Business, Marketing, Technology

Mobile phone buyers in India – 2010 and beyond (Part 2)

(Last time, I wrote about the qualitative classification of Mobile phone buyers in India. This is a continuation of that post. )

Million households
Firstly, to give numbers to the last time’s classification – NCAER numbers of 2006 are as given in the chart above. The survey takes into account data for 209 mn households.

In the IPL, we have some interesting brandings happening already. Have you noticed the number of telecom companies + mobile phone companies advertising during the 45 day cricket extravaganza? I can count – Karbonn mobile, Micromax, Videocon, Nokia, Airtel, Vodafone, Idea, Reliance, Tata Docomo, Max mobile, Samsung, LG – basically the entire industry is present here in some or the other manner. That explains the mad scramble to get to the Indian eyeballs and grabbing some amount of market share.

So, where is this industry going ahead? If I were to identify top 3 potential game-changers in 2010, these (or a combination of these) would be my answers.

1. The mobile operator – As mobile phone buyers become more versatile and know what to expect from a mobile phone, they will make more and more informed choices- particularly, those in the Climbers class and above. In this context, the role of the operator will become increasingly important. For an aware mobile phone buyer, an attractive mobile phone package can act as an effective deterrent to the lure of the prepaid connection. That phone manufacturer+ operator combination which can crack this code the quickest will have some kind of first mover advantage in this aspect of the market.

2. Promotions – As the cost-feature mismatch between manufacturers reduces, Promotions and top-of-mind recall will be a differentiator in a major way. The huge ad-spends during IPL by every major mobile manufacturer indicate just that. Expect the bollywood and cricketing fraternity coming to your newspapers, TV screens, FM channels, roadside hoardings a lot more during the remaining quarters of 2010. Here’s another Zoozoo ad from the 2010 campaign. ( We had so many posts on the Zoozoo campaign on Strat.in last year – here’s one by Shubham )

3. 3G technology – when and if it happens! – This TOI article states that 3G auctions in India may happen in April 2010. I have been hearing about these dates for the past 18 months now, and would comment on these only when the auctions truly take place.

At the risk of digressing from the topic, I wish to quote Mr. Shyam Ponappa in an article about Spectrum management written during the budget week

India’s spectrum allocation is burdened with short-term revenue collection for the government, and a shortage mentality. There is apparently insufficient clarity on spectrum usage for ubiquitous broadband/telephony as in other countries, let alone more ambitious targets, such as developing an Indian standard.

Our policies could address the requirement for enhanced coverage/capacity at low cost to make services available everywhere at reasonable prices. Innovative approaches to spectrum management could help get these, through:

Technology-neutrality: the UK and Norway have not restricted the use of recently auctioned spectrum to any technology.

In the context of the mobile phone buyer, the 3G auction can lead to considerable changes in the buyer mindset. If the auctions of through, there can be significant shifts in the buying patterns of the feature conscious mobile buyers , particularly in the later part of the year. The auction can also be the trigger for the emergence of Apple and Android based phones to enter the Indian market in a big way.

To round it up, the market is a huge opportunity right now- the new entrants and the super-aggressive promotions happening all around are testimony to the above statement. 2010 may well be an year where (a) fragmentation can come into the market (b) mobile-buyers will increasingly become feature conscious (c) growth will come through the second time buyer.

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Business, Strategy

WiMAX – Coming soon to a network near you

One of the events that has been overshadowed somewhat is the proposed auction of WiMAX licenses along with the 3G license auction in a couple of months (hopefully!). Given the low internet penetration within the country, broadband technologies can go a long way in increasing the number of internet users. Of these, WiMAX holds a lot of promise especially to cater to the last mile customers in rural areas and relatively remote urban areas.

Speed is a critical factor while accessing the internet. Slow connections are a major reason for low usage, especially as sites get more data intensive. With video sites becoming popular and every other site having banner ads embedded, the need for speed is being felt even more acutely. Broadband is playing an important role in the country by bringing greater download speeds to the users. As such, the number of broadband subscribers have grown tremendously.

There are various technologies within broadband through which the internet can be accessed. DSL / Cable have been the dominant ones among these technologies upto now. However, these require laying down physical infrastructure to the last mile (i.e. copper wires upto each home). The wireless broadband options available are 3G and WiMAX. While 3G is relatively better for mobility, WiMAX has an edge in terms of speed. As such, 3G would be better used for internet access through mobiles, while WiMAX provides scope for residential and corporate internet access in areas which have been under served upto now.

