The Internet Economy in India is future waiting to happen. With approximately 200 million new users connecting to the internet in the next 3-4 years horizon Internet is the next big economic and commercial business opportunity. On a cummulative basis the internet economy’s contribution to India’s GDP (i-GDP) is set to break the $100 bln mark (a 3X growth compared to 2012)
1. Number of internet subscribers in India expected to grow from 135 million (Exit 2012) to 330 million (2015).
2. At the same time, Internet’s contribution from India’s GDP to grow from 1.6% in 2011 to 3.4% in 2015.
3. Thus India’s i-GDP (internet contribution to GDP) is expected to hit about $100 billion by 2015 – making it one of the most attractive investment locations and industries globally. Refer to the Chart below for the Assumptions and Calculations
4. Device Convergence; low cost device innovations; reach and affordability of data networks; Increasing digital literacy; access relevant apps and services on the net are factors that are driving the growth of Internet networks in India.
Whats now required is a comprehensive government policy roadmap for the Telecom sector which has been adrift following a few bad calls by the government.
Source of Data: McKinsey Report March 2013 – India’s Internet Opportunity.
Years from now, we will read about the Information Revolution as much as we read about the Industrial revolution these days. We live in the era where data and Information are rapidly transcending borders and limitations and changing lives like never before. The stats here prove the point that as a civilization, we are at a inflection point with data and information.
One of the most enduring and endearing representatives of print is Encyclopaedia Brittanica which after 244 years of print run shut its print run. EB will be available in digital and web formats now on. The product most associated with wisdom of the crowds i.e Wikipedia is credited with the death of the Print edition of EB. EB maintains that the death of Print edition is because the digital media encyclopaedia is taken over. Print encyclopedias account for less than 1% of Britannica’s revenue, while 85% of the revenue comes from educational products and 15 percent from the $70 subscription to its website, which about half a million households pay. Recently, the company recently launched a set of apps ranging between $1.99 and $4.99 per month. Thus the end of Print EB is more about the death of paper and print era at the hands of digital media.
Stating the death of the print media, Jorge Cauz, President of EB expects many trade publishers not to survive and content development company to be filling up the gap
Image courtesy: Statista
The print edition became more difficult to maintain and wasn’t the best physical element to deliver the quality of our database and the quality of our editorial
It’s a rite of passage in this new era. Some people will feel sad about it and nostalgic about it. But we have a better tool now. The Web site is continuously updated, it’s much more expansive and it has multimedia.
Furthermore, Cauz predicts that, “print may not completely vanish from the market, but I think it is going to be increasingly less important. Many publications will never have a print analog and will only be printed on digital formats.”
Inspired by the success of Telecom sector and the advent of mobility, the Government of India is relentlessly pushing for better services, reach and depth of telecom services as a economy support, enabler and growth engine for India. The policy makers think of Telecom as a medium to reach out to the far and inaccessible corners of a rather large state.
A couple of new initiatives are worth mentioning in this regard.
1. The Ministry of Human Resource development (mHRD) along with a UK based device maker DataWind have produced the cheapest tablet/ computing device in the world. Called Aakash (meaning Sky In Hindi), the 7” tablet combines Android 2.2 Froyo, a 336 MHz processor, a 800*480 WVGA resistive screen, 256 MB RAM and 2GB flash memory along with 32GB expandable memory with a 2100 mAH battery in what could be best termed as Frugal Innovation targeting the bottom of the period. The product is priced at an unbelievable $38 and the government is subsiding a lot of it to make it available to colleges and universities.
Not only does this mark the entry of a computing devices to Sec C,D and below consumers, it also opens up a new avenue for internet penetration. It is also expected to spawn off a hundred apps and other value added services
2. To support services through wireless, the government has also at least five new frequency bands, including the 700 Mhz band, for telecom services (mobile broadband). The 700MHz digital dividend was earlier being used for analogue TV signals. The other major spectrum allocation is the use of S-band has been opened up for broadband services. This band, falling between 2.5 Ghz and 2.6 Ghz, is being currently used exclusively by INSAT systems for satellite based services including meteorological data dissemination. If the Plan is implemented then telecom companies could get access to about 200 Mhz spectrum more, which could boost broadband coverage. However, the NFAP is only a broad guideline outlining the future roadmap for spectrum usage in line with international standards. The actual implementation of this Plan depends upon inter-ministerial negotiations.
In the pre-read to this post, i had written about how Internet, the way we know it is fast coming to a saturation and how mobiles will fuel the next growth engine for Internet. Most of the terms and facts used were the clichéd variety.
Internet on Mobile will be different than internet on Computers. There are a few paradigm shifts and i would provide these for the reader’s consideration:
1. Internet is mostly a Pull medium as against a Push medium. For instance, a user gets to know about a particular Facebook update only when he logs into Facebook.
An App changes that. It pushes the Facebook Update on the device and is thus more immediate and relevant than delivery through the Internet.
2. Internet is static medium (low on mobility experiences). Even if a user uses a laptop, the device is incapable of “external intelligence” i.e Time, Location, Context, User Experience. Thus it would only be a communications device than a experience device for the user.
An App with its various APIs is more intelligent to “external” than the internet delivered as a static medium. There are many software engines and APIs which could make the content delivery contemporary to the context of the user. A simple example here is an LBS service or a NFC led discovery. Thus the App adds the dimension of “experience” to the user context.
3. Apps with their ability to wrap around the user context, experience, intelligence thus becomes a far more effective medium for monetizing services. The App thus takes up the role of a media to deliver sponsored messages to the user.
