The last decade has been a remarkable one for the Internet in India. In many ways, the Internet has gone mainstream. While it is still by no means a household necessity as much as a telephone or a cable TV connection, it has achieved its place in our daily discourse, if not on our desktops.
Over a million Indians have Facebook accounts. Indian issues routinely rank among the top terms to trend on Twitter and other social networks.
We are, at least by some metrics, a force to reckon with on the Web.
Yet, India today has an Internet user base of just 70-80 million, a penetration of less than 8% of our population. And even this number may not be accurate. This also may or may not include the number of people who use the Internet on their mobile phones. (But that is a whole other can of worms. If someone downloads a ringtone or a song from the Internet by clicking on a form or without consciously browsing, is he or she a user of the Web?)
Surf’s up: Students from schools in Bangalore learn how to surf the Internet. Photo by Gautam Singh/AP
But even if we assume that this number of 80 million is accurate enough, it pales in comparison with not just the traditional Western benchmarks, but even Asian ones. Japan has around 100 million users and China has a mammoth five times as many users. India accounts for only 10% of Asia’s 825 million Internet users. At our current annual Internet user growth of 30% per annum—the average rate according to the Internet and Mobile Association of India (IAMAI)—it will take India seven years to reach where China is today.
The traditional wisdom is that India has failed to achieve penetration because of poor broadband coverage and prohibitive costs of personal computers and other access devices.
An August 2010 report by IAMAI on the Internet in rural India says the way forward is for public and private partnerships to develop deeper access. The report seems to say that the best way would be Internet kiosks in rural areas. Once this core infrastructure has been set up, the report concludes, “private operators will be keen to exploit this untapped market and eventually expedite Internet reach and growth”.
The obvious response to that is: given that penetration is much higher in urban areas, this should mean that private operators must have rolled out compelling products in urban markets.
Tipping Ponits (PDF)
Gopinath, Tharoor, Bikhchandani and Kalra (PDF)
In fact, for the most part of the last decade, they haven’t.
A few months ago Promod Haque, a managing partner with investment firm Norwest Venture Partners, told The Economic Times newspaper that India was where the US was a decade ago in terms of Internet and retail products.
The best way, then, to look back at a decade of the Internet in India is to figure out how we’ve managed to achieve so little of substance in so long.
And the answers to this question perhaps lie in the stories of the successes and failures of the last 10 years.
Things started very promisingly. It was in 1999 that Rajesh Jain sold his IndiaWorld collection of websites to Satyam Infoway for an astounding Rs499 crore. Even at the time—and this was well before the dotcom bubble had burst—the valuation of the deal was enough to lift eyebrows right off your face and toss them over your head.
The IndiaWorld deal looked set to open the floodgates. Not for the Internet in India as much as for eager Internet entrepreneurs. The actual issue of Internet usage, penetration, and viability of goods and services took a back seat.
All that mattered was getting funding and then getting listed. Overnight, small players such as Mom And Pop Cement Sales Corp. became MomPopCemCo.com.
What happened next is popular history.
Besides the fact that it was an irrationally exuberant bubble, other reasons were also cited for why dotcoms never took off in India. Connectivity and computers came tops. Then came things such as literacy, English language dependence, aversion to online transaction, paucity of credit cards, and so on.
But also a lot of the services and portals were rip-offs or/and were terrible.
Thankfully the launch of the Indian Railway Catering and Tourism Corp. Ltd (IRCTC) railway booking site in 2002 and its sustained success brought a reality check. The Internet business model could work in India. Provided it made sense to the consumer. IRCTC was convenient, quick, easy to use, reliable and secure. It catered to a need that was almost universal in India—booking train tickets.
A handful of businesses since then have been able to replicate this success. Matrimonial, career, basic retail and taxation services sites have grown and some have made money.
Then, in the latter half of the decade, we had a mini-boom that heavily focused on travel websites or social networks. The first came on the back of an explosion in low-price air travel, and the consequent need to aggregate flight search and data.
The second was a purely reactionary strategy to trends in the west. Start-ups hashed out an array of clone social networks hoping to become the next MySpace, Bebo or Facebook.
Most of those social networks have now been wiped out by the success of Facebook and, to a lesser extent, by that of Orkut. Much like the way me-too Indian web portals were obliterated a decade ago.
From a business perspective, the decade closed with MakeMyTrip’s listing on the Nasdaq. Why did MakeMyTrip succeed? Influential tech blog TechCrunch had this to say: “Unlike entrepreneurs who waste their time trying to build, say, ‘an Indian Facebook’—MakeMyTrip wasn’t a reskin, it actually solved problems unique to India.”
And that nicely summarizes the last 10 years of the Internet in India. Tremendous amounts of money, time and talent have been wasted on products and services that simply don’t solve problems in an Indian context, or are poor copycats of successful businesses.
To the average Indian today, the Internet is simply not relevant enough. Which is why the mobile phone has so thoroughly overtaken the Web across the country. On the odd occasion when one does need to book a ticket or check an exam result, there are always Internet cafes nearby.
The next decade comes with several opportunities. The mobile Internet has to be at the top of that list. Penetration is high and growing, even though exact data on live users is embroiled in Byzantine controversy.
Social networks will change the way we are consuming news, communicating with each other and forming communities. This will determine how marketeers and advertisers tap into the Web and these communities.
But most of all what can propel the Internet in the next 10 years is e-governance. The government of India continues to boast of some of the poorest public service websites in the world. (The Commonwealth Games website intermittently had wrong scores, stale medal tallies even the wrong Indian flag during the tournament.)
These sites offer little information and hardly any services. Which is why the IAMAI report on rural Internet had 34% respondents saying “didn’t feel need” as one of their reasons for not using the Web (second only to the 84% who said “not Internet aware”).
Projects such as the one being run by the Unique Identification Authority of India to provide an ID to every Indian must encompass Web services. Citizens in this country must be able to access everything from birth certificates to land records online. And they must be able to do this in their own languages.
The Internet, like the mobile phone, must be something that adds value to their lives. Without these meaningful products, investing in urban or rural penetration is a waste of time.
One lesson from the last 10 years is this: the Internet for Internet’s sake is pointless.