Experiences of an American woman who was married to a Serb.

Sunday, September 2, 2007

Serbia's Internet Industry: Ready for Takeoff?

Depending on which source you research, the amount of Serbs who are online ranges from 16% to 27%. That's somewhere between 1 and 2.5 million people, which is not a a large universe to build an entire industry around.

I assume this figure includes people at work, but most white collar workers here are not online at the office yet. Example: although Radio Sombor has a Web site, the station's 20-person staff share about four PCs between all of them, and most of these are reportedly fairly old.

On the consumer front, from what I've seen of Internet cafes in Sombor at least, going online means you're a teenage boy who uses the Internet exclusively for game playing. A 14 year old girl, I met last week at the beauty salon that her mother manages, told me she'd like to do more on the Internet but she couldn't find any Web sites to visit aside from Google, B92 and Krstarica. She simply had no idea where else to navigate to.

Based on my admittedly brief time here, plus 13 years in the Internet industry in the US here's my analysis of Serbia's Internet potential.

On the down-side:

o You probably can't profit online in Serbia by exploiting a particular micro-niche, which has been the strategy of many US Netpreneurs, especially the AdSense publisher crowd, because the whole country is a niche in and of itself. Anything you launch has to be of wide interest, or cost you so little in time and effort it's worth doing even though the payoff may be small.

o Extreme convenience and time saving -- which are the raison d'etre of many ecommerce, Web conferencing and other online services in the US -- may not be very compelling here either. The overwhelming majority of Serbs online are concentrated in just two cities, Belgrade and Novi Sad. So, they already have ready in-person access to (a) each other and (b) the best stocked stores the country has to offer. And, for now at least, they're not time stressed the way Americans tend to be. It's a more relaxed life.

o Serbia's not ready for video which is where the big bucks are headed in US Internet services and advertising. I pay extra for the best bandwidth you can buy from the cable company in Sombor, and video is very slow and jerky. It takes 4 hours to download a one-house low rez TV show from iTunes.

o Ecommerce security may be still a very real problem. The vast influx of banks to Serbia in the past three years means a lot more people have credit cards. However they are not protected by some of the laws and customer service traditions Americans have. If someone steals your card number online and starts charging, you probably have to pay even though it's not your fault. Everyone I know in the Net world here has been saying ecommerce will take off when PayPal at long last comes to Serbia. Unfortunately, PayPal doesn't appear to be on the horizon.

On the good side for the Serbian Internet industry:

o Recently the government slashed the VAT (purchase taxes) on PCs from 18% to less than half that amount. And, close to 42% of Serbian households have cable TV, so they might be upsold to Web if they don't have it already. (However, even $20 a month which many US households pay for Internet, is going to be too high here to entice the broad use the Web needs to take off in a big way.)

o Diners Club and Mastercard have reportedly announced Serb ecommerce-enabling initiatives in the past couple of months. This could be huge, even if PayPal takes their slow sweet time getting here.

o Web development professionals here are already getting plenty of practice by doing loads of freelance projects for clients outside Serbia. In fact, they routinely beat bids from teams in India because Serb prices are often a bit lower. You'd be surprised to learn how many Web sites for British small and mid-sized businesses are built and maintained by Serbian firms such as Program In who are based in Novi Sad.

o Serb programmers are unusually well-rounded. If you attend university to become a programmer here, your classes concentrate solely on that topic (no liberal arts extras, Serbian universities assume you got all that stuff in high school.) To graduate, you have to learn at least six, and sometimes ten or more programming languages fluently. This is exceptional brain preparation for an Internet world where new programs and applications are invented frequently. These guys are not paralyzed by over-specialization.

o 90% of adult Serbs have cell phones, and I can tell you most teens do too. Just like their peers all over the world, those teens are driving their parents nuts by text messaging all times of the day and night. Plus, according to my step-daughter, a fancy new cell phone is a MUST-HAVE for showing off affluence here. Younger consumers will scrimp like crazy on every other expenditure but lay out the big Dinars on new cell phones. If your cell phone is a year or two old, even if it works perfectly well, your friends will start thinking you have no dash and no dosh.

So, as the whole mobile Internet confluence gains strength, Serbia may end up going online through their cell phones. I bet the whole space will be transformed in the next 24 months.


Dejan Bizinger said...

Excellent analysis of Serbian IT/Internet market! I will have some comments

1) For the first thing, you are right and not. You said very nice that "the whole country is a niche in and of itself". However, you can make some profit (and it can be a nice one) even if you make a niche web site for Serbia. Food delivery web 2.0 service Donesi.com is prooving that, or money from advertising on specialized web sites like Putovanja.info or Mobilnisvet.com

2) Many people are interested in e-commerce or web conferencing services even as you many people live in Belgrade and Novi Sad (BTW. Nis is the 2nd largest city in Serbia) Yes, there are many hypermarkets in Belgrade in Novi Sad but I would like not to waste my time there and to get everything I want with home delivery and to buy online. There is that service on www.maxi.co.yu, Pakom.com is IT web shop and soon we will have some good general e-shops If we speak about web conference, friend of mine is director of EDGE which helds webinars (I recently had my 2nd webinar there) and he has a very good solution and people are interested to watch the webinars.

3) Speaking about video, you are right. Majority (around 70% users) are still dialup users, many people don't have technical conditions to have a broadband yet. However, there are some estimate number that by 2010 Serbia will have 1 million ADSL users and even more with cable and wireless. You can see the first video podcasting in Serbia (I'm the co-founder) http://www.razgovori.com

4) You are right for the education of IT professionals or any other professionals. IT or business professionals don't learn liberal arts but we can learn some other irrelevant things.

Danica Radovanovic said...

Very accurate empiric observations, but before all eBusiness, video, radio podcasts, not to mention implementation of web 2.0 services in broader sense, Serbia would need to pass through very good digital literacy 'course', in rising the awareness and information literacy level in whole country.
In my master paper two years ago, I have researched and coped with those issues, and one of the ways for overcoming the passivity is:
-first to get IT equipment into educational organizations (academia, schools)as well into business and governmental institutions (joke of promised e-signature three years ago)

and then
-with strategic planning and educational and information actions through classes, courses, seminars, conferences (for business organizations) and other programs of E-Animation that can motivate those people to start to use facilities of IT/Internet market.

There is lot of to talk about this topic, thanks for mentioning it.

Keep on good blogging!

Mr.Smith said...

Right on a dot...Trying to transfer my e-enterprise to Serbia, to no avail so far. Three major problems, as you have already noticed - slow Internet speed, relative lack of e-commerce security, and, above all, no practical way to e-transfer the payments from abroad. Hopefully, this will change soon (Paypal not getting brownie points for this at all).

Dellionity said...

You got it, if not all, then at least 90% right. Your analysis is quite correct (especially that "cell phone" thing :)) However, I am the living proof that internet can be profitable here; although I am underage (i'm 17), I earn approx. 130$ per month from AdSense. Guess what? I paid nothing for hosting and domain. I have two sites, both of them hosted on my not-so-good friend's server, who offered me sponsored hosting. And plus, my parents support me (by giving me food :P)

Anyway, excellent blog.
Kindly visit my site, about AdSense tips:

Peregrine said...

Gaah PayPal. They operate in Sierra Leone; what could possibly be more difficult about the Serbian market?
What do you think explains their continued absence?