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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Technology

The mystique & hype of Apple’s product launches

All over the internet – be it tech blogs, twitter, facebook pages or anything that has remotely to do with technology – there has just been one topic of discussion over the past few weeks – What will Apple do on their show this Wednesday – Jan 27. The invite is as simple as ‘Come see our latest creation’ and is handed to the top bloggers/press in the USA. Its accompanied by this picture as well.

Apple-inviteNow how does Apple manage to generate such unbelievable hype with every ‘Special event’ that it announces? Why does a MacWorld or an equivalent event looked up to so much by the world in general, and Apple fans in particular? There are many reasons for that, but here are my top 3 in reverse order:

3. The inimitable Steve Jobs – He is the CEO of the decade, the man who survived a liver transplant and someone who gave the best graduation speech I have ever heard. The whole idea of one man being the face of such a huge company is unbelievable! Steve Jobs deteriorating health caused some turbulence in the stock price in 2k8, that is the kind of respect the industry gives to the CEO.

2. Product design – To summarise in one sentence, when Apple says its a breakthrough in product design, they really mean it. Their last breakthrough was Magic mouse – to check one out in a Croma/Super Mall near you to find out what exactly I mean.

1. Their last product, the iPhone Quoting the recent conference call:

Apple sold 3.36 million Macintosh computers during the quarter, representing a 33 percent unit increase over the year-ago quarter. The company sold 8.7 million iPhones in the quarter, representing 100 percent unit growth over the year-ago quarter. It sol d 21 million iPods during the quarter, representing an eight percent unit decline from the year-ago quarter.

100% growth in the number of iPhones sold, that says it all, doesn’t it? All other firms flood the market with so many devices – Apple released one device, went totally against the market norms and is now a dominant smartphone in the US.

I think the way iPhone has changed the industry is the single biggest reason why there is so much hype about the Special event! 24 hours from now, we all will know what the latest creation is all about! I am definitely all ears tomorrow, for sure! Lets discuss about this in the Strat chatroom in the toolbar you can see at the bottom tomorrow then.

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Business, Human Resources, IIM

Detachment and leadership

We welcome our latest strater, Amit S Holey, an alumnus of the SP Jain PGDSM – MIT course. Amit also blogs here.

Leadership is one of the most coveted yet one of the toughest roles in any industry. The jazz and awe that accompanies any leadership position also carries with it the burden of tough decisions . As Spiderman teaches us- ” With great power comes great responsibility“. One of such compelling tasks is the ability to get detached and move on.

Two dynamic leaders from the technology industry have been in news recently. Both are founding fathers of great technology companies. Yet their attitudes have been contrasting and surprisingly so. Nandan Nilekani has been appointed by the Prime Minister as in charge of the UIDAI of the prestigious project. Two years ago, following the footsteps of NRN Murthy, he had already moved onto the co chairman role clearing the way for others. Now, there is a talk of further upward movement of the new generation of leaders. Nandan and NRN have moved on and let the sapling they planted blossom under other leaders.

Compare this with Apple. Steve Jobs has held a vice like grip and instilled deep fear in the minds of its employees. There is absolute secrecy over his health, so much so that the rumours floating in the media are furtively traced to the employee. All new products under development are fiercely guarded within the Labs itself in such secrecy that even the top echeleons of Apple are at times fazed to hear about the launches. Steve’s health has been deteriorating and the truth has been stifled from reaching the media. There is an interim CEO, but reports say he is just that- an interim CEO. Jobs is in the classic leadership dillemma. He just does not seem to let go of his baby – Apple.It maybe the one of the highly innovative companies, but it is reckoned to be a scary place to work.

An organization is akin to a family. The family head is the provider for the members and has the duty to nurture the youngsters in the family. With the passage of time, it is the duty of the family head to pass on the responsibilities  and step out of the role. S/he may mentor, but Nature forces the passing of the baton in such subtle but strong ways that the next generation has to come up and the old has to step down. It is the Law of Life to ensure the process of Evolution. When the old generation tends to hold on, it leads to skirmishes and sometimes even breach of the Family concept.

Similar is the case with the organizations -albeit at an abstract level. Founding fathers must understand and respect the Law of Life. They must pass on the baton and move on. Latching onto their positions only rottens the company and slowly starts to run counter to all the earlier work. Attachment is the root of all evils. Survival instinct is the strongest of all animal behaviours and that very instinct perhaps breeds selfishness that causes attachment. Bhagvad Gita, therefore says – ” Do your duty rightfully and do not worry about the fruits. They shall come eventually.”