With potential speeds ranging from a few hundred kbps to >64 Mbps, all kinds of applications (including the data intensive ones) can easily work on WiMAX. This technology also offers enough mobility providing good network within a 30-50km radius from the location of the physical infrastructure.

The critical success factors (CSFs) for WiMAX in the country would be:

1. Accessibility: Ability to reach under served areas and provide decent network quality

2. Affordability: Making the offering price competitive to other ways of internet access such as DSL

3. Content: Development of enough content for various types of customers

There are indications that companies such as Google are wanting to tie-up with some local players and offer WiMAX services in urban areas. Other players are looking at these auctions as a way to enter the India internet service provider market, that is expected to grow manifold in the next few years. Given this and the fact that government has shown high interest towards areas related to ICT (information, communication and  technology), the CSFs will be taken care of to an extent.

WiMAX licenses would be auctioned by the government two days after the 3G licenses. The details can be found in this document provided by the department of telecommunication. 28 companies have bought the tender documents and are expected to participate in the bidding. Two licenses are being auctioned per mobile circle of which one has already been allocated to MTNL or BSNL. So, essentially there is only one license per circle available to bid for.

The hope is that the process would go through without many controversies – and that WiMAX adoption would provide the necessary impetus to internet penetration within the country. It should not be long before one would be able to say “WiMAX running successfully all over the country”.

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Strategy, Technology

Impact of Converging communications media

An avid cricket fan, say Swami was watching the India-Pakistan cricket match in Mumbai at his office. Since it was a long weekend, he had to catch a flight to reach his home in Bangalore. So, he left the the small TV sets in office albeit reluctantly. But, Swami was keen to stay in touch with the scores all through. So, while he was waiting for a cab, he sent an SMS to an cricket-SMS channel about latest scores. In the car, he asked the driver to put on the live radio (and cursed his luck for not getting the FM mobile connector with him) Then, at the airport he enjoyed the match on a flat screen plasma TV. In the plane, he enjoyed live satellite TV (note: he had booked a KF flight knowing that there would be a match on) . Next, after alighting at Bangalore, he called up his friends, for expert commentary on phone – who in turn advised him to go to this new cool website on internet for live commentary. So, he checked the mobile internet on GPRS for the match. So, finally he reached home, where he quickly put on his LCD tv and logged onto the internet for a detailed scorecard as well! Clearly, Swami had not missed a moment of the match!!

cellphone-TVNotice something here? The service offered was essentially the same – ‘Providing Cricket Match updates’! But check the communications media used. Sounds incredible right? Well, I haven’t even brought the social networking aspect yet into the above scenario. Clearly, communications is evolving and fast!

The moot question in all of this is – how will this impact the society? Well, the answer is simple – the effects are already seen. Due to so many communications media available, news gets around extremely quickly. People are becoming more aware. Example: the recent floods in northern Karnataka, AP and southern Maharashtra. The news spread like wildfire. I am sure, these communications media can help in more ways than one in such crises (its another matter whether they are used already or not, but thats not the question here) On a global context, the relevant issue was on the Iran elections and how twitter was used to post updates about happenings in Iran then.

Given all this, what is the future of communications as a service? I am of the opinion that it will evolve as a service which can effectively cover all of these media and provide real time updates. It is this critical success factor which is making people in the USA gaga over the internet industry- twitter and facebook in particular. The concept of real time updates is here, and is here to stay.

In the Indian context, however, the media convergence is a few steps away, but not far off. While internet on the ‘computer’ may not get as popular as in the USA, but one device has the potential to reach most of the 100 crore population – ‘the mobile phone’. Many believe the convergence of media would happen on the cell phone. And in that context the 3G auction is going to be critical since the 3G spectrum allocation can truly place power in the hands of the users’ pockets. We are getting closer to communication media convergence for sure.

The point is, whether the end consumer accept this change? And are the telecom operators willing to see this as an opportunity? Even in the USA, Google voice as an application ran into trouble. How will the telecom industry as a whole react to this inevitable change? That would truly decide the pace of media convergence in India….

Comments, thoughts invited…

Right, so this Friday – 6 October, 9 pm to 1030 pm – Strat. In is hosting its first live chat. The subject is going to be CAT 2009. There will be 4-5 from among us at the chatroom –  . This group includes CAT 100 percentilers as well. Please let your friends know about this event on strat.in . Details about the same follow tonight.

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