Tuesday, October 12, 2010
Monday, September 27, 2010
Monday, August 30, 2010
So, what’s going on?
Since the auction several leading operators such as Bharti, RCom and TTSL have ramped up their existing infrastructure and signed contracts with leading vendors in order to support the launch of 3G services. While Huawei and ZTE are the vendor partners for RCom, TTSL has recently selected NSN as its 3G equipment vendor. Most operators are now waiting for the government to release the spectrum- which is slated to happen on the 1st of September 2010- in order to get their 3G radio network up and running. In all likelihood, customers can expect 3G services to be a reality in India by the end of this year or latest by early next year.
What to expect?
In the voice segment, falling ARPU’s (Average Revenue per User), high competition, and price wars have been the pain point for operators. VAS currently contributes only ~10% of the revenues of telcos, most of which comes from SMS. Operators are therefore increasingly looking at new non-voice services to boost their revenues. The advent of 3G is expected to drive this transition. Consumers can thus expect a host of high bandwidth consuming value added services (VAS), focused primarily on music and gaming, and high speed mobile broadband in the first leg.
Most operators in India are facing an acute spectrum crunch especially in the metros. The newly acquired 3G spectrum will enable telcos to decongest their existing 2G networks by creating more capacity for voice. Consumers are therefore likely to enjoy superior voice quality and fewer call drops.
The combined effect of 3G launch and mobile number portability (MNP) services, which are likely to be rolled out nationally by October 31st, will indeed make subscribers the king! Operators will endeavor to differentiate themselves by offering superior VAS, high quality voice calls, and improved customer service in order to poach subscribers (especially the high income post paid users) and earn incremental revenues. With their numbers not being tied to an operator anymore – thanks to MNP- it will be a win-win situation for customers.
What not to expect?
The 3G auction has cost the operators dearly and most of them have paid hefty prices to acquire the spectrum. As a result, telcos are likely to stay away from tariff wars. Customers should therefore not expect 3G services to be offered at extraordinarily cheap prices as operators will charge a premium for these services.
To begin with, mass rollout is also ruled out as not everybody will be willing to pay for high priced VAS and broadband. Operators will opt for a phased implementation of 3G services with the creamy layer in metros and the major cities being the primary target segment. Though the promise of 3G bringing mobile broadband to rural areas and small towns, where fixed lines have not yet reached, sounds encouraging, in reality this is unlikely to happen as it won’t contribute to an operator’s topline.
Services such as video calling and mobile TV which are being pegged by some to be the main drivers of 3G in India are likely to remain mere hype’s and buzzwords as the main focus of operators will be on segments such as music and gaming which generate high user traction and contribute significantly to operators VAS revenues. Even globally, video calling and mobile TV have failed to make a mark (barring the exception of few countries such as Japan) due to high cost of the service and poor user experience.
3G auctions in India created a lot of buzz globally followed by a phase of silent calm. But this silence is the precursor to the storm which can be expected with the launch of 3G services in India shortly!
Tuesday, May 18, 2010
“Eight months after its August 2008 launch, total sales of iPhone were reportedly less than 20,000 units.”
“Estimates of Kindle sales in India, since its October 2009 launch, range from a few hundred to 1000 units.”
The iPhone and Kindle were never expected to have mass uptake in India in their early days. However, it is surprising that sales figures have been so utterly disappointing. High pricing of these devices and poor data speeds in India (especially in the case of iPhone) have been attributed as the main reasons for dismal uptake. Though these factors have some role to play in the India failure of iPhone and Kindle, they seem to be overhyped. Here is why.
The iPhone and Kindle, in India, are primarily targeted towards the creamy layer in metro circles and the English reading elite respectively. For these consumers, pricing is not the foremost consideration before purchasing a device. Smartphone shipments in India numbered
Slow Data Rate
The lack of 3G in India and the inconsistent performance of EDGE networks is another factor often attributed to the poor sales of these devices, especially the iPhone. The argument is that the absence of 3G networks renders some of the functionalities of the iPhone useless, thereby inhibiting user experience. In case of the Kindle, some believe, that one of its most attractive features, which enables users to download a complete book in 60 seconds using 3G connection, will not deliver on promise. However, consumers in India do not necessarily buy phones and other gadgets for functional reasons. The social value and status symbol associated with a device takes precedence in many cases. This is one of the reasons why 3G compatible phones have been readily available in the Indian market since 2005!
The main reasons why the iPhone and Kindle have not taken the Indian market by storm lie elsewhere.
Lack of push from Apple and Amazon
If Apple and Amazon desired, the sales of iPhone and Kindle could have been much higher than where they presently stand. As pointed out earlier, many Indian consumers chose a product based on its perceived societal value. The marketing and advertizing initiatives of both Apple and Amazon have been negligible and hence have failed to create a brand recall for their products. Interest (and hence sales) in the iPhone and Kindle would have been much higher if Apple and Amazon had launched extensive promotion campaigns to highlight their products. Instead, they have chosen to stay dormant in the Indian market.
While the iPhone is available only to subscribers on Airtel and Vodafone networks, Kindle users are limited to books from the Amazon store. Such tie-in’ not only hinder user uptake but also limit distribution (in the case of iPhone). Unlike their counterparts in US and Europe, Indian operators do not have the experience of selling handsets aggressively. As a result, the distribution of iPhone was negatively impacted by Apple’s decision to rely only on Airtel and Vodafone.
Grey/Overseas Market Purchases
Many gadget freaks in India chose to purchase these devices from grey or overseas markets either to avoid operator and application tie-in or save on overhead costs. Several users buy the iPhone from countries such as the US and then jailbreak it in order to accept any SIM without restriction or use applications that are not available from Apple's store. In case of the Kindle, a purchase in the US saves users additional shipping costs and custom duty.
India is an attractive market for both the iPhone and Kindle. However, for device sales to pick up, Apple and Amazon need to adopt an aggressive strategy and focus more positively on the Indian market.