Intel exits from Rediff, while the share of e-biz in Satyam's revenues zoom. VSNL sows the seeds of a tariff war, and Sabeer Bhatia's Arzoo=ASP will kick off in April. Plus, how to learn e-com through distance-ed.

By Roshni Jayakar & Aparna Ramalingam

E-LEAD

• Intel Corp's investment arm Intel Capital has sold its stake in Rediff.com to em Warburg, Pincus & Co and affiliates. The sale of 645,000 shares for $3.55 million translates roughly to a price of $5.5 per share, and has been confirmed by filings to the U.S. Securities and Exchange Commission. Warburg Pincus already owns about 10 per cent of Rediff. Observes Rishi Sahai, Fund Manager, Infinity Venture Funds, ''Intel and Warburg are just trading portfolios. And Warburg Pincus has set aside large chunk of its funds for Asia, with an emphasis on India.'' Analysts point out that the price at which Intel exited will be sending healthy signals across the market, especially when the Rediff ads is quoting at a low of $2-3, consequent to the NASDAQ meltdown.

E-NEWS

• Arzoo.asp, the new extension of Sabeer 'Hotmail' Bhatia's Arzoo.com, will be up by April, 2001. Currently, around 2,200 it experts are signed up with the site, which serves as a marketplace for corporate clients to get it solutions on a 'bidding' basis.

• Who said e-biz doesn't pay? e-Business contributed 30.73 per cent of Satyam Computer Services' Q3 revenues (21.28 per cent in Q3 last year and 27.1 per cent in Q2 this year). However, dotcom clients contributed less than 1 per cent of its revenues.

E-ACCESS

There's blood on the access floor. With VSNL beginning the New Year by slashing its dial-up rates by 50 per cent, the private-ISPs are being forced to rethink their strategies. And, in a contrarian twist, some of them could actually react by hiking their rates. Like all good businesses at the crossroads, value-addition is what they are talking about in early 2001.

There's nothing surprising about VSNL's move: it is merely an unbundling of its earlier festival offer of Rs 1,500 for 200 hours with 100 hours free. Now, if only the behemoth's 70 per cent cut in leased line tariffs could be explained as easily!

Atul Kunwar, President and CEO of Bharti BT Internet (which has about 1,20,000 active subscribers), says VSNL is just doing a price correction. But, he admits Mantra is 'actively considering' a hike in its access rates, (its entry-level internet access rate is pegged at Rs 199 for 25 hours). Others like Net4India with a dial-up base of 30,000 (and a dial-up rate of Rs 4 per hour for basic packages), have no immediate plans to hike their rates. As Jasjit Sawhney, CEO, Net4India, puts it: ''The market conditions just don't favour higher rates.'' Watch this corner.

E-MISC

• The country's largest advertiser and consumer goods major Hindustan Lever Ltd (HLL) has roped in Planetasia.com to re-design its website as part of its new-e moves. HLL's online ad budget for 2001 is pegged at $1.3 million (Rs 4.66 crore).

• In view of the dotcom bust, Rupert Murdoch's News Corp. is putting on hold its interactive plans. Reports said the company is likely to prune the number of vertical sites to be launched from the proposed 12 or 13.

• They're shaking hands for the last mile. Cable operators in Kerala have formed a cooperative for a state-wide fibre optic project. The proposed Hybrid Cable Internet Super Highway Project will provide cable TV, interactive multimedia, and internet.

• e-Commerce education goes online! The Chidambaram, Tamil Nadu, based Annamalai University has launched an e-com course through distance education. The course will be conducted in collaboration with HMH International Education Consultants, Singapore.

• It's not all quiet on the broadband front. Data Access, the Indian affiliate of Pacific Century Cyberworks, is planning to invest $22 million to expand Network of the World (now) broadband and broadcast services in India. Meanwhile, the US-based Homeland Networks is planning to invest in India in the broadband segment-both in the infrastructure (edge server architecture) space, as well as in media-related applications.

E-MOOD

• The death chill continues. Latest in the list of dead dotcoms is iMandi.com, which suspended operations as funds dried up. Yet, new VC funds are being set up, like 2iCapital PCC. And after Chrysalis Capital, which is raising its second fund, more veecees are expected to try and raise funds in the next four-to-six months. The focus of veecees also appears to be shifting from dotcoms to tech plays. Now, have they learnt from their past mistakes, or will they continue to display their old bovine mentality?

