This event was organized by the OpenWeb.Asia Workgroup and prominent entrepreneurs and bloggers within Asia's web industry.

While a good local startup in a European country can soon go international, having users from Europe and the United States, in Asia language is the top issue. Attracting users from neighbouring countries is difficult.

Each local web market in Asia is potentially huge, but these markets are still restricted and the global audience still lacks communication channels to understand the Asia web. Social networks are very popular in China. The mobile market is fascinating in Japan. Online gaming originated from and is still driven by Korea.

The India and Singapore markets could be easier entries for English-only service. Local markets like Vietnam are still quiet, but will be a battlefield for big names from China, Korea and Japan when ready for expanding. 

Social Web is Theme

Spurred by a desire to create a high-quality, informative and practical technology conference focused on the Asian Internet industry, Open Web Asia '08 was organized with 'The Social Web' as its theme.

Socialization has been a game-changing development on the Internet, and the social web is an area where Asia has its own strength and vibrancy. Asian countries have a distinct Internet culture and market players, so cross-country comparisons can be made.

Topics expected to be discussed at Open Web Asia '08 include: 1) How the Asia web sees trends in the global Internet industry; 2) The innovations in Asia's web; 3) The mobile and online gaming markets; 4) What are the challenges of internationalizing an Internet business to and from Asia?

Open Web Asia '08 provides a stage where leaders Kim James Woo (CEO, Yahoo Korea), Kevin Day (CEO, Comsenz China), Yoonjoon Hyoung (founder of Cyworld, Korea), Shusaku Maruko (corporate strategy, Felica, Japan) can share their insights with Western experts and entrepreneurs such as Loic Le Meur (CEO, Seesmic) and Kent Lindstrom (SVP, Friendster).

In association with one of the most prestigious conferences in Asia, World Knowledge Forum, the event will be held on October 14, 2008 in Seoul, Korea. For more information, go to the official web site.

It's Open Season

'Open' is one of the hottest words right now in the Asia web. Google is focusing on Asian markets and promoting its open strategies. Sohu has localized Netvibes' UWA. Yiqi was the first Chinese open platform fully supporting OpenSocial.

IDtail brought OpenSocial to Korea, and Mixi said yes the day OpenSocial was announced. Comsenz has developed its own ManYou Open Platform (MYOP) to target the China market.

With many open platforms announced and imminent, China and the Asia web need to assess how to monetize the Open web and prepare for the widget economy. Though the global Internet industry is still dominated by Western giants, opening up Asia will benefit both the regional and global Internet industries.

Adobe Launches Online Office Suite and New Flash-Enabled Acrobat 9

Back in March, we said that Adobe was slowly building an online empire. This week, that news turned out to be true. Adobe launched their version of an online office suite at Acrobat.com, complete with word processor (Buzzword), web conferencing/whiteboard app (ConnectNow), online file sharing (Share), file storage, (My Files), and PDF converter. To complement this launch, Adobe also announced a brand-new version of Adobe Acrobat, Acrobat 9, the biggest release since the initial one that introduced Acrobat to the world. The remarkable change in this new version is that Adobe is now incorporating Flash into the PDF experience.

Trouble at eBay

"I think [fixed prices] will disappear online, simply because it is possible - cheap and easy - to vary prices online." That was MIT Media Lab's Patti Maes in 1999, at a time when eBay's business was booming and auctions were seen as the future of ecommerce. Flash forward 9 years, and BusinessWeek this week called online auctions a dying breed, Nick Carr is wondering if auctions were a fad. Indeed, the fixed price ("Buy it Now" only) format is beginning to dominate eBay, and the company has taken recent steps push fixed price even harder. But the death knell of the online auction format is not eBay's biggest problem -- no, that would be the small exodus of sellers from the site.

Yahoo! Pushes Search Results Customization to Users

Yahoo!'s SearchMonkey platform got a little more public this week with the unveiling of the Search Gallery -- the platform's official application repository. The gallery has already been open to developers and curious bloggers for a couple of weeks, but Yahoo! is now pushing it to the public at large via a "Customize" drop down menu on all search results. In addition, starting this week developers can share applications via external links even if they haven't yet been approved for inclusion in the official gallery.

