AOL makes online foray in India, poses challenge to Yahoo!

American Online or AOL, the Internet division of $44.2 billion Time Warner Group, has launched its India portal, its first outside the US and Europe, April 26, offering next–generation e–mail service with unlimited storage and spam blocking and, according to market analysts, posed a strong threat to rival Yahoo!.

"If Yahoo! had the first–mover advantage, we have the second–mover advantage. We have been evaluating the Indian market for long. This is the apt time to be in India, when the Internet–user base is poised to take a big leap and with our cool and innovative features that are new to the Indian online community, we will definitely be among the top three in the next three years," said P.G. Ponnapa, vice president and general manager, AOL India after the launch of AOL India portal.

"We wanted to make sure this (India launch) is our highest priority. India is essential to the growth of AOL. Although this is a very early stage for AOL in the Indian marketplace, we would look very closely at Indian consumers and would be investing significantly to enhance the users' experience," Ron Grant, president and COO of AOL said.

AOL's relationship with India dates back to 2002 when the company started its call centre. In 2005, AOL started its R&D operations in India. Subsequently, it set up a knowledge centre to support the US operations. AOL has about 2,000 people across all its divisions in India.

With the launch of the new portal, internet users in India can look forward to availing the services of the next–generation AOL e–mail services, which include unlimited storage, effective safety and spam–blocking systems and mobile services.

"Our next–generation e–mail service is the first of its kind being offered worldwide on AOL, even before its introduction in the US and Europe. Our Indian software development team played a key role in developing the software for this unique mail service," Grant said, adding that Indian operations formed an integral part of AOL's growth plans.

The Time Warner unit has an aggressive global expansion plan, and will launch more online services and portals over the next two years, Grant told Forbes.com. With subscriber numbers falling at its former core Internet service business, AOL is attempting to transition to ad–based free Web sites in high–growth markets.

"We plan to be one of the major providers of e–mail and instant messaging services in India," Grant said, adding that it will be in competition with Yahoo! and MSN's messenger services and Google. "India is one of the world’s fastest–growing online markets, and our India portal will help us compete for users and advertisers in this important region."

"We are going to be very aggressive in our rollout," Grant promised. "Over the next few months you'll see a series of launches internationally."

"This is a very important – I would say critical – market for us," Grant said. "India has the highest priority in our international business."

With a host of global tech majors and domestic companies expanding in India, Grant acknowledged that there is a high amount of competition for talent here. He said AOL's strategy to deal with that involved offering Indian employees the opportunity to go abroad.

"When you are in a competitive place, you offer your employees global opportunities. An AOL employee here has a chance to work at any of our offices," he said.

Google, Yahoo!, MSN and local web companies such as Rediff.com and sify.com already have a sizeable share of the Indian internet market which, Grant said, is still in its infancy and forecast will grow in the high double digits "for a number of years."

AOL will tie up with mobile–phone companies and also offer local content in Indian languages, he said.

"This is only the first step in our evolution," he said of launch of the AOL India portal.

The AOL India portal offers integrated e–mail, instant messenger, mobile services, video, sports and entertainment. The company has partnered with Google to provide Google search feature.

AOL e–mail services have features such as auto–remembering of mail ids, mail search based on the subject or calendar, among others. It is also packed with high security protection against viruses and industry–led spam blocking. The AOL messenger service comes with unique features such as offline messages, picture sharing, personalization, group messaging, and access to multiple e–mail IDs. A user can connect to a maximum of 1,000 buddies. AOL mobile will enable the users to receive mail on mobile devices and stay connected with the AOL messenger via SMS.

"By launching our new mail products in India, we are making a powerful statement about the importance of India to AOL and the online world. aol.in is our first portal launch outside of North America and Europe, and it shows how committed we are to this market for the long term," said Maneesh Dhir, executive vice president (International), AOL.

"As India's online world rapidly grows and matures, the needs of online consumers are quickly evolving," maintained Ponnapa. "We are building a portal to meet the needs of India's millions of online users. aol.in will have better e–mail, messaging, mobile services, videos and content."

In addition to the regular features, the AOL India portal offers users a wide range of content, including video and special channels dedicated to news, movies, Cricket, Hollywood, plus an online expert advice service called 'Guru' channel.

The portal will soon introduce mobile communication and an infotainment suite for WAP mail to access mails on mobile devices, and extend the messenger to devices such as SMS.

The Internet population in the United States has largely plateaued, with 70 percent of U.S. adults now online, according to the Pew Internet and American Life Project. Not surprisingly, AOL is banking on projections for rapid online growth in India. According to an estimate by Kaufman Brothers, the number of internet users in India, which stood at around 45 million in 2006, is set to reach 67 million in 2007 and 147 million by 2010.

In 2006, AOL's revenue was $7.9 billion and operating income before depreciation and amortization was $2.6 billion.

AOL, of which Google owns 5 percent, also has portals in the U.K., France, Germany, Austria and the Netherlands.