interesting article from wsj.... i am sure hawaii will loan you the crystal ball (must insure), his brain (keep in mind this is the braintrust, so please do not shake), anything you need...and based on the apathy of the board, idtc rallies tomorrow and wakes the dead.
StarMedia Battles Pack of New Rivals
For Region's Booming Internet Market
Associated Press
August 17, 1999
BOGOTA, Colombia -- Shaking with techno-music and shimmering in splashy colors, Bogota's year-old WebCafe serves up pricey sandwiches and cheap Internet time, and Lucho Sabogal is master of the machines.
A 23-year-old computer science student who helps cafe visitors navigate cyberspace, Sabogal recently discovered StarMedia Network Inc. -- a much-ballyhooed startup company that is bent on dominating one of the Internet's fastest-growing markets.
StarMedia's Loss Grows, but Results Beat Forecasts (July 29)
Latin American Web Start-Ups Lure U.S. Backers, Investors (July 26)
StarMedia to Launch Package for Region in Mexico, Brazil (July 1)
"I like it. It's the biggest Internet community for Latin Americans -- it's true," he says, sounding like one of the company's ubiquitous billboards and TV and radio ads across the largely Spanish-speaking region.
Latin Americans are hopping online at a dizzying rate. Analysts expect the region's number of Internet users to rise nearly fourfold to 19 million over the next 3 1/2 years.
StarMedia, founded by a young Uruguayan entrepreneur, aims to grab them with a Spanish and Portuguese cyberspace "portal" similar to popular services like Yahoo and AltaVista, both in English. So far, the company leads an increasingly crowded pack of competitors in wooing the region's computer-savvy residents with native-tongue services.
But despite the praise from Mr. Sabogal, who spends 35 hours a week online and uses StarMedia for e-mail, chats, games and news, he also illustrates the obstacles facing the growth of the Internet in Spanish.
His English is limited, but that doesn't stop him from more frequently using the very English-language sites StarMedia emulates. He trusts those established services, even if he misses a word here or there.
Nelson Franco, a 32-year-old chemical engineer visiting the cafe, says his English is also pretty rough. Still, the only thing he reads online in Spanish are local newspapers.
"It doesn't make any sense to use the Internet in Spanish. English is the universal language," Mr. Franco says. "And, what you find in English is more current."
StarMedia's 32-year-old chief executive, Fernando Espuelas, has his work cut out for him in attracting the allegiance of "wired" Latin Americans.
According to StarMedia's figures, only 2% to 5% of all Web pages are in Spanish. It is that corner of the Internet that StarMedia users access when they browse the site's many topical channels -- including news, sports, money, travel and shopping.
Latin America's vast wealth inequalities could be the key variable affecting the long-term growth of native-language online services. Most Net-savvy Latin Americans belong to an affluent minority that speaks some English and can afford home computers.
But Mr. Espuelas is betting that as computer prices drop and access in public schools rises, more people outside the upper crust -- many with no knowledge of English -- will get online and need a service like StarMedia.
Another snag could be Latin America's dearth of phones lines -- just 10 per 100 people, compared to 64 per 100 in the United States. Even if more of the region's 500 million people had computers, most would have no way to connect.
Despite the obstacles, StarMedia is buzzing with optimism -- and flush with cash. The company's initial public stock offering in the U.S. over-the-counter market May 26 brought it $105 million in operating capital. The stock seesawed up from $15 a share to a peak of $70 on July 1, but is now trading in the low $30s.
"The Internet has the potential to unify Latin America, to bring people back together again," said Mr. Espuelas, recently named one of the region's "Leaders for the New Millennium" in Time magazine's international edition.
Beyond Latin America, the company is counting on picking up users in Spain and among the rapidly growing Latino community in the United States.
On July 21, StarMedia announced it had acquired one of the largest Spanish-language services on the Net, Barcelona-based LatinRed. The company has also purchased would-be rivals this year in Brazil and Chile.
Colombia had an estimated 350,000 Internet users at the end of last year -- about 1% of the population -- but the number is expected to grow by 50% this year, according the Framingham, Mass.-based International Data Corp.
IDC forecasts similar growth rates throughout the region, predicting somewhat faster increases in Chile, Argentina and Mexico and slower growth in Brazil.
StarMedia isn't alone in the market. Among its competitors: a joint venture of America Online Inc. and Venezuela's Cisneros Group, an alliance between Prodigy Communications and the Mexican phone company Telmex, and the U.S. portal Yahoo! Inc., which offers a Spanish version.
But analysts say StarMedia, with its financial war chest and existing operations in seven Latin American countries, has a strong hand.
"There's nothing that can stop StarMedia," said Jason Calacanis, editor of the trade paper Silicon Alley Reporter. "They can become a superbrand like Coke or Disney." |
