Internet.ID v2.0: Happy New Year!!

Internet.ID v2.0: Happy New Year!!

By Hasan Yahya

JAKARTA (JP): In this day and age, it's amazing what can
happen in a year. Early in the year, the local Internet scene was
buzzing with energy and excitement. Launch parties and fancy
campaigns, you can almost feel it in the air.

Things were happening, or at least were expected to happen,
and it was a gold rush toward that land of opportunity called
cyberspace. The excitement, of course, was only too welcome after
the crisis that hit the nation hard during 1997 to 1999 period.
There was a sense of awakening, at least among the younger
generation.

People felt they could make an impact on the economy. Portal
became a business buzzword, warnets mushroomed all over the
country and corporations rushed in to find their domain name
snapped up by college kids in Depok.

Just like in the U.S., there was a sense of hyperoptimism that
the Internet would boldly take us where no one had gone before.
It was fun and strange at the same time, when everyone suddenly
felt that a NASDAQ IPO is within a business plan's grasp... felt
that way, anyway.

I had a good share of partying during those days, I enjoyed
it.

Then came the NASDAQ crash in March, the turning point that
rudely awakened everyone to reality -- forgotten to some and
oblivious to others that business is about profitability, sales,
revenue and well, noticeably customers. In the strange mechanism
in which a global market economy works, the crash in the NASDAQ
immediately made an impact on our country, all the way across the
Pacific and dampened the optimism we'd seen before. I'm not an
economist, so don't ask me the mechanics of it but things have
changed since then.

Suddenly everyone starts talking about advertising revenue or
the lack thereof, and hurrying, one after another, to try to come
up with the most innovative ways of making money. One buzzword
after another - in an industry that has a seemingly unlimited
supply of random combinations of three letters - were touted to
be the ultimate moneymaking escape hatch.

We're lucky this is an industry that also seemingly has an
inexhaustible supply of optimism. By end of the year 2000, the
discussion on how to play it in the next year is the after-hours
chosen subject of conversation. We've seen how it played out in
the past several months, and many of us had mistakenly put our
bets on the wrong buzzwords, it'd be nice to know what's going to
happen in 2001.

Recently, I had several discussions with some friends, playing
oracle, and trying to figure out where the industry will go in
the New Year. We've seen the industry go through the phases of
overhyped buzzwords just like it happened on the NASDAQ, albeit
some minor variations.

Repeating the same cycle

The cycle goes like this, content was king, portal was the hot
stuff, B2C was the revolution, B2B was the one after the
previous, infrastructure is the underlying fundamentals and
wireless is the heavenly dream - and that's when you start
thinking about content to go on your nifty mobile screen.

Sporadically along the way on the cycle, Indonesia had seen
companies, daring investors and gutsy entrepreneurs alike trying
to conquer each of these individual markets.

To no one's great surprise...as we approach the New Year, it
looks like we're about to repeat the same cycle all over again.

The overall experience on the news portal sector was
devastating to some and less than good to most. Most players are
likely to see new management taking over within the first quarter
of 2001, and they need to learn from their past mistakes.

No more overextended newsroom operations. No more silly
branding exercises, it's time to get to know the audience and
prepare something relevant. Something more entertaining. Getting
the page views means nothing if that can't be turned into cash.
No more land grab in content alliances, this is the time to ally
with advertisers.

The truth is, as the country gets better in the overall
economy and Internet users start reaching critical mass, the top
tier online news portals that actually survive will make good
acquisition targets for international players looking for
regional footholds. If they're lucky, the investors will get some
spare change. The less fortunate ones will simply experience one
hard lesson in new economics.

Since portals are going through transformation and more people
are getting connected to the Net, expect a revived version of the
B2C ideas. Hey, you can probably actually sell those hats online.
After all, Lipposhop has managed to sell quite a few bottled
Starbucks cappuccinos online. So it could probably work, and
investors have probably forgotten the high profile NASDAQ flop in
year 2000. It's worth a try.

And then, of course, comes infrastructure, which is probably
the most interesting sector. During 1999, ISP was the name of the
game for the industry. As the licensing procedures and
bureaucratic hurdles were notoriously difficult, the barrier to
entry into this market was significantly higher, with only a
handful of companies ending up operating as full ISPs during
those days. They later found out - many, again, the hard way -
that running an ISP is not as simple as they thought, and
certainly not as cheap.

