What next for Mid East Internet players?

The Internet revolution is barely three years' old in the Middle East, and largely missed out on the venture capital of the dot-com boom. But some niche players are beginning to emerge with valuable roles in the New Economy, and a few paper millionaires hide in the bright new offices of Dubai Internet City.

At present truly profitable enterprises are hard to find, but those with a market niche and high barriers to entry are starting to become apparent.

Info2cell, for example, now has more than 100,000 subscribers for its SMS breaking news service in the UAE, Kuwait, Jordan and Egypt. And in the 18 months since Italy's Acotel paid $4m for a 33% stake in the company, staff numbers have grown to 45 and $2.5m has been spent on technology.

By 2004 Info2cell expects to have 500,000 subscribers, and its in-house software gives the company an 18 month head start on any would-be rival.

Being first-to-the-market has always been reckoned to be a key to success on the Internet. AMEInfo was also the first to occupy the business information space in the Middle East, and now has a monthly user base of 700,000 and advertises on CNN International.

The barriers to entry are also much higher than in the early days. It would cost a fortune to establish a large web presence today, and few think the modest rewards, thus far, would justify such an investment.

Even Microsoft's joint venture portal with LinkdotNet of Egypt, MSNArabia, seems to have struggled since its launch last October. But then the timing of its launch, following September, 11th and the general advertising downturn have not been working in its favour. However, LinkdotNet has recently turned acquisitive, swapping its own shares for dot-coms in a rush to consolidate the local industry.

Quite what sort of Middle East Internet community will be left in a few years' time is not absolutely clear. It may be that the portals, such as Arabia.com, that are now living on venture capital will survive to experience better times for Internet advertising.

Or it may be that only the profitable niche players will still be in business, and that the regional portals disappear. However, pioneers like Info2Cell deserve recognition for establishing genuine New Economy services and will clearly reap a rich harvest in the future.

For mobile phone and Internet technology is here to stay, and those that can really harness the New Medium will do well.