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As this story is being assimilated on a crowded office floor, there are
countless noises in the background. The human ones apart, the next most regular
feature is the famous SMS beep. While all of those who are reading this must
have replayed the sound in their minds, they might not have till date pondered
upon the reasons which have made this beep music to some ears and dismay to
others.
And what else, most of us would never even have imagined the economies that
this SMS (along with its new age variations) supports, the heads that it rolls
and the money that sits behind every advertising message that our phone
receives. Every application you download on your smartphone is built by a
company, provided content by another, supplied with ads, if any, by names well
known, with those ads created by some others.
That is a whole lot of players, with more joining in everyday, doing newer
and newer things. If you have followed the online wave of the late 90s, it is
not entirely new to you.
Two differences though: the ubiquitous e is replaced by a more ubiquitous m.
And while that time around, the users for whom those e-everythings were designed
themselves were not e-enabled, the situation is vastly different now seeing that
India has close to 350 mn mobile phones. In fact, many are being forced to use
this option, because it reaches a significant number of users to whom nothing
else reaches.
So, the m wave, if we can call it that, is far more real. So is the
opportunity for the set of players who build and enable these applications.
Commonly, but somewhat not so aptly, called value added services (VAS)
companies, they are today the hottest firms in the scheme of things of venture
capital firms. In 2007-08, they are easily the largest single category within
technology where venture money has gone.
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Reaching the Unreached |
| So far, all of us have played up
the convenience part of the mobile phone. Perhaps more important in the
Indian context is the reach. Today, India has close to 350 mobile phone
subscribers. There is hardly any medium that reaches so many people, not
even television. Comparison with PCs do not even make sense.
Can this aspect of mobile phonesits
ubiquitybe leveraged better? There is no reason why a farmer in a village
should not have access to information about the best seed, weather
predictions, the crop harvest, etc. That too with utmost ease and in his own
language, says Vinay Goel, head of products, Google India.
Agrees Nihar Das, regional managing partner
for Mediacom Asia Pacific. Das says that the mobile may not be the best
medium to market the packaged goods, as the medium suits the more high value
transaction services such as insurance. But he informs that his client,
Procter & Gamble, the worlds largest advertiser, had to seriously take up
this medium when it realized that in certain markets in the APAC region,
such as India and Philippines, this may be the only medium that is available
to reach out to a large section of people.
Now even mobile payment companies are
exploring if payment services can reach people without a bank account. There
are estimations that about 25 mn people in India have access to mobile
phones but do not have a bank account.
From payments to sales, from invites to ads,
The m word has made everything possible via the device in your palm. But the
real challenge is: can you deliver? The question applies to every link in
the ecosystem. Everyone acknowledges the tremendous potential that the
untapped part holds in this country, but they are yet to reach them. One of
the major reasons for this is that the prowess of the mobile has gone
unnoticed till now. It has surfaced and caught attention only very recently.
As is obvious, in its nascent stages the
mobile is, and will be surviving on the metropolitan wires. But that doesnt
in any way underestimate the massive opportunity that lies below the tier-3
down cities. And its gradually being uncoveredthis all new face of the
mobile.
One recent initiative by Airtel is to sell
the idea of m-governance to state governments. This assumes that the citizen
services will be made available on the mobile phone. |
We will simply call them players in mobile applications, not value added
services, unless we refer to some secondary sources. And here is our
proposition. The phrase value added services inherently assumes that there is
something else and they do value-add to that. Historically, that is not entirely
incorrect. For the mobile operators, traditionally and even today, the biggest
share of revenues come from voice. So the phrase was designed to denote
everything that was not voice.
Two things have changed. While voice is still the biggest thing for the
operators, share of mobile data is increasing. But, more importantly, there are
now mobile applications that work and help people do business fairly
independently of the mobile operators, like say mobile advertising or mobile CRM
in an enterprise. The latter still provide the pipes; but that is it.
