VenturAdventurs

Brave new world...

2012-02-22T05:25:00.002-08:00

Think about what role the mobile operator has been playing to-date:

They own a pipe to transmit information (voice + data)
They own a touch point to the customer (and hence impact the choices I make)
They own a mechanism to charge the customer - either stored value or monthly billing

Long-term which of these will be critical? The pipe is a commodity - as I mentioned in the last post, we have 5-10 such "pipes" floating around at any given location in the country. The touch point is critical, to establish the connect between customers and the network - however once customers are connected, there is a resentment toward anyone limiting their choices...customers prefer the "chaos of choice" over a "curated calmness".
#3 here is the most critical, and in my mind, the lasting value-add of operator -- enabling me to pay. Why is this one lasting? Because customers themselves need someone to play this role, and who better than someone who already has a billing relationship with me, someone who has thousands of retail points across the country. Add to that the fact that customers are unwilling to use plastic, and I think operators are all set as the mobile payment enablers.

Now think of a new world where the operator magically accepts their new role, and transforms a broken industry. For the app creator, their side on the revenue share equation switches to give them majority ownership of the value created. With this new viability, the pace of innovation on mobile apps accelerates...leaving CBRT far behind :). Operators start providing open access to all apps created instead of this sorry excuse for an app store! ("Spicy Jokes", anyone?!). And while we're at it, all of Gurgaon's roads get repaired and Delhi doesn't flood during the monsoon!

But seriously, the reality might be something like this - starting from the current single player VAS world, 3 different providers emerge:

Traditional VAS: The legacy players hum along, supported by their legacy (but declining) businesses, while searching for new stream of revenue - both new products and new geographies. Smaller one die out as they're unable to cross the unexpected chasm. If you look at one of the public VAS player's quarterly revenues, the entire focus is on International, while India continues to decline due to "lower quality of users and reliance on the operator". Tough times!

App Economy: With 10+ million smartphone shipped in 2011, there are enough app hungry users today to dream of building a viable apps-based business. So everything from music and videos to location services and mcommerce will see action this year. Payments remains a roadblock, so while that piece gets figured out, businesses will focus on driving adoption and engagement - monetization to hopefully follow soon.

Hybrid Player: How do you (mildly) twist the operators arm and force them to share? Build a direct connect to the customer and effective remove them from the coveted middle-man position. App developers create and the user votes with his downloads. Continue to use the operators infrastructure, but since the operator no longer markets, they are relegated to a payment providers role and corresponding revenue share. Undoubtedly this is non-trivial - so companies with some kind of existing customer connect, either offline or through other media like TV, will be able to play here. But for the near future, this might be the most exciting mobile space...

Comments welcome...

Setting the mobile context...

2012-02-02T09:38:00.000-08:00

India and "mobile" have been synonymous for as long as I can remember. To the extent that most of us have forgotten what the acronym PCO stood for, let alone see one in our part of the woods! We all complain about SMS spam, ineffective call blocking and poor network coverage. Some of us have also starting tinkering with apps, 3G and 6 inch phone screens. The broader reality of course is very different.

Looking at the commonly known metrics, starting with the biggest numbers -

894 million mobile subscribers
15 mobile operators
85% revenues from voice
$4 average revenue per user per month - among the lowest worldwide!
~97% connections are pre-paid

Read the numbers carefully and you should start to get some sense of the market. Cellphones are everywhere, especially in metros where penetration in greater than 100%. More operators => high competition => cheaper services (I pay $8 for an all-you-can-eat national data plan!). 85% voice revenues means either we talk a lot here ;-), or we don't have much going on in terms of non-voice services. And the low ARPU and pre-paid connections are closely related as well - but let's look at VAS first.

Value Added Services - operator marketed, billed services started with BSNL's wake-up call services back in the old days. Since then, mobile operators have been hawking everything from callerback ringtones to wallpapers - both telling me what to buy, and enabling me to complete the purchase through my mobile account. For this "amazing" service, operators have kept 60-70% of the revenues from consumers! The rest is split up between VAS providers and the poor guy who developed the content. Not a pretty business to be in!

So in this world where the developers make pennies (or paise!), there really hasn't been much passion to innovate - why bother when someone else will keep 80% of the value you create! One of the operators VAS page really gives you a good idea what kind of products we're dealing with here - this in a world of apps like Pinterest and Instagram.

Why not sidestep the operator and go directly to consumer, especially with platforms like Android and iOS? Payments! Across multiple sectors - eCommerce to mobile - lack of payment mechanisms continues to be a roadblock. While ecommerce seems to have found a Cash-On-Delivery band-aid, no such luck (yet) for mobile. Add to that our tiny mobile ad market - $25 million last year - and really few monetization options left for a direct to consumer approach. So most of us remain at the mercy of the operator and VAS providers to choose apps for us.

With this context, allow me to present a view of what will happen in the next few years...in my next post.

mea cupla: this post is 4 months late, I have a thousand excuses - but will spare the bs and try to write more regularly.

Metro and Mobiles...

2011-09-28T09:44:00.000-07:00

One benefit of being 'car-less' is that I have to take public transportation often, especially the Delhi Metro. Our Metro can go head to head with Chicago's El, Paris' Metro or the London Tube and easily come out ahead! I especially enjoy it since it allows me to see, hear and talk to the people powering India's growth - our middle class.

It is one thing to sit in a conference room and postulate about our emerging middle-class or read a research report, and another to actually hear and understand the stories behind the numbers. My 8.00 am train to Gurgaon is full of knowledge workers (like me!). A good chunk of my co-passengers spend the entire journey staring at their mobile phones, they are listening to something, updating facebook, reading news while we are speeding underground below CP. On some days, I've counted up to 50% of the people in my compartment to be 'phone warriors' - killing time with their phone!

Since my data connection still does not work (thanks Alka!), I end up bugging people around me with questions. The best conversation starter is the phone itself - it seems we all love our phones. Though one reads mostly about low-end phones in India, I am happy to report that most of my co-travellers have true SmartPhones - connected devices that can install apps, play videos, might even have a touchscreen. They have a car but prefer to take the Metro to avoid traffic and crazy petrol costs. Many people who didn't have an official phone said that they still decided to pay for data since it helps them pass time. Of course, the user numbers are still low compared to the overall population...but this is the segment that will support the next set of mobile innovations.

On the device itself, it seems that music is the most favored activity (ignoring calls and SMS). Next was playing games, most of them downloaded for free. Facebook-ing was next as people were busy reading status updates. So all in all, content consumption seemed to rule. However I didn't see any homegrown services or local content sources (yet). Why? One reason might be what Alok articulated recently - the reluctance of the gatekeepers.

So what apps might appeal to this mobile consumer for his smart Mobile - now that he has a good device, a decent data pipe and time? More to come....

Namaste World!

2011-09-22T06:15:00.000-07:00

This blog is my attempt to synthesize things that I see, read and hear into some digestible structure, both for my future lookbacks and for anyone interested. My goal is to mix work with pleasure, so will try to add some flavour of life in India, and especially Gurgaon ;-).

By background, I've dabbled in a few different things in my journey thus far. I started with C++ pointers, went to Distributed Databases before discovering Free Cash Flows. Next I experimented with Build vs. Buy, bought into the power of eyeballs and finally helped create a new Groove of Music.

Today I get to learn from people much smarter than myself, and try to share tidbits from whatever little I've picked up on the way! I'm always up for a cup of coffee, or even better, cold beer ;-). My goal is a 24 hour turnaround on email, so drop me a note and test me out!

Ciao,
Nishant