Thursday
Taiwanese Market Seen Ripe For Dot-Com Rebound
Many of today's office workers start their day checking e-mail and catching up on the latest news over the Web. For less serious users, online gaming tops their list of things to do on the Internet. Search engines have become indispensable tools for researchers, journalists and anybody who loves information. Clearly, the Internet is weaving itself deeper and deeper into people's lives, and service providers are gradually shedding the bearing of apprehensiveness they adopted following the dot-com crash.
A few short years ago, the future seemed bleak for dot-com businesses. Companies that had been riding the wave of the information revolution went bust overnight. Even those that survived the dot-com bust have had to struggle to get out of the red. Early this year, Taiwan's major Web portals reported significant growth in sales--something industry watchers say could be heralding a better future for dot-coms.
Yahoo!Taiwan--a 2001 merger of Yahoo! Inc.'s Taiwan Web presence and an operation called Kimo--began reporting profits in the third quarter of last year. Currently the largest Internet portal in Taiwan, Yahoo!Taiwan recently reported third-quarter revenues of US$10.5 million, a 28-percent increase over the previous quarter. Revenues from advertising--which also saw a 23-percent surge--accounted for 69 percent of total earnings. According to company sources, the number of unique hits, or non-repeat visitors, on its portal in August reached 9.28 million. Users spent an average of 426 minutes a month on the site. These are strong numbers.
Other companies, though they have a smaller share of the market, have managed to break even. PC Home Online, Taiwan's second-largest Internet portal, saw its revenue reach US$17.9 million in the first half of this year, an increase of 213 percent from the same period last year, according to market manager Vicky Tseng. "We were still in the red last year, but so far this year, we have been able to make profits every month." Equally buoyant is the team at Yam Digital Technology, one of the oldest portals in Taiwan. Ily Wang, assistant manager of public relations, said the company expects to see its after-tax profits hit US$1 million. Advertising revenue is expected to grow by at least 70 percent.
"We indeed have reason to be optimistic about the future of dot-com businesses," said Liu Fang-mei, a project manager at Institute for Information Industry's Focus on Internet News and Data research group. "The industry has been growing continuously despite the darker days of two years ago, when people's enthusiasm for investing in Internet stocks suddenly went cold." With all the recent hype surrounding portal profitability, headlines have announced that the dot-com business is heading for another golden age. Tseng, however, characterized such proclamations as erroneous, saying that the previous dot-com bubble resulted from people's false expectations of the new medium. "Vendors and users expected too much, too fast," she said. People's understanding of the golden days was reflected in the soaring stock prices, rather than the positive interaction made possible between the new technology and humanity, Tseng explained.
"The Internet industry has never really taken off," she stressed. "Dot-com growth is always there. In fact, we are still in preliminary development." The latest report of a boom seems only natural. "As the years have gone by, companies have settled on viable business models and the Internet has become an essential part of most people's lives. All this has led to a dynamic development of the industry," she said.
By the end of June, the number of people with Internet access in Taiwan--meaning those having active registered accounts with service providers--reached 8.76 million. The figure for broadband subscribers stands at 2.45 million.
Analysts believe that the general business community is more willing to invest in Internet stocks than it was after the dot-com crash. Advertisers are indicative of this trend. "More and more business executives began vying for the attention of young people. While there are many types of media through which companies can gain exposure, the Internet is nevertheless the best choice if you want to reach out to the younger demographic," Liu said.
Internet advertising methods have evolved since the days of old-fashioned banner ads. Programming advances allow companies to market their wares with flash animations, pop-up windows and an array of ever more creative schemes to develop what marketing experts call mind share, which is the degree to which their brand is easily remembered by a target consumer group.
Thanks to new technology, advertisers can interact with users more directly and reach their target consumers more easily. The fact that advertisers and Web portals have over the years settled on a payment method that is beneficial to one another is conducive to portal growth as well, Liu suggested.
Some analysts have pointed out that, in the past, most Internet advertisers tended to be Internet operators themselves. Now, traditional businesses like banks, food retailers and manufacturers of daily necessities have begun to budget more of their advertisement dollar for the virtual marketplace and away from brick-and-mortar operations.