6 Great Tools to Save Links for Later

Unfortunately, there just aren't enough hours in the day. This seems to be especially true when you take on a lot of projects. Between blogging, researching, emailing, and real life, reading all of your feeds isn't something we can do all the time. Sometimes, we see something that we'd love to save it for later without cluttering up our bookmarks. Here are 6 tools to get the job done.

See also: RSS Reset: Dump Your Feeds for a Month

SEE MORE WEB PRODUCTS COVERAGE IN OUR PRODUCTS CATEGORY

Web Trends

OpenWeb Asia: Opening the Asian Web to the World

Everyone working on the web around the world would like to connect with people in Asia, but it's not easy to do. That dynamic and populous region is often focused inward and it's made inaccessible to outsiders because there is so little information about what goes on there available in the web's dominant language, English. OpenWeb Asia is a new project that aims to change those trends.

See also: C-Shirt: Remixable T-shirts by Mobile Phone and Nico Nico Douga and the Simulation of Real Time (two Japanese web apps that Marshall checked out during his recent trip to Japan)

I.T. 2.0: How Changing Technology is Having Big Impacts on Business

In case you haven't heard yet - the I.T. world is changing. The rise of social computing technologies, generally branded as "Web 2.0" and including things like wikis, blogs, social networking, RSS, and more are slowly making their way into the business world. This new movement is called Enterprise 2.0, and it's no small shift. They're even having a conference about it next week. But the change encompasses more than just the introduction of new, social software into the formerly stodgy business world - it also includes the movement of server software from in-house data centers to the cloud, the rise of a mobile workforce, the rebirth of thin client computing, a self-provisioning user base, and more.

See also: Introducing the Enterprise 2.0 Launch Pad Finalists

The Numbers Are In, Live Video Online Is Blowing Up

Live video broadcasting service Ustream.tv announced this week that live feeds on the company's website and distributed video players got a combined 10 million unique viewers last month. That's a major validation of live streaming video on the web. When YouTube Live launches later this year, this medium is only going to get bigger.

See also: Watch Out TV: YouTube is Taking Over

Survey: 48% of Bank Customers Want Web 2.0 Gadgets

WorkLight, a startup that offers enterprise 2.0 products, recently did a survey among Facebook users to find out their willingness to use Web 2.0 tools for secure banking. The survey was conducted among 1000 Facebook users between the ages of 18-34. The fact that the survey was conducted among Facebook users gives it a bias towards tech-savvy people. However there are some surprising findings.

SEE MORE WEB TRENDS COVERAGE IN OUR TRENDS CATEGORY

That's a wrap for another week! Enjoy your weekend everyone.

A | It is interesting to see that Facebook has almost no presence in the three markets we cover: China, South Korea and Japan. In China, QQ dominates by far with 300 million active accounts, Cyworld has close to 20 million in South Korea while Mixi has 14 million in Japan.

Q | Those are pretty big figures for subscribers. Even so, Facebook has a good portion of them globally and is losing money. Are the Asia social networks making money?

A | One thing to keep in mind is the addressable population: QQ only deals with China, Cyworld addresses seriously only Korea, Mixi is only in Japan. Corresponding penetration rate among Internet users are: 150% for QQ, 57% for Cyworld, 15% for Mixi. It becomes even more interesting when realizing all three are largely profitable. Notably, QQ had 523 million USD in revenues in 2007 and 224 million operating profit, with only 13% coming from advertising! This is more than Facebook's total revenues. Moreover, Facebook was still losing money last year (and likely this year).

Q | How do those services manage to turn such profit?

A | QQ and Cyworld make most of their money from digital goods - from background music to personalization, avatars or casual games. The introduction of an online currency supported by a variety of payment systems has helped lower the payment and monetization barriers dramatically.

Q | Are digital goods the next big thing?