According to a survey conducted by the Internet and Mobile Association of
India (IAMAI), the mobile Value Added Services industry was estimated to be
around Rs 5,780 crore at the end of June 2008. It is expected to grow steadily
at 70% over the next two years and touch Rs 9,760 crore by end of June 2009, and
Rs 16,520 crore by the end of June 2010.
While the scene is dominated by the ringtone segment (40%), peer to peer SMS
(P2P) grabs the next sizable chunk (37%). However these figures, like the whole
mobility set up, have the operators as their central point. These are mostly
indicative of what the operators earn through VAS. How the flow of revenues
takes place beyond the operators depends largely on the commercial agreements
and the complex revenue sharing models.
However, all these still do not address areas where the consumer does not
have to pay. In that sense, it is a subset of the entire m-opportunity. That is
far more, often complex.
It is these complexities that we try to unfurl as we go beyond the operator
and explore the non-voice mobility landscape. We try to make some sense out of
the chaos as we classify the players who make the mobile applications landscape,
analyze the current trends and project the future directions, and present
profiles of important pure-play players in each/multiple of the sub-categories
in the mobility space.
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Some New m-Opportunities |
With so much activity around the
whole mobility scenario, the industry is hopeful of it taking off in a big
way soon. A look at the prominent trends that are expected to emerge in the
near future.
- M-Healthcare: The penetration of the
device will ensure more utility based applications. Healthcare seems to be
gaining the top slot already.
- Social Networking on Mobile: As the
Internet on mobile will gain popularity, social networking will naturally
follow. There is no reason to believe that if an employee cant access
Facebook on the office network, he wont want to check his messages on his
phone!
- M-Payment: Although this field was watched
with a great interest, it didnt perform as was expected. That is because
of the regulatory hindrances. With the RBI guidelines in place, the
apparatus for m-payment is already rolling. RBI guidelines are the right
step in a positive direction. 2009 will not see any explosion on the
mobile payment scene, but it is going to be a good year.
- M-Learning: Says Shantanu of MosPay, the
first company to introduce learning programs through mobile, I want to
educate everyone in the country who has a mobile phone. M-learning is
going to take off as more people begin to say what the Idea ads have
already laid a foundation for.
- M-Governance: Another concept which is
rapidly gaining popularity. Dr SMS project is only one such example of
m-governance. The reach of the mobile will make it the most effective
channel of interaction between the government and the citizens.
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Mobility Value Chain
Much of the initial research time for this story was spent on trying to get
a tap on the elusive mobile applications value chain. Talking to players in this
industry and other stakeholders only made it more confusing, because each was
drawing a circle keeping itself at the center. Analysts too did not agree on a
single model.
And then we realized where we were getting struck: we realized that something
like a mobile value chain that could encapsulate the entire set of players just
does not exist. So, we were trying to find something that is non-existent.
Sure there is the traditional mobililty ecosystem, with the operator at the
center and some of the mobile applications players very much a part of that. But
there are an equal number of them who are outside that ecosystem. That is when
we chose to use a more generic term landscape rather than ecosystem, to
describe the entire set of players. In fact, there are several ecosystems that
overlap this landscape.
Some of them are age-old ecosystems with mobile being just a new component of
those ecosystems. For our analysis, what we could finally agree on is to
classify them into five categories, based on who these players target as their
ultimate customer. The basic question on which we based this classification is:
who pays?
These customers are
- The consumers
- The enterprises IT
- The brands/agencies
- The operators
- The phone makers
While the enterprise IT and brands are part of their own ecosystems, IT and
media respectively, the operators and phone makers along with consumers who pay
for this service belong roughly to what is the newest ecosystem to emerge. Let
us call it simply the mobility ecosystem, in the rest of the story. This is what
we take on in this story. We have a separate one on mobile marketing that
analyzes the trends in the ecosystem corresponding to the brands/agencies: the
media ecosystem. The enterprise IT constitutes most of the content of
Dataquests regular mobility section.
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