Videocon Infotech (VTech), a division of the flagship company Videocon International, along with California-based Telecruz Inc, has developed a chip that can be embedded either into a set top boxes (STB) or an Internet television (iTV). The chip has enabled the development of new protocol technology ie, Television Application Protocol (TAP).

The company will be the pioneer of TAP devices and services in India. "We hope to bring about a massive explosion in home Internet subscribers and users in India through TAP," said Videocon group chairman Venugopal DhootThe group has a specific business model. First, they plan to manufacture iTV sets, STB and increase penetration of Internet in homes. Then they plan to become an ISP and bundle it with iTVs and STBs.

By providing both the product and the service, they will cover the full value chain for the customer. The company is also exploring the possibility of moving up the value chain by offering ASP services. Videocon is planning to launch its portal, `HelloVonline' by April this year.

The company will then tie-up with various e-commerce service providers to do t-commerce.

Following the above blueprint, VTech has already launched iTV sets in December 2000 and is planning to launch STBs soon. These devices will drive Internet access to the home user by making it affordable. TAP shall evolve as a comprehensive solution to offer Internet connectivity, as well as t-commerce to the home user.

The penetration of iTVs is around 5,000 units at present and Mr Dhoot expects it to rise to 50,000 units in another three months and around 9 units lakhs by 2005. The expected turnover from the sales of iTVs and STBs is expected to rise from Rs 163 crore in 2001 to Rs 910 crore in 2004.

Revenues from other IT related business like ISP, advertisements and t-commerce is expected to rise from around Rs 15 crore to Rs 285 crore during the same period. Starting with a nominal cash profit of Rs 1 crore in 2000, the company expects to generate a post tax cash profit of Rs 430 crore in 2004. Overhead expenditure is likely to rise from Rs 22 crore in 2000 to around Rs 210 crore in 2004.

Next, VTech will launch a major marketing drive and the initiatives will include direct as well as channel sales. Seminars and conferences will be held to popularise TAP. Local publications, personalised e-mail campaigns, Internet marketing, trade shows are other tools the company plans to use. Costs on all these marketing activities will rise from Rs 7 crore to Rs 82 crore between 2000 and 2004.