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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Marketing, Strategy

Making Money with Open Source !

Making Money with Open Source

Making Money with Open Source

Almost all the discussions about open source lead to the all important question – if your software is open and up for grabs for free – how the hell are you going to make money ?

There are 2 entities here, the ones who write the original software  and put it up as open source (‘original company’) and the ones who take it, reuse it and deploy (lets call these ‘parasite company’). The case of the latter is easy to understand- why reinvent the wheel, if someone is just giving it to you, take it, polish it and sell it. So we will consider entity 1 here. Lets try and see.

So you come up with this great idea, find a loophole in the market, or just have a super enhanced version of some existing concept and you decide to make a software solution. After toiling hard and working with great passion, you build your product. Lets say you spent about $20,000 building it. Lets see how going open source is going to help you make money, both in terms of saving of essential investments and actually generating revenue.

Marketing : Once you have decided to go open, you give away your code for free download, have it for a free download on your product website, blog about it like mad and post about it in every possible place you can. You start attracting some developer community attention – obviously its free and no one has anything to loose to download and see what you have done. It’s amazing how the word FREE has a specific magnetic effect on your mind no matter where you see it. Anyways, so people start downloading the software and messing around. To your surprise, the software starts reaching customers who would have never have even considered or even come to know about it. Here comes the most important point about going open – you need a software that is seriously good – because it is naked out there, a ‘just good enough’ software will never attract developers and downloads. You didn’t spend a penny and your software is already going places by harnessing the power of open source to market itself. This much about saving on money (for marketing and advertising) – now about actually making some-

Service : You then put up pages on your website about a complete installation suite(1st source) – a preinstalled OS, DB, App Server and your free application over that and offer it for some price, say $5000. You can now officially use – free, open source, $0 only to attract all the attention you want. There is a good chance that a lot of prospects considering your software will go for you as, of all the parasites thriving on your software, you yourself are obviously the most reliable one. Next comes your customization : Many of the users who consider going in for your free software, would need some arrangements to suit their own needs and since the idea of getting the software for free has already gotten them excited, they would not mind shelling out something like a $100/hour for customization(source 2). And once you have gotten your customer – you always have the enhancements @ may be $150/hour which becomes our 3rd source.

Support : By now, with some amount of downloads and some community focus on your software, you would probably have an active support and knowledgebase on your site. Its obviously free until now. But now onwards, you start charging for a support package selling support on case basis or a monthly or yearly basis(Say $100/month). Consultants depending on your software and serving customers will not mind paying you for all genuine support. Every programmer has their style of coding that other coders dont understand and trust me, even if its open- tones will need support which is our 4th source.

Demoware Open Source : This is a somewhat debated but definitely a very effective way. Give a really basic, almost commercially non usable version of the software as complete open source. And have a professional and enterprise paid edition over it(Say $500 and $900 respectively). The lowest version suffices the basic needs, but people are stuck up during critical customer custom deployments and have to upgrade. Sugar CRM does this. But attracts a lot of criticism for marketing itself as open source while truly being our demoware open source. But they seem to be better off than other truly open source CRM’s. Proprietary softwares like Salesforce.com, Oracle On Demand and FreedomCRM are way better off in the CRM market though. Anyways, so this is our 5th source.


Collaborative Money : This is where open source is used to collaborate and help some other aspect of your business to monetize itself. Google have Wave and Android open for developers and cant we see the android boom now(2% to 9% growth in market share in just 6 months) and with Nexus one out there now, who knows how far ! Turning these into open source is actually their marketing strategy to market their software through the power of the community in order to be able to sell more Advertisements. So that’s source 6 to use the ‘self marketing power’ of open source to generate revenue through some other aspect of the business.

So as per our(just some rough) analysis, you need to sell 4 Installation suites($20000) or 200 hours of customization ($20000) to break even and we have not even considered all the sources mentioned above.

So open source is not about goodwill or spirit, its about fierce competition and capitalism. You know that the company next to you has the same piece of clay as you have and it all boils down to who can mold it better and sell, thus fostering innovation and productivity. No one can put it in words better than Red Hat CEO, Jim Whitehurst “If we all had to walk around naked, we’d spend more time in the GYM”.

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