CNET : News : Story Thursday, January 27, 2000 

Malaysian portal players on the march
By Julian Matthews
Thursday, January 27 2000

KUALA LUMPUR--It may be just a case of portal envy of their American counterparts, but Malaysian portal players are definitely on the rise with new capital and expanded offerings.

"The face of local portal players has changed in Internet time. Stakes are raised with the entry of foreign players like Yahoo and Lycos, and Malaysia does not want to be left behind," said Richard Jacobson, senior Internet analyst for International Data Corp's Asia Pacific unit.

He was commenting on a series of announcements on expansions, tie-ups and fresh investment by several local players in the portal space in recent weeks including, Cari and Skali.

Jacobson said the Malaysian Internet portal market may not be as developed as Taiwan, Korea and Australia, but is entering a new phase of investment.

Public-listed electroplating and tool-and-die maker AKN Technology Bhd pumped in an initial RM5 million (about US$1.3 million) this month for a 30 percent stake in Cari Internet Sdn Bhd, which runs search engine

The cash infusion was a welcomed boost for the Penang-based company, which was founded by computer engineer Liew Chew Keat in 1996. The site currently garners 2.5 million pageviews monthly with an 18 percent growth rate per month.

It was also AKN's first foray into an Internet venture and a change from its focus on the semiconductor industry.

Jacobson said the Internet has piqued the curiosity of companies in traditional businesses because of three factors: the dotcom phenomenon, user growth, and eyeball availability in Asia.

"The dotcom phenomenon was created by enormous amount of publicity on Nasdaq, when even loss-making companies can have their counters value at US$70 to US$80. Many are jumping in because of this," he said.

Jacobson said Internet usage is also growing rapidly with latest IDC estimates for Malaysia at a high of 1.3 million users.

The Asia Pacific market excluding Japan is also growing fast with a compounded annual growth rate (CAGR) of 40 percent from 1998 to 2003, compared with 28 percent worldwide, albeit some markets like North America are already matured, according to IDC.

"Asia has three billion people, half the world's population. You don't need to do the math to figure out why this will be growth market for the future," he said.

Jacobson said IDC analyses' indicate that the two-year recession (in 1997) that hit Asia may also have been "a blessing in disguise" and a key driver for the surge in interest on the Internet.

"Usage kept growing in spite of it, and people had an inherent need to get online and still buy up accounts. One factor could be that small and medium enterprises with no resources to spend on physical expansion took the alternative route and expanded virtually. They were also more open to e-commerce," he said.

Jacobson said IDC was bullish of e-commerce in the region and expects to see more tie-ups and partnerships between portal players, content owners, and various businesses.

An example was today's teaming up of online reservations player established content aggregator for a one-stop web site for all travel needs to be called Skali Travel Services.

Jacobson expects to see more varied types of portals in future, and the rise of 'vortals' or vertical portals that are single-industry or single-interest portals targeted to a specific demographic.

He said that the opportunities for new players are in financial portals, medical-related and healthcare portals, manufacturing portals and B2B portals.

"Portal players also need to splash marketing dollars to raise brand awareness and attract usage," he said. He cited for its high-impact advertising campaigns and extensive press coverage as a prime example.

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