Despite the slowdown that hit late in the fourth quarter, the industry saw a healthy growth of 37%, with Indian companies launching 92 new software products and upgrades in the domestic market, while MNCs launched another 152. Oracle’s 11i, mySAP, iBaanERP, QAD’s eQ—all launched this year—are collaborative e-business solutions addressing the issue of complexity with varying degrees of success. Other than showcasing the growing import of automation in Indian enterprises, these also indicated a clear move away from ‘point solutions’ that tackle just one aspect of e-business. The onus is on comprehensive and integrated solutions that are Web-enabled and support hardware from almost every major vendor. While it is simpler to integrate versions from the same vendor, the challenge lies in cross-upgrades.

The year 2000-2001 was projected to usher in the application service providers’ boom. However, the ASP revolution failed to take off due to bandwidth and infrastructure constraints. As with PeopleSoft’s CRM 8, a pure Internet solution was considered a shortcoming that needed to be upgraded to integrate with mobile connectivity. In February 2001, Onset Technology introduced Metamessage, a wireless service that displays Web pages and more than 25 different file types on wireless e-mail devices.

As for Microsoft, its Office suite continued to occupy over 80% of the market.

The year also saw the emergence of applications being delivered over the Internet as services that allow customers to interact with them dynamically, and not just as static programs that sit on a desktop or run off a server. And perhaps therein lies the future of HailStorm, Microsoft’s next big push, based on the Passport authentication system.

Internet and bandwidth woes

Plunging Internet access rates and deregulation by the government led to a rush in the ISP market but few succeeded. The initial few months of 2000-2001 witnessed a lot of continued activity and setting up of networks by most ISPs. By December 2000, DoT had issued more than 400 licenses. But today, what remains of them are 150 players. And the marketshare of the 150 operational ISPs is pyramidal, with the seven top players controlling 75% of the market. With lower operational costs and upgrades, value-added services will see spiraling demand from corporates who demand reliable communication and connectivity.

An IDC India report shows that Internet access rates came down by about 70% in leased line and 60% in dial-up connections. Against this backdrop was born the concept of free ISPs, with Caltiger emerging as the largest in three of the four top markets. Infrastructure remained the biggest and most fundamental issue faced by the Internet industry. The total bandwidth in the country went up to about 1.2 GB, still well short of the estimated requirement of 2 GB. Private operators hope to fill the gap by setting up gateways and networks. Meanwhile, VSNL continued to lead the ISP pack by far, while Caltiger was the pick of the lot when it came to free services.

Networking

Internet service providers (ISPs) continued to scale up their infrastructure, the global slowdown had its impact, and those depending heavily on the ISP and the Internet data center segments found their targets running away from them. The more seasoned and mature players reacted by reworking their targets. This helped them tackle the situation, with the top five growing at an impressive 89%. India remained a thrust and growth area for most of the larger networking vendors, with Cisco, Lucent and Nortel setting up huge development centers for outsourcing activities.

The country was certainly growing in its importance as a major growth area in the networking segment. The best equivocation of this trend were the visits by Cisco’s John Chambers, Nortel’s Clarence Chandran and Juniper’s Scott Kriens, among others. When ISP activity slowed down, software houses entered the picture, setting up development centers to handle increased offshore activity and making good purchases. Investments also poured in from banks and Old Economy sectors like manufacturing and insurance, which emerged as heavy buyers of routers and switches in their ramp-up quest.

While the use of VSATs for village telephony was not allowed, accessing of the Internet using VSATs also remained a non-affair due to unclear regulatory norms. The networking industry grew at 45% to touch Rs 1,789 crore, with ISPs being the primary demand drivers in the first half of the year. As ISP activity slowed down, the banks, financial institutions and insurance companies got into the act. As increased automation and networking saw the demand for LAN switches shoot up by 57%, hubs were hit hard, crashing by 35%. Wireless LANs were deployed by large integrators like IBM Global, CMC, HCL Comnet, Supreme and HCL Infosys.