Q&A

David J. Becker, President & COO, Freemarkets Inc. chats with BT's Ranju Sarkar on the Indian B2B space. Q. What's been key to your success globally? And, how has it gone for you in India? A. Our key has been credibility and results. Our virtual marketspace has been generating real value for customers: for every dollar a customer invests in the space we offer, they generate savings of $5 or higher. We have generated savings of over $2 billion for our customers. We have already completed auctions worth nearly Rs 200 crore in India. Many large corporations have hesitated in the past in working with Indian suppliers; we are making that happen now. How is the B2B space shaping up, especially in India? Companies need to restructure their internal processes to take advantage of technology. So, the short-term future belongs to those that have best-of-breed technologies. You have to build businesses, and create services, which when combined with technologies can become a source of long-term competitive advantage. In India, there's some confusion, but there's more contemplation. Here we will see a much shorter learning curve. Corporations in the US are talking about a portfolio approach and are not thinking in terms of one solution for all problems. Indian companies can think about it upfront. But what I dread is that there are a lot of small companies which are polluting the marketplace (Some charge suppliers, and then close shop). This will shake the confidence of suppliers and buyers. What are the key ingredients of an auction economy? Your business strategy should dictate the most logical route. If it's not the case, you are wasting your time with auctions. What that means is that for you to have competitive supply, the commodity itself has to be definable, and you should be able to provide the unique specifications. The quantity that you are buying also has to be sufficient. Indian companies are traditionally relationship-based. Then, there are issues like credit, smaller lots... The same conditions exist in markets like Japan and Mexico. If your product offering is better, and has a larger economic benefit, then it works. What we are forcing a lot of companies to do is to quantify the value of business relationships. I may be very comfortable with that supplier, but is he worth $1 million? Companies are now evaluating the trade-offs more closely. That's one. Second, we are bringing the global economy to your doorstep. In Japan, for instance, domestic sourcing is more expensive; the cost of goods is so out of line with the rest of the world, there is a 20 per cent cost differential. The global economic forces would force companies in countries like Japan to change.

On A Platter, Point Blank

As long back as 1999 (@Net-time that is), ad legend-turned-content baron Jay Chiat put it down for everyone to click through: ''Like when TV began, we now have technicians creating Web ads. The artists are yet to come in.''

In retrospect, even Chiat seems to have got it wrong. Businessmen, it is now becoming clear, were the ones creating ads; even technicians are just now giving the business of creating on-line ads a look-see. As S. Ramakrishnan, Veep (Business Development), Intercept Consulting puts it: ''Technology is all important in the internet medium, an essential ingredient for success.'' Ramakrishnan should know: he is part of the first Indian firm to move into the third-party space of serving up sure-shot content sites to advertising clients.

Using a technique called Adcept, developed inhouse, Intercept helps e-advertisers profile their target audience. These profiles can range from the specific to the generic; they can even be based on space (location), or time (when the user is on-line). For example, a Pizza Corner ad will pop up only during lunch in an office in a specific city. The ad will include information on how to order. More important, the ad will not be aired (or whatever the right word is in the context of the net as a medium for advertising) in the morning hours. Life doesn't end at banners either: according to Intercept, interstitials or pop-up screens, and e-mail are equally important on-line advertising techniques.

The Intercept model has been adopted by RightServe (a division of Hughes Software Systems), and by Webshastra. But then, Intercept's strength lies in its IP database, consisting of the unique identity number given by ISPs to their Internet subscribers. It was created with the assistance of research agency, TN Sofres Mode. Not surprisingly, Intercept-its clients include Bacardi Martini India, Tanishq, and niit-clocked billings of Rs 6 crore in 1999-2000 (2000-2001 estimates: Rs 12 crore).

Expertise, in terms of technology and knowledge of online audiences, is the company's key differentiator. For instance, Intercept claims, one out every two connected finance professionals visit financial sites on Sunday afternoons. Information of this nature, which can help online advertisers target focussed user segments, allows it to charge anything between Rs 450 and Rs 1,000 for thousand impressions.

Projections associated with any aspect of Web-commerce can prove dicey, but a surge in online advertising does seem imminent. In 1999-2000, the online advertising market was valued at Rs 10 crore; for the year that will end March 2001, it is valued at Rs 45 crore. Intercept Consulting's research wing claims that this will double (Rs 90 crore) by March 2002.

There are, as is only to be expected, IFS, and K.P. Balraj, a director with VC firm Westbridge Capital Partners puts them succinctly: ''This will depend on how soon large offline advertisers (like HLL) move into online advertising, and how soon service providers like Intercept bring in the technology, as well as a range of innovative product offerings, and lay them convincingly on the table.''

Still, most companies operating in the online advertising space are convinced that there is a viable market out there. Observes Sanjeev Gadre, Business Manager, RightServe: ''If we don't succeed, it will be our own fault. The market has the potential.'' Gadre, however, tempers his optimism by adding that not more than three companies will survive in the space.

Intercept's Ramakrishnan is a little more cheery in his take on the future: ''There will be smaller players catering to niche areas. But in this business, it pays to be comprehensive in your knowledge.'' From sheer data to pure wisdom, did you say? 

-Nitya Varadarajan

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