. Indiatimes, of course, is a content-driven portal, and Satyamonline is trying to leverage its ISP advantage. These sites face the looming threat of a Yahoo!India service next year, which could immediately wean away surfers.

With the entry of Yahoo!, the jockeying for eyeballs will attain a feverish pitch. A few horizontal portals-perhaps a couple of them, if not more-will gain pre-eminence in catering to the Indian market (China, for instance, has 2 large horizontal portals, china.com and sina.com). There is ample scope to manage a niche: services like chat and community need to have a local flavour to catch on. For instance, the chat facility has been one of the main planks of Indiatimes' success. Of course, services like news and stock-quotes too need to be localised to appear more relevant.

Who will be the winners for Indian audiences? It's still early days, but Rediff has the advantage of moving early, particularly in tapping the non-resident Indian population. It goes without saying that with just 375,000 connections in 1999, Indian on-line advertising and e-Commerce spaces are underdeveloped, and there is no critical on-line audience mass as yet. Of course, the optimists are banking on the penetration of the Net permeating like STD booths did. ''We want our homepage to be the start-up page for all the Indian users worldwide,'' avers Priyojeet Mazumdar, 26, Property Manager (Events), 123india.com. Ask Rediff, Indiaworld, Indiatimes, or Satyamonline, and you'll get but a variant of that answer.

If the Net explodes, that could also open up the market for regional language portals. Already, portals like Webduniya and OrientationIndia-which also has an Urdu portal for Pakistan and a Bangla portal for Bangladesh-have established a presence. Says Varun Gupta, 23, Business Consultant, DSF Internet, which has set up OrientationIndia: ''Once the government takes the initiative to increase the accessibility of the Net services, there is a huge regional language subscriber-base waiting to be tapped.'' That may be true, but they have a long march ahead in building communities of the semi-urban and rural rich.

VERTICAL VENTURES

Specialised portals, which aim at niche segments and are dubbed vertical portals, is the way forward for late-comers into the portals game. credit should go to Indiaworld which, in 1995, set up a collection of 13 vertical portals aimed at meeting the niche requirements of surfers. Khel, Indiaworld's portal for sports, has become a big hit. Its other portals, like Samachar (news) and Dhan (personal finance), can be accessed individually as well as from the homepage of the parent company.

Says Rajesh Jain,32, CEO, Indiaworld: ''Our strategy was to provide value to the customer by creating a combination of vertical sites which are category-leaders in their segments. As against a horizontal portal, I feel that it is easier to establish oneself as a vertical portal because there are still a number of areas that have not been explored.'' Concurs Pradeep Kar, 41, Chairman, Microland, who has set up itspace.com, a portal targeted at the infotech industry: ''In a situation where everyone is coming up with general portals, vertical portals are a better bet because it is easier to distinguish oneself by targeting a niche segment. But the target segment has to have the potential for growth.''

By all indications, speciality sites are going to have a rolling time. They are, after all, segmentation vehicles par excellence that give marketers the opportunity of targeting individual customers. A quick look at the recent vertical portals emanating from India reveals that there is furious action in this area. There's webindia.com and kagaz.com (aimed at Indian business and the paper industry, respectively), ETH (education), and a host of portals aimed at everything from Indian languages, regional music, and bollywood to medical, real estate, and professional portals. Why, there are even personal vertical portals: Khoj even lists a Rahul Dravid portal.

THE PORTALS BUSINESS MODEL

Although at first glance, the business model for a portal may appear to be based on advertising, it is, in fact, more complex. The basic model, of course, was to create a site that offers easy entry-points for Net-users to different themes and topics, use it to draw in large number of customers, and, then, use that traffic to lure advertisers onto their sites.

To start with, most portals supplemented this with a subscription-led model where the user pays to access certain services. That approach has its problems, particularly as surfers have got used to free content on the Net. However, content-driven sites do have a section to fee-based access to archives. And most portals continue to have windows of subscription through specialised services. Says Satyam's Padma: ''The lines seem to be blurring between e-Commerce-providers and pure content providers. Companies that started out as one have taken on the other function as well. So, labelling someone under a specific head becomes difficult.''

Indeed, the advertising-driven model has morphed into marketing alliances whereby shopping sites paid portals to be featured in a certain area of the portal. Usually, they would be the only company offering that particular type of service. For example, amazon.com is the exclusive retailer of books on Yahoo!'s site. A more recent phenomenon is a co-branding strategy, in which companies team up to offer services. For instance, the health service offered on Satyam's portal is an alliance between Satyam and Apollo Hospitals.

How many-or which-of India's portals will survive, then? Sure, the Net provides a fantastic opportunity to market to specialised, niche audiences. Argues Jain of Indiaworld: ''As a customer gets Net-savvy, she stops going to the portals on accessing the Net. Instead, she goes directly to the sites of her interest. So, the basic image of the portal as a gateway somehow limits its role unless it keeps on providing other services.'' However, returns will take longer than those for a successful horizontal portal. Concurs Satyam's Padma: ''Vertical portals should have a better chance because, one, they will be better focused and, two, the level of competition will be less, at least initially. But I guess you will require deeper pockets as reaching the target audience might take some time as the numbers will be smaller and more scattered.''

The bottomline for portalists? If you're lucky, Yahoo! will want to buy your portal. If you're luckier, you may want to buy Yahoo!. If you're neither, innovate on content any which way you can-or log out now.

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