Another crucial factor to a prosperous Internet portal is fee-based services. Many have questioned whether regular users of the Internet would be willing to pay for services that are currently free, such as e-mail, newsletters and online chatting. "Consumers will definitely resist in the beginning," Liu opined, "But the more they depend on a particular service, perhaps the more willing they will be to pay for it." While industry stakeholders agree that the attitude of the average user has been changing, no one seems willing to rush into charging money for services that, at this point, are widely available for free. Even online auctions, whose popularity in Taiwan has soared in the past year alone, are unlikely to become subscription-based services anytime soon.
Sites such as eBay and Yahoo!Taiwan, which already make money on each transaction they host, have been hesitant to supplement that income by charging people a fee. "I think the important thing should be to provide better, value-added services to attract consumers--to know what they want and make them willing to pay for what they can get," Tseng said.
PC Home Online offers fee-based services like newsletters and online data storage. It recently added online credit-information requests to the list. Tseng noted that information about a company's credit history is a more advanced service, for which consumers should expect to pay.
"Of course, for more basic services like e-mail, portals should keep them free. This is necessary to maintain the size of our online marketplace," she said. Conversely, there is no reason service providers must shoulder the cost of high-capacity Web storage, she added.
But portals have also sought other means to grab attention. While Yahoo!Taiwan runs a successful auction site, PC Home is known for its online shopping, especially for consumer electronics, communications products and computers. Yam Digital, on the other hand, manages and distributes software-based services and solutions to its customers, and helps local industries establish online networks.
Yam Digital's Wang noted that the company has also devoted much effort to managing specific Web sites for children, women and sports fans, the contents of which are all produced in-house.
Having confidence in the local operator's ability to run thematic Web sites, the National Basketball Association in the United States recently granted Yam Digital exclusive Taiwan distribution rights to its Web content.
Portals in Taiwan have grown from being simple search engines to information pools, Liu said. "You go to a portal and everything is there--it can lead you to updated financial information, entertainment and virtual shopping malls. It is a one-stop shop," she enthused. The project manager added that, for older people who may not be as adept at using computers as the younger generation, such one-stop shopping is an attractive, less intimidating way to connect to the Internet.
However, for researchers and analysts like Liu herself, powerful search engines such as Google are also irreplaceable. "The chances for success are greater if you either specialize in the area you know best or if you diversify. Web portals just need to have a clear idea of what they want to become." When Yahoo!Taiwan celebrated its second anniversary early this month, General Manager Rose Tsou said she hopes to turn the Web site into an "Internet-life essential"--an indispensable virtual destination, whether at work or at home. So far, most of the portal operators seem to be trying to achieve a similar result. As they report more stable growth, they are increasingly confident that they have chosen the right path.
A few short years ago, the future seemed bleak for dot-com businesses. Companies that had been riding the wave of the information revolution went bust overnight. Even those that survived the dot-com bust have had to struggle to get out of the red. Early this year, Taiwan's major Web portals reported significant growth in sales--something industry watchers say could be heralding a better future for dot-coms.
Yahoo!Taiwan--a 2001 merger of Yahoo! Inc.'s Taiwan Web presence and an operation called Kimo--began reporting profits in the third quarter of last year. Currently the largest Internet portal in Taiwan, Yahoo!Taiwan recently reported third-quarter revenues of US$10.5 million, a 28-percent increase over the previous quarter. Revenues from advertising--which also saw a 23-percent surge--accounted for 69 percent of total earnings. According to company sources, the number of unique hits, or non-repeat visitors, on its portal in August reached 9.28 million. Users spent an average of 426 minutes a month on the site. These are strong numbers.
Other companies, though they have a smaller share of the market, have managed to break even. PC Home Online, Taiwan's second-largest Internet portal, saw its revenue reach US$17.9 million in the first half of this year, an increase of 213 percent from the same period last year, according to market manager Vicky Tseng. "We were still in the red last year, but so far this year, we have been able to make profits every month." Equally buoyant is the team at Yam Digital Technology, one of the oldest portals in Taiwan. Ily Wang, assistant manager of public relations, said the company expects to see its after-tax profits hit US$1 million. Advertising revenue is expected to grow by at least 70 percent.
"We indeed have reason to be optimistic about the future of dot-com businesses," said Liu Fang-mei, a project manager at Institute for Information Industry's Focus on Internet News and Data research group. "The industry has been growing continuously despite the darker days of two years ago, when people's enthusiasm for investing in Internet stocks suddenly went cold." With all the recent hype surrounding portal profitability, headlines have announced that the dot-com business is heading for another golden age. Tseng, however, characterized such proclamations as erroneous, saying that the previous dot-com bubble resulted from people's false expectations of the new medium. "Vendors and users expected too much, too fast," she said. People's understanding of the golden days was reflected in the soaring stock prices, rather than the positive interaction made possible between the new technology and humanity, Tseng explained.
