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September 23, 1999
How to become the America Online of IndiaNeena Haridas at Pragati Maidan
At least that is what Bruce Elliot, executive director, World Wide Web Initiative, would have us believe.
He says, "The good thing about India is that it has allowed privatisation of ISPs. But the sad part is that, of the private ISPs, only five are functional. This is a disturbing scenario especially when you realise that ISPs are not considered to be a profitable business."
What ISPs must realise is that they should consider themselves as an "informediary" and not just an "intermediary" business. It is the power of information that will make them play big, claims Elliot.
The best choice for an ISP is to cater to business-to-business solutions because it has better growth potential there than in the retail business.
"It is important for an ISP to realise that the Internet economy has no boundaries, it is global and destroys the conventional concepts of time, space and value," Elliot warns.
Even as the space one operates in expands, the time to operate is collapsing. Solutions have to be provided instantly and it is important to learn from experiences in real-time in terms of processing information and making it cost-effective, Elliot says.
The value of the service too acquires a different connotation as intangible assets come into play. For instance, Yahoo!'s market value went up from $400 million to $2.8 billion or so when its subscriber base increased.
What this means is that growth is accelerated by the Net and virtual marketing opens up new doors. But these doors are best opened with a first-mover advantage.
The first mover has a higher intangible value because of a higher user base. Armed with these realities of the Net, what the ISPs need to do to grow is harness this power. As buyers are gaining new powers of information, sellers should cater to them by providing unique products and services.
"By and by, even the accessibility will have to be given free by the ISPs," says Elliot. However, giving free accessibility is a concept that is tough to digest, but that is the way the market will move.
Then what makes ISPs profitable? "The information," reveals Elliot.
ISPs can create a community based buying culture and adopt the role of an informediary. Besides, this gives the ISPs an opportunity to provide customised solutions for the clients and customers. For instance, Dell sells over 200,000 customised computers on the Net. Staples is another Net retailer of office products.
"ISPs must upgrade themselves to provide value-added service," stresses Elliot. Besides, in e-commerce there is the advantage of impulse buying. "One has to realise that every product is available everywhere. The time lag between desire and buying is reduced to few seconds and an effective ISP can take advantage of this," Elliot says.
Once the traffic on the Net increases, companies will have to operate with multiple Web sites and this is where ISPs with innovative services will have a competitive edge.
Being an informediary involves exploiting the vast information that is available in the community that has been created.
"Information is the product. And this information is the digital value of the service of the ISP. And depending on the information base that an ISP has, the digital value becomes higher than the physical value of the product itself. Because with this information in place the ISP can provide virtual customer management services, referral services, hidden inventory, notification service, selling by combined products for discounts etc. A higher digital value thus allows an ISP to sell itself at a premium. Once an ISP arrives at this status, it would be profitable even though it provides free accessibility," explains Elliot.
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