A | It is certainly a great way to monetize a community. The West has been slow at catching up but digital goods are a proven monetization method on the Internet almost since Cyworld launched in Korea in 1999. Casual games are also a great money maker: imagine users were offered attractive high-quality Facebook applications for 10 cents. Many would pay, but today they have no way to.

Q | If it has been around for so long, why is it coming so late to US and Europe?

A | We see two main reasons: first, the West is not looking closely at Asia. When it does look, local successes are usually stereotyped, which prevents deeper understanding. Some great services like Naver's Q&A (which was Yahoo Answers' inspiration) were created there, mainly because the US do not have the lead anymore in Internet infrastructure, so local talent managed to come up with great new ideas. Second, most non-US markets have not developed a very rich online advertising market, and had no choice but to find alternative revenue models. In a way, the rich online ad market has been holding back innovation in the US, and forced most Internet companies to design their service around pageview as a main metric.

Q | Is that a problem?

A | It can be, as the focus becomes to generate more pageviews, not make the service better. Users are mere "eyeballs", while the real clients are advertisers. The revenue mix defines the service DNA. We even came up with a new metric: ARFU for "Average Revenue From Users" (rather than per user, for ARPU). With this in mind, ARFU for Facebook is almost zero, while ARFU for QQ is 87% Internet + mobile combined.

Q | What are the key lessons from those successful services?

A | First, that users are willing to pay for services - even in China! Second, several companies in Asia have already solved a number of headaches on how to make it work and can help save a lot of time by adapting their best practices. Third, that the main barrier is the persistent bias that all US stuff is great, while Asia just copies. I don't think QQ will make a bid on Facebook but there might be a need for a strong eye opener to realize that inspired by the West, Asia has made incredible advances that can now help us in return.

Q | Are those companies trying to enter foreign markets? Cyworld just pulled out of Europe and is not doing too well in the US either.

A | Cyworld tried China, US, Europe and Taiwan. Mixi is trying China. QQ has entered US via a content partnership with AOL on casual games. In most cases, they do not do too well as they send or hire managers and not entrepreneurs. Also, they often face tough competition from incumbent players while they dominate their home market. So they have less market acumen, less hunger and face a difficult timing. Those are the same reason why Facebook and MySpace are weak in those key Asian markets. That being said, the fact that they are not able to succeed themselves does not invalidate their concepts and business models. For instance, Xiaonei in China applied the early Facebook model (alumni) and is doing very well in terms of users. Who would say Facebook is not good even if they fail in Asia? The key is to focus on service concepts and business models, rather than on how well the companies execute them out of their home market. As for Cyworld, it is important to notice that the foreign versions are very dumbed-down compared to Korea's, where they enjoy a mature payment infrastructure and digital goods culture. If so many million people use the service, there must be something to learn.

Thanks Benjamin! Here now is his Media 08 presentation:

Note: +8* is offering free samples of their research on both QQ and Cyworld at www.plus8star.com. Also see ReadWriteWeb's review of QQ last year.

Firstly there were some interesting factoids about Firefox market share. Firefox now has almost 28% market share in Eurpoe, 16-17% in US, and lower market shares in Asia -- it's 16.5% according to a recent post on Mozilla Links. See graphs below:

Kanai said that Mozilla is "seeing a lot of growth in China", after opening their China office last year (it's being run by the former leader of MSN at Microsoft China). In Japan, Kanai said, there are more mobile users of the Internet than PC users, so it is a unique market for them. It currently has a 10-12% market share in Japan.

Mozilla structure in Asia

In Korea, Kanai told an interesting story about how the market for Firefox has been restricted by Korean govenment encyrption protocols, which make people use Windows and Internet Explorer! So Microsoft has a "de-facto monopoly" in Korea in the browser space.

Kanai then addressed the question of how strong the open source movement is in Asia, a topic recently explored by Victoria Ho on ZDNet Asia and by Mat Asay on CNET. The story so far is that Asia corporations are using open source, but (it's claimed) are not giving back to the open source community. Linux founder Linus Torvalds recently said that the barriers are: culture (possibly the largest barrier), language, education. Kanai has more details on his blog.