"The Internet industry has never really taken off," she stressed. "Dot-com growth is always there. In fact, we are still in preliminary development." The latest report of a boom seems only natural. "As the years have gone by, companies have settled on viable business models and the Internet has become an essential part of most people's lives. All this has led to a dynamic development of the industry," she said.
By the end of June, the number of people with Internet access in Taiwan--meaning those having active registered accounts with service providers--reached 8.76 million. The figure for broadband subscribers stands at 2.45 million.
Analysts believe that the general business community is more willing to invest in Internet stocks than it was after the dot-com crash. Advertisers are indicative of this trend. "More and more business executives began vying for the attention of young people. While there are many types of media through which companies can gain exposure, the Internet is nevertheless the best choice if you want to reach out to the younger demographic," Liu said.
Internet advertising methods have evolved since the days of old-fashioned banner ads. Programming advances allow companies to market their wares with flash animations, pop-up windows and an array of ever more creative schemes to develop what marketing experts call mind share, which is the degree to which their brand is easily remembered by a target consumer group.
Thanks to new technology, advertisers can interact with users more directly and reach their target consumers more easily. The fact that advertisers and Web portals have over the years settled on a payment method that is beneficial to one another is conducive to portal growth as well, Liu suggested.
Some analysts have pointed out that, in the past, most Internet advertisers tended to be Internet operators themselves. Now, traditional businesses like banks, food retailers and manufacturers of daily necessities have begun to budget more of their advertisement dollar for the virtual marketplace and away from brick-and-mortar operations.
Another crucial factor to a prosperous Internet portal is fee-based services. Many have questioned whether regular users of the Internet would be willing to pay for services that are currently free, such as e-mail, newsletters and online chatting. "Consumers will definitely resist in the beginning," Liu opined, "But the more they depend on a particular service, perhaps the more willing they will be to pay for it." While industry stakeholders agree that the attitude of the average user has been changing, no one seems willing to rush into charging money for services that, at this point, are widely available for free. Even online auctions, whose popularity in Taiwan has soared in the past year alone, are unlikely to become subscription-based services anytime soon.
Sites such as eBay and Yahoo!Taiwan, which already make money on each transaction they host, have been hesitant to supplement that income by charging people a fee. "I think the important thing should be to provide better, value-added services to attract consumers--to know what they want and make them willing to pay for what they can get," Tseng said.
PC Home Online offers fee-based services like newsletters and online data storage. It recently added online credit-information requests to the list. Tseng noted that information about a company's credit history is a more advanced service, for which consumers should expect to pay.
"Of course, for more basic services like e-mail, portals should keep them free. This is necessary to maintain the size of our online marketplace," she said. Conversely, there is no reason service providers must shoulder the cost of high-capacity Web storage, she added.
But portals have also sought other means to grab attention. While Yahoo!Taiwan runs a successful auction site, PC Home is known for its online shopping, especially for consumer electronics, communications products and computers. Yam Digital, on the other hand, manages and distributes software-based services and solutions to its customers, and helps local industries establish online networks.
Yam Digital's Wang noted that the company has also devoted much effort to managing specific Web sites for children, women and sports fans, the contents of which are all produced in-house.
Having confidence in the local operator's ability to run thematic Web sites, the National Basketball Association in the United States recently granted Yam Digital exclusive Taiwan distribution rights to its Web content.
Portals in Taiwan have grown from being simple search engines to information pools, Liu said. "You go to a portal and everything is there--it can lead you to updated financial information, entertainment and virtual shopping malls. It is a one-stop shop," she enthused. The project manager added that, for older people who may not be as adept at using computers as the younger generation, such one-stop shopping is an attractive, less intimidating way to connect to the Internet.
However, for researchers and analysts like Liu herself, powerful search engines such as Google are also irreplaceable. "The chances for success are greater if you either specialize in the area you know best or if you diversify. Web portals just need to have a clear idea of what they want to become." When Yahoo!Taiwan celebrated its second anniversary early this month, General Manager Rose Tsou said she hopes to turn the Web site into an "Internet-life essential"--an indispensable virtual destination, whether at work or at home. So far, most of the portal operators seem to be trying to achieve a similar result. As they report more stable growth, they are increasingly confident that they have chosen the right path.
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