Imagine planning your holiday with Thomas Cook App, which not only includes tickets and stay, but also a mobile based tour guide app which takes you to “your” kind of places, basis the system intelligence of your preferences. Imagine a advertising eco-system that can be built out a local context through this medium.
4. Applications could be delivered through any and many screens: TV, Computer, Mobile and even in cars. One application could travel with the user across his usage dynamically to address him on TV when he is watching a game, on mobile or car when he is travelling , on computer when he is in office.
5. Last but not the least is Apps ability to drive Mobile health, Mobile banking, mobile education solutions across a diverse geography. There’s enough thats being done in the area of basic amenities and utilities to deliver life services to billions through mobile phones and apps.
Thus, apps would alter the way internet is delivered to the next lot of internet users in the world. The medium would be highly customized, very mobile, very user context and experience specific. Best of all things, it could provide unique monetization opportunities to a very diverse eco-system.
Theres an App for that!…Apple
In an earlier post, i had written about focus on innovation for apps and services to customer centric models amidst larger value creation templates with more stakeholders. It also shows the roadmap and indicators for value creation.
This post is about how Applications and an eco-system around apps will drive the next level of growth in Internet. “Next level of growth” is mostly a clichéd term. To put my argument in perspective. i will use a few stats:
So here’s the cliche no.1: Europe 58.4%, North America 77.4% and Australia 61.3% is where Internet growth is falling. Having featured the first wave of internet growth, it was about time, that the fast and furious growth in Internet numbers abated here-on. Also, these geographies house only 17.4% of the world population. Hence, the next level of growth in Internet has to be powered by 82% of the world pop scattered around elsewhere.
Cliche no.2: BBC estimated sometime around mid 2010, that the number of mobile phones globally has hit the 5 billion mark. Infact, there were interesting comparisons about Mobile phones and bank accounts and toilets, each a surrogate milestone in development of the world.
Cliche no 3: It is therefore expected that Mobile phones will be the next carriers of internet to a very large population around the world. That, more then half of the 5 billion phones are typically low end phones with very little capabilities will severely test the delivery mediums of Internet.
So here come Apps (Continued here)
In a first of its kind, Bharti Airtel has been given the go ahead by the central regulatory bank in India to execute mobile money services. This would allow users to exchange physical cash for virtual money to pay for goods/services less than 5,000 rupees.
For starters, Mobile money is defined as the use of the mobile phone as a channel to conduct payments, account management and other financial services.
Relevance of Mobile Money to India: Given below is a representation of the World Economic Pyramid and financial service access across the three tiers of global markets.
India is a typical case of co-existence of all three markets and if at all, the disparities are likely to be bigger and more stark compared to any other geography in the global context. One common reason for lack of access and reach across geographies in India is the cost of last mile connectivity which is significantly higher than revenue/margins accrued. That is where Mobile Money Services can be very effective. For a banking perspective, Mobile money services can reduce cost of transaction 500 times.
While Mobile Money/Mobile financial services pan across different segments of usage such as Payments, MicroFinance and Mobile Banking, the real potential of Financial services through mobile is accrued when an amalgamation of services such as Healthcare, Insurance, Access to Credit services drives efficiencies in Survival markets.
Easy and Cost –effective access to Healthcare through a combination of Mobile Financial services and 3G services can be very instrumental in taking Healthcare services into rural Hinterlands. Inspite of the best efforts by Government of India, Healthcare services is unable to surmount the last mile given deficiency of doctors and trained staff available for Rural Healthcare services.
Micro-credit extension to the relevant and the needy can be a huge enabler in sorting the “New Variant Famine” Hypothesis of Alex De Waal. Micro Credit access has other cascading effects on HIV, Malnutrition, Infant Mortalities. Combined with access to information, Micro Credits can be huge enabler to making the survival markets more economically self dependent.An example in this regard is Syngenta’s Kilimo Salama in Kenya which has helped reducing risks and increased investments through mobile micro Insurance for small holder farmers.
10% increase is Mobile penetration would lead to .6% increase in GDP of the nation: That speaks volumes of Telecom as a economic multiplier. In a nation as large as India, the power of Telecom to connect its 1.2 billion people with Information and utility services is seen as the next Mass movement to drive the a broad based fundamental growth.
The Government of India realizes the potential of Telecom and has been at different levels pushing the levers for stimulating Telecom/Broadband growth. In what is a spin-off of sorts, the Government of India in partnership with NABARD, Department of Telecommunications, Banking/Financial institutions and funded by the USOF (Universal Service Obligation Fund) is launching a spate of micro-programs that will aid Women in Rural areas (Aggregated to Self Help Groups) to become entrepreneurs and gain some socio-economic independence.
The project which is un-named yet, focuses on females, and uses NGOs and Micro-Finance companies to reach out to these Self help Groups (SHGs), helping them with micro-credit and loans to finance their ventures. Furthermore, GoI is also joining hands with market players under the aegis of Corporate Social Responsibility to support the SHGs in their entrepreneurial endeavor. So, the Nokias and Airtels of the world are a part of this whole exercise extending their support, help and expertise to the SHGs. The beauty here is that while this is under the aegis of CSR activity, it has economic and business relevance to these players as well.
The SHGs adorn the role of last mile distribution houses in an otherwise lengthy and economically unviable distribution supply chain. Thus the whole template of a win-win-win for all three parties in the program. The Government benefits from economic-inclusion of the bottom of the pyramid people. The SHGs would benefit from being able to have an earning for themselves at the end of the month. The Companies would benefit from benefits of getting connected to the last mile and the last consumer in the value chain.
That’s called reliving C K Prahlad’s Value at the bottom of the Pyramid.