Kanai believes there is actually a lot of participation in open source in Asia; he cited the Ruby language, which was developed in Japan by Yukihiro Matsumoto. However he acknowledged that cultural and language barriers are significant - e.g. he thinks the open source community in the West can be very forthright in their opinions, which is a cultural thing that open source developers in the East may not like. He also cited economic factors.

Here is the video presentation:

1. A large domestic market
2. Access to intellectual capital
3. Reliable, low cost telecommunications
4. A culture that rewards innovation and risk taking
5. A well developed venture capital industry

Against these 5 Aces, India had only one good card, which was low cost labor. It is interesting to revisit these 5 Aces ten years later in 2007 (well, 2008 now!) and see what it means for the state of innovation in India. In short, India is looking a lot better:

However, despite all these advantages and despite thousands of developers in India creating value for Western companies, where is India’s killer app? Where is the Microsoft or Google from India? Or being slightly less ambitious where is the Salesforce.com or YouTube from India?

Why does this matter for India? Look at the market cap of Google ($218 billion) vs Infosys ($24 billion). This is not bubble valuation. Both have similar and reasonably valued PEG (Price Earnings Growth ratio, the only rational way I know to compare two valuations) with INFY at 0.81 and GOOG at 1.30. Google has over 9x the value and is about 15 years younger.

When you read the Google story, you won’t see anything created in a Stanford dorm room that could not have been created in an IIT dorm room. What is really wild is that the barriers have come down even further since Google came to market.

The fundamental issue in India is the risk/reward equation. It is simply too easy for a young developer in India to get paid a lot by an outsourcing firm; then enjoy being headhunted every year for more money. Those of us old enough to see a cycle or two, can see the parallels between Silicon Valley 1999 and Bangalore 2007, when just being able to spell the words of a popular programming language on a Resume meant fame and fortune. It is possible that when this comes back to some reality the motivation to innovate will come to young Indian developers (yes young; breakthrough technical innovation tends to come from people under 30).

This has been the story for some time but it is changing fast right now and we maybe reaching a tipping point related to innovation in India. Three factors are rapidly narrowing the labor cost arbitrage – weaker dollar, rampant salary inflation in India and new technology that significantly reduces the amount of code that needs to be written.

At the same time, VCs are looking entrepreneurs in the eye and telling them that capital is not a constraint but that you had better find a way to get sustainable advantage and scalability that is not tied to linear growth in headcount.

Innovation is happening today in India. You won’t see a lot of it as yet as the interesting ventures are still fairly small and below the radar. But it is happening.

Today’s successful (meaning currently lucrative) innovation in India tends to be at the process and business level. These companies use technology extensively, they are technology driven and enabled, but the technology innovation is more incremental than disruptive and still uses lower cost labor as a core advantage. There are four interesting types of new ventures in India:

1. Leveraged services models. This is where most “next generation BPO” is headed and most niche software services vendors now innovate around a proprietary framework of some kind. These ventures use proprietary technology and other innovation to do transformational change for clients rather than simple offshoring of existing processes. They are being created by teams with deep domain expertise that use India for execution, as opposed to Indian services firms that look for markets that need lots of people. This is “the industrialization of office work”, wringing lots of little process efficiencies through reengineering. It is similar to what Japan did with “Kaizen” continuous improvement to manufacturing in the 1960’s. It is less glamorous than radical, disruptive innovation but it can be hugely effective, creating great value for both client and vendor.
2. Direct to consumer phone and online services. This is very new. These services use new technology, but the real innovation is in process, training and branding. It is a dramatic departure from the old services model that relied on selling through large Western firms. Three examples are GetFriday, iYogi and TutorVista. Direct to consumer services have been enabled by the Internet, specifically Google search engine marketing which is a phenomenally cost effective way for a start-up (that has the right proposition and knows how to properly leverage SEM) to reach global markets. Indian direct to consumer services fill a nice gap left by US ventures that assume that an entirely self-service online strategy will meet the need; this maybe true in some markets and demographics but there are many markets and demographics where a person on the end of the phone is still needed for at least some of the service.
3. Concept arbitrage/localization. This is popular with VCs as they globalize as the deal is simple to understand. For example, when eBay was first getting traction in the USA they were years away from looking at foreign markets, so there was plenty of time in many markets to copy the basic idea and add in a few twists to appeal to local tastes. When the originator has won in the USA they use IPO cash/equity to buy up the local players, which is a good result for all. There is less easy money in these deals now as Web 2.0 start-ups either need less localization, or they figure out those issues upfront, leaving less time for a local clone to get traction. This requires more innovation to build features that really make a difference in India and other Asian countries that could later enable a global rollout. One area for innovation is wireless as America is so far behind Asia in wireless. Most of these won’t get much visibility in the West as that is not a target. One success, riding the booming jobs market, is Naukri (India’s answer to Monster).
4. Cheap clone/selling to bottom of pyramid. Clones dramatically under-price Western products based on lower cost R&D and volume. There have been attempts to do this in software, but open source has taken the bottom out of this game in most segments. With excellent execution there is sometimes room for a “better faster cheaper” fast follower play if the software is delivered as a service and does not require corporate approval to get traction. Zoho is a good example of great execution on a crowded field. The much more interesting play is for real world products that need to be substantially cheaper for the Indian market. Pre the 1991 liberalization of the Indian economy this was derided by economists as “import substitution”, flying in the face of free trade economics. However now it has a new lease of life as “selling to the base of the pyramid”, delivering products to the 4 billion people who are not currently in the consumer market. Generic pharmaceuticals are already a success story. Another example might be a Fetal Heart Monitor, the most basic bit of medical equipment. If a robust product was offered at half the price or less of Western products more rural clinics in India could buy it; would this also later find a market in the West? The standout for me is Novatium, who are really making the sub $100 laptop a reality without any subsidies. Don’t expect to see them in the West any time soon, their market in India is plenty big enough!

Many people would not see these as innovation. They are not seen as classic “killer apps” and disruptive innovation along the lines of eBay or Google. In this view, truly great innovation should be totally independent of the cheap labor advantage or market localization.

There is no reason this type of innovation cannot come from India but also no reason that it should; the innovation spark is totally location independent today. This could come out of an IIT dorm room, or indeed any room anywhere in the world.

India needs to find work for a massive labor force that grows every year. So the Western ideal of a huge business with minimal employees is not the ideal for India. The great Indian success stories will probably still leverage the talent for organizing large numbers of people toward a common goal.

In trying to come up with a top 3 list of great entrepreneurial ventures, I found it easy to come up with two that are very much real world:

• Jet Airways. If you think it is impossible to build a truly great airline that is a pleasure to travel in whether it is Coach or Business, fly Jet. Doing that in India where infrastructure is weak is a phenomenal achievement.
• Bharti Mobile. They rewrote the rules on growth by outsourcing everything non-core and became possibly the best Private Equity return ever.

I also find it easy to think of old, large companies that are innovating like crazy – Reliance, ICICI and Tata Motors come to mind; break dancing elephants, wow!

The achievement of the SWITCH (Satyam, Wipro, Infosys, TCS, HCL) is not to be denied; great value creation for investors, clients and employees.

The best shot at a software product breakthrough looks like Zoho. (On a strict definition maybe they should be excluded as their head office is in America but I think that is nit-picking). They could give Microsoft and Google a run for their money in the web office space. The new and highly controversial Live Documents may not strike one as technology innovation but it is certainly a big ballsy move.

The one that will make the biggest difference in my opinion is Novatium; they really bring the web to millions of the poor and without any subsidy.

Conclusion, wow what a lot of change in 10 years! The momentum looks set to make the next 10 years even more dramatic.

What really great innovation have you seen from India? What do you expect to see in the future?

Image of Innovation Center of Infosys in Bangalore, by ianus via Flickr