Only when one moves on, will one evolve. Only when one moves on, will the others evolve. Hoarding creates nothing, but destroys the very thing that it holds.

Remember the movie ‘Dilli 6’. The feathers of Masakalli – the pigeon are tied as Om Puri wishes to retain the bird forever. In the same way, he stifles his own daughter too. She secretly mines a passion to sing in the ” Indian Idol”, but family resistance keeps her down. Nobody is happy this way. Only when Masakalli is untied and let free, does she scream into the air and fly away. The freer the bird, the higher it flies and the happier you are. Do not strangle the bird and choke yourself. Love it and let it fly. It is yours and always yours.

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Business, Marketing, Strategy

Does Apple have a self-imposed maximum market share limit?

Apple logoWith the kind of cult following that Macs have amongst their users, one would believe that Apple’s market share in the PC + Notebook category would be steadily on its way up, since their resurgence as a formidable player in the computer market in the early 2000s. Almost anybody who has made the move to a Mac (yours truly included!) swears by the fragile beasts, and wonders why they didn’t move earlier.

While Apple’s share has indeed gone up, it is still small in terms of volumes. Most of this is probably due to two strong factors – the premium pricing of all of their models – their range starts from $1000 – and the reluctance of the average consumer to shift to a completely new operating system. Apple sees the second one as more of a strength rather than a liability, as most of its users would agree, and would almost never tinker with what is essentially its USP – a robust OS which just sits there and lets you do what you want to without bothering you with random error messages and crashed programs.

What it can do, however, and no doubt would have been tempted to do, is tinker with its price range. It has already done that to an extent, in its June WorldWide Developers Conference, slashing prices of its high and mid-range MacBook Pro models. What is notable is that they have maintained the entry level pricing of $1000 for the white polycarbonate Mac constant. This seems like an attempt to lure current Mac users to trade up, rather than get new ones into the fold, which means that there is little change in market share. Apple has resisted temptations to enter the lower end of the market, steadfastly maintaining that it has no intentions of bringing out a netbook or a cheap laptop, saying that the lesser-than-optimal user experience with cramped keyboards and slower processors is not something they want to get into. This sounds like more of an excuse, though, for their current entry-level Macbook keyboard, although comfortable, definitely isn’t anything exceptional.

All of which makes one wonder – Does Apple have a self-imposed maximum market share limit? As scandalous as this may sound, can we put this kind of unconventional thinking beyond a company which has continued to surprise and wow gadget freaks for close to a decade? This seems to make perfect sense for several reasons. One of the reasons the Mac OS has been so successful is that it makes up too small numbers to attract the attention of evil coders with too much time on their hands, who’d rather play with Windows and watch as the world cringes. Change that, and you have a whole new headache to deal with, fixing each and every loophole in your OS, something which will undoubtedly come at the cost of further innovation, which Apple would rather like to spend its energy on. Macs work fine without any anti-virus software, and there seem to no known viruses in the wild which can create havoc with Macs so far. Try to cater to the lower end of the market, and you suddenly have a host of new problems, with only a marginal rise in profitability, due to the fiercely competitive and price sensitive nature of this market. Secondly, it’s rather tough to have a cult following and a fierce sense of ownership amongst your users if half the world also uses the same product, although the trade-off can be well worth it, as Apple saw with iPods. Third, Apple might be taking a conscious decision to maintain or improve profitability over topline growth, something which gives it a remarkable amount of breathing space in case things start going awry. Fourth, Apple would be wary of anti-trust litigation, after the hammering Microsoft got over crimes far less serious than what Apple pulls off with its OS. While there is no doubt that the Apple OS is a superlative piece of software engineering, it is as monopolistic as things could get.

Would it really be unthinkable to do this way? Would everybody, by default, prefer a larger, heavier, more cumbersome organization which has to put up wall after wall of defenses to stave off threats, whether it’s evil coders or government watchdogs, living off small margins and having to deal with a billion different suppliers and dealers and what-not? Maybe Apple does not limit its innovation to merely the design of its products, but extends it, or rather, lives by it in all facets of business. Maybe the real innovation is here, in their business model, rather than in their superlative products.

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