Web 2.0: Not very enterprising

It's a shiny, new dance floor, but how many can dance? The Web 2.0 market in India is still struggling for direction and funding, though the start-up scene in the Indian consumer space has been vibrant. Yet, the number of Web 2.0 companies focused on the enterprise or business space can be counted on one's fingers.

A majority of players are active in areas like social networking sites (SNS), blogging, and document and multimedia sharing in the consumer space. A mere 12 of the 67 India-focussed websites studied by research firm IDC have a clear enterprise or business-driven model to their operations, while 55 have a consumer focus.

Websites like Zoho, Cynapse, Techtribe and Uhuroo are among the few sites that have a considerable degree of enterprise or business focus.

Uhuroo's simple Web-based architecture has been immensely useful for enterprise workgroups working across multiple locations and makes content referencing infinitely easier.

IIT Mumbai-incubated Uhuroo has had successful test-runs among scattered workforces in companies like Cap Gemini, L&T Infotech and Arch Pharma. "Three of our 10 enterprise deployments so far are up and running," says Uhuroo CEO, Kaushal Sarda.

"Our purely enterprise focus has helped us stand apart, not to mention our understanding of enterprise workforce needs relating to selection, collaboration and consolidation of multiple information blocks," Sarda says.

Sarda believes that Uhuroo's collaborative vision for the enterprise can be achieved even through a consumer focus. "There is a lot of value in the consumer Internet space which can be translated into the enterprise space with the right vision," Sarda adds.

In a recent paper titled 'Web 2.0 in India: An overview', on India-focussed and homegrown websites in the Web 2.0 space, IDC notes that while homegrown sites like Yaari.com, Minglebox, Fropper, SirfDosti and BigAdda have done well enough, they are yet to cross a threshold that can compare with their global counterparts.

Deepak Kumar, head "� communications research, IDC India, notes that homegrown Web 2.0 sites are still miles away from mass adoption in comparison with global biggies like Orkut, YouTube, Flickr and Wikipedia.

"What was true for Web 1.0 in India is all the more applicable to the current state of Web 2.0. Global sites have a more dominant base in India compared to their homegrown counterparts," Kumar notes.

He says that in the consumer Web 2.0 space, smaller players will find it difficult to survive with a low user base. "Replicating overseas business models in India will not help. That's why we foresee a shakeout in this space in the second half of 2008," Kumar says.

Kavita Iyer, CEO of Bangalore-based Minglebox, with a user base comprising largely college students and alumni, notes that global players have had a 3-year advantage over their Indian counterparts.

"We can take them on only through superior products. We are where China was five years ago, and today, the Chinese Internet scene has exploded. Young people are moving from traditional media models to the Web, and that is where all the action will lie for startups like us," Iyer says.

While Sequoia Capital-funded Minglebox is yet to open up to an advertisement-based model, the company has plans to get into revenue mode in the next six months.

She agrees that Web 2.0 entrepreneurs should work towards satiating local needs in ways that global sites may not be geared to address. IDC notes that as of now, many key Web 1.0 players (in India) are yet to develop a Web 2.0 presence, but many are in the process of doing so.

"Companies like Reliance Entertainment (Big Adda) and Indiatimes can help tilt the balance, and also kickstart a churn in the Web 2.0 segment. The entry of big-ticket players in the Web 2.0 space will increase spending on marketing and promotion. For the smaller players, better visibility and timely funding will be crucial, as in its absence, many of them will have to exit the space," Kumar observes.

IDC adds that promoters with sound new media backgrounds have the seed capital and the vision to bring their products to a required level of maturity and completeness.

"The question is one of carving out the right business models which will help them sustain operations in the medium to long term," Kumar adds.

Progress in this direction, this year, will be slow, though steady. Excluding established global players like Orkut, Metacafe, Digg, YouTube, Flickr and Wikipedia, Web 2.0 startups have a combined user base of around 1.5 million in India, after eliminating overlaps, according to IDC.

This is from a combined Internet base of 46 million as of September last year, as attested by the Internet and Mobile Association of India.

Any shakeouts in the sector this year will be posited on the fact that pureplay SNS, folksonomies, wikis, photo and video sharing are not sustainable in the long run.

More than 78 per cent of the start-ups are focusing on the consumer space, which means there already is a glut out there. IDC expects a moderate level of consolidation and a high degree of shakeouts starting around late 2008.

Fighting the shakeout possibility would require Indian start-ups to widen their addressable universe with conceptually sound products, and participating at a culturally involved level with their audience across diverse media, including mobile, TV and offline.

The Indian surfer is ready to be wooed. Though, more Web 2.0 startups will be needed to bell the cat "� doing a better job than Flickr, Orkut, YouTube or MSN while they are about it.