These days, data centers seem to be unusually popular, laying
cables and throwing satellites around the place seems to be
everyone's idea of making big bucks. It probably wouldn't change
all that much in 2001, as the market having grown spectacularly
in the last year, almost everyone has found themselves short of
bandwidth. But then again, many of these would find existing
bureaucracies and regulatory hurdles stubbornly refusing to move
away from those nice milestones set on the business plans, and
some adjustments would need to be made.

Well, that's not even mentioning leaving customers stranded
without support services and a pricing structure that would
confuse even the most mathematically gifted bandwidth-hungry-
money-spender, such as myself, excluding the gifted part.

To be frank, most of our infrastructure players lack that
ultimate experience in dealing with real life customers and tend
to treat them as hostile entities that creep into their network.

Ugly price war

Either way, I'm still hoping to get one of those nice
satellite connections sometime in 2001. I personally think that
this is a good bet, although it tends to get into ugly price wars
and only those with significant savings are advised to get into
it. If you happen to be following what's happening on the NASDAQ,
you'd have also noticed that infrastructure is probably the
closest thing to the now-happening event of telco and optical
network equipment. Since Indonesia is unlikely to see the sudden
rise in network equipment research lab and manufacturing, putting
the things together is probably a good way to follow the trends.

And then, of course, is the whole brick-and-mortar stuff. The
so-called incumbents, traditionalist, old economists, dinosaurs,
something, whatever, those big guys who were there during the
last economy. Enjoying their stable growth in the survival of the
crisis and their legal mess, many of them would find themselves
right in the middle of the Internet revolution.

Truth be told, these guys are the biggest suppliers, buyers,
customers, producers; in short, the dynamo that would actually
have any serious opportunities to survive and propel the Internet
industry. After all, if they could survive whatever it was that
hit them in 1997, there's a good chance that they wouldn't be
obituaries to our adrenaline-driven entrepreneurs.

You notice that I didn't mention wireless. The truth is I
don't really know what's going to happen with wireless. Much
touted to be the "next thing", wireless communication and the
numerous gadgets haven't yet gotten any further than that: the
next technology.

The current technology available here is far from ideal to
deliver anything useful short of SMS messaging and choppy voice
communication. Technology is about usability. Enabling customer
to do more, better and quicker. The fact is most customers don't
really care about the capability of new technology, they care
when they can use it. The year 2001 will see a slew of new
gadgets arriving in the market, both overseas and here in
Indonesia. Carriers are expected to start upgrading their
infrastructure to enable bigger bandwidth and a range of new
services would probably be made available. Exciting times, to see
whether the customer will buy it.

The truth is, the Internet industry, the way it is right now,
is a market in the making. The contribution to the overall
economy is barely there. The value creation mechanism within the
entire chain merely skims the surface of the market expectation.

It's a Darwinian process on adrenaline very early in the
evolutionary process that will pick the surviving species. It's a
cycle that goes around, just as it has happened in other markets,
each time snowballing until it reaches that perfect critical mass
that would launch it to the next phase in the economy.

At least we passed year 2000 with some sense of reality that
those IPO dreams that most of us had, wouldn't come as easy... we
probably should start learning that it definitely wouldn't come
any easier in 2001. We still lack that one success story. It's a
whole load of battles with no winners. It probably came as a
surprise to some that generating sales is actually an important
element in doing business, but to many who have gone through the
old economy phase, it's just an official nod that we didn't waste
our time trying to create value and that those things take time.
We need a success story to prove that it can be done. There's a
real business to be made on the Internet. Right here, in
Indonesia.

I'm a big believer on this whole Internet thing. And I believe
that someday, hopefully not too long from today, it will start
having a real impact on our real life. A weird combination of
factors have kept some of the best success stories from the
outside world away from Indonesia, leaving us way behind in terms
of technology competitiveness. As we repeat the cycle in our
learning process, with more respect to generally accepted
economic fundamentals, the year 2001 should be a critical year
for the Industry. It's the final exam year on the third grade.
Heck, it'd be nice to start the new year with the same optimism
as we had early this year. After all, it's the real millennium.
Welcome to Internet.id 2.0!

The author is CEO and lead consultant of SIP, an IT and human
resources firm in Jakarta. (hyahya@sip.co.id)