Perhaps the biggest success in Estonian IT is Bluemoon Interactive, the company that designed FastTrack, the technology behind such file-sharing applications as KaZaA - despite recent disputes over the program's ownership and legality.
"KaZaA came to us with an opportunity to provide a technical solution to their idea," says Bluemoon cofounder, Jaan Tallinn. "With our background in producing video games, it was a challenge that we gladly took on."
"My first trip to Estonia was in 1999," says KaZaA cofounder Niklas Zennstrom. "I was impressed by this small yet extremely forward-thinking and progressive country."
Indeed, Estonia's size has worked to its advantage in this field. "As Estonia is a small country, it's much easier for its local companies and organizations to change their IT systems than it is for older multinational organizations," says Peter Priisalm, CEO of MicroLink Estonia.
Another Estonian IT company, Curonia Research, has pioneered a medical system called Doc@Home which allows the user to collect their medical data at home and send it via the Internet to their doctor. The company has received a million euros in funding from the European Commission, and is currently running pilot projects in Britain, Germany, Finland and Estonia.
The main function of Doc@Home is to prevent the need for hospitalization. However, as Curonia CEO Ardo Reinsalu admits, "Estonia is definitely not our target market. A day in hospital costs 20 euros in Estonia. That same day could cost 2,000 pounds in the U.K. The savings on hospital costs in Estonia are so low that our system would not be cost-effective here."
The latest IT trends have even started to influence the traditional field of Estonian agriculture. One farming company has recently adopted an electronic tagging system for dairy cattle.
"You go into the office at the end of the day, and the computer lets you know what every cow's done," the farm's manager says. "If you have a problem cow, the computer won't let you milk it. It's basically foolproof."
The world's first Internet banking services started in 1995. By the end of 1996, there were about 20 such services. Three of them were Estonian. Estonia's largest IT organization is the IT department of Hansabank.
"We've come from the Stone Age to the IT Age," says Hansabank's Olari Ilison. "Western banks are struggling with old systems which are difficult to upgrade and adapt to Internet banking, but we leapfrogged the mainframe era."
Ilison agrees that too great an emphasis on Internet banking poses problems. "Our number of branches is not decreasing any more - in fact, it's increasing again. You can't do everything over the Internet. And there are people who don't have access to the Internet - they still want cash!"
One of Hansabank's solutions has been to initiate the Look@World project, funded by private-sector sponsors, which has trained 102,697 people in Internet skills over the last two years. That's about 10 percent of the adult population of Estonia. Lithuania has started a similar project, and Latvia is planning one.
"When we started, the prime minister was Mart Laar," says project chairman Alar Ehandi. "He did a lot to support us. The current government is very much for the information society - in words - but they don't do so much. There are more people who want training. The private sector has invested nearly 3 million euros. Now it's the government's turn."
"E-government is not employed at the level it should be," says Mart Parve. "It's a kind of hype."
Tana Otsustan Mina (Today I Decide) - or just TOM - is a Web site on which Estonians can present proposals for legislation. If a proposal receives sufficient support, it is discussed by the government. Although the portal boasts 6,000 registered users, there are only 10 or 20 active members.
"Some famous freaks are trying to start new laws, but it's not working," says Parve. "We've been quite pessimistic about the state since Soviet times."
The portal is run by Tex Vertmann, who has served as communications adviser to Estonia's last three prime ministers - Mart Laar, Siim Kallas and Juhan Parts. "Mr. Laar was enthusiastic about e-services, e-democracy and e-society," Vertmann says. "Mr. Kallas and Mr. Parts are more focused on developing a knowledge-based society than on the e-thing. Electronic services must support the rest of development."
The TOM portal has led to a number of changes in Estonian law. The first was a proposal to put the clocks forward in the spring and back in the fall. But there have been others.
"Parliament had made a stupid change in the weapons law," Vertmann says. "Students and sportsmen couldn't carry swords or guns any more. The sportsmen and members of student fraternities proposed that they could carry their swords on the streets again. The law was amended."
There are plans to introduce online voting at next year's local elections. But won't these developments mean that the half of the population with Internet access will find it easier to exercise their democratic rights than the half without? "Theoretically, yes," Vertmann says.
Former government adviser Linnar Viik is widely credited as the visionary responsible for Estonia's e-society, but now he laments the fact that his country's youth seem uninterested in politics. "Why don't those people who have access to government influence want to use it? E-democracy doesn't have a real impact on the democratic process," says Viik.
"Politicians often think the Internet is just for computer freaks. They want you to join their party for your opinion to be heard. You shouldn't have to be a party member to have your opinion registered. I don't so much believe in representative democracy. I believe in participatory democracy.
"Democracy in Estonia is like a small child. I can compare it to my five-year-old son. He can talk, he knows some manners, he knows how to pee - but he's still learning. This technology is just a tool for teaching and learning and expressing yourself."