India iGDP set to break through $100billion with 300mln+ connections by 2015: McKinsey

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.

Android – Google’s best strategic move ever?

Android controls 70% of the Smartphone volumes in 2012. Over the last 4 years, ever since Google launched Android, this has been one huge success story. In this post, i am looking at the 3 factors that have fueled the Android’s success story. The success generated by Android is across three key levels – Present day revenues for Google,Access to mobility for Google and generating intelligence and information about the user – creating profile and semantic patterns which is the future of advertising as we know it.

While Google’s intent behind Android was such that it was not completely shut out of the mobile Internet by a dominant OS provider. The initial fears were around the dominance of Microsoft which in the post 2007-iPhone era came to be Apple. However, it just did better – it went on to become the dominant OS in Mobiles and handhelds itself.

We all know that Google makes almost all of its money on ad revenue – 94% of Google Q4 revenues were based on advertising. Of this $8bn was generated by mobile devices of which, analysts now expect $5bn of 2013 Google Ad revenue to be from tablets alone! That makes it seem like a pretty solid investment for Google to pay whatever it does to be the default search engine in iOS ($1 billion/annual), since the iPad still holds close to half of tablet sales.

Android is Google’s footprint on mobile- An Android device, properly signed into a Google account and running all the Google Apps, generates an endless stream of little bits of ‘signalling’ information, way beyond what Google gets from a desktop search user even if they’re using Chrome. It knows where the user lives and works, how he commutes – and which phone numbers on web ads he dials. All interactions with Search, Maps and anything else can be linked together. Android, allows Google to tie searches and advertising to individual people and places. In the long term, the data that Google gets from Android users is probably just as important as Pagerank in understanding intent and relevance in search. The real structural benefit to Google from Android now comes from the understanding it gives of actual users, and the threat comes from devices that do not provide this data.

It is quite possible that even Google didnot see the scale of success of Android – Not only did it mark Google’s entry on mobiles, it also is generating revenue and most valuable user information.

Google- Internet usage figures 2012

Google has released statistics on global internet usage for 2012. According to the company the number of world-wide email users is at 2.2 billion with daily email traffic of 144 billion. Gmail emerged the most popular service provider with 425 million active users while Google’s web page and sites registered 191 million visitors as of November 2012.

The report shows the number of internet users worldwide stands at 2.4 billion with Africa coming in fifth accounting for 167 million of those. Asia is the leading continent in internet usage with 1.1 billion users followed by Europe with 519 million, North America with 274 million, and 255 million users in Latin America and the Caribbean islands.

The Middle East records 90 million users while Australia and Oceania regions account for 24.3 million users. The number of users in China alone is 565 million making it the country with the most users and internet penetration of 42.1 percent. On the social media platform, the report established Brazil as the most active country on Face book with 85,962 posts per month.

Worldwide face book had 1 billion active users as of October 2012, 47 percent of those being female and a user average age of 40.5 years. Twitter followed in popularity with 200 million users with 163 billion tweets since its inception and a user age average of 37.3 years. Google+ recorded 135 million users while Google recorded 1.2 trillion searches in December 2012. The report also establishes that 6.7 billion people were accessing internet through their mobile phones 1.1 billion of those through smart phones.

The number of mobile handsets was at 5.3 billion with 1.3 billion smart phones in use worldwide by end of 2012. 465 million android smart phones were sold in the same year. Google says it is almost impossible to capture all statistics seeing as the web has massive information but the prediction for 2013 is that people will rely more on the internet privately and professionally with more people using their mobile devices to access the internet while social media will become more significant to people’s lives as more use it not only for social networking but also to run their businesses.

Internet in Indian context – The prime mover

If 2000-10 was the decade of voice, the current decade 2010-20 would be the decade of data. Over the next three years, data could more than double in size to a US$14 billion industry, contributing over half the incremental industry revenue and add 500 bp CAGR to an otherwise slowing voice industry. The economic payoff of a data-connected population would also be significant. A World Bank study shows every 10 percentage point increase in broadband penetration leads to a 1.38 percentage point increase in per-capita gross domestic product growth in developing economies.

With 121 million Internet connected consumers, India’s tally lags 565 million Chinese Internet users by more than some distance. However a 42% CAGR in Internet subscribers over a 3 year period from 2008-2011 provides ample reason to get excited about the Internet market’s potential for stellar growth in India. An industry study by Assocham and ComScore indicates that the Internet user base in India is approximately 125 million and among the BRIC nations, India has been the fastest growing market adding over 18 million Internet users and growing at an annual rate of 41 per cent.

India is one of the youngest online demographic globally with about 75 per cent of online audience between the age group of 15-34 years. Among the age segments, 15-24 years of age group has been the fastest growing age segment online with user growth being contributed by both male and female segments. The female population accounts for almost 40% of 125 million internet users – indicating that gender equality on the information superhighway is catching up.

The Assocham-ComScore report on Internet usage in India (october 2012) indicates – The top five popular categories accessed online are social networking, portals, search, entertainment and news sites.

Online travel has seen growth across all subcategories including car rentals, online travel agents, airlines as well as hotels and travel information sites.1 out of 5 online users in India visit the Indian Railways site.

Others waiting to benefit include companies offering Indians everything from online travel bookings, recruitment and matrimonial portals. The country’s Internet retailing market will reach $2 billion by 2014, with consumer electronics, toys and games growing the fastest, forecasts by Euromonitor show. Retail category penetration has increased to 60 per cent reach and has grown to 37.5 million unique visitors a month. The travel segment sales will grow at a compound annual growth rate of nearly 38% in five years from 2009, and total $5.7 billion in 2014, according to Euromonitor. Apparel has been the fastest growing subcategory in retail and reaches 13.4 per cent online users in India.

These are still early days for Data and Internet in India and there are many business empires and business models which would scale up with the rise of the internet and Always on real time data access. The Internet and data industry in india may be 10 years – but the big numbers are starting to build up. Watch this space.

Taking the Internet Down – Factors and Ease of Effort

Can the Internet really be taken down? The recent blackouts at Syria and Egypt beg this question to be answered. Can Internet be engineered to fail abruptly and completely in certain regions of this world?

The key to the Internet’s survival is the Internet’s decentralization — and it’s not uniform across the world.   In some countries, international access to data and telecommunications services is heavily regulated.  There may be only one or two entities who hold official licenses to carry voice and Internet traffic to and from the outside world, and they are required by law to mediate access for everyone else. Under those circumstances, it’s almost trivial for a government to issue an order that would take down the Internet.On the flip side, this level of centralization also makes it much harder for the government to defend the nation’s Internet infrastructure against a determined opponent, who knows they can do a lot of damage by hitting just a few targets.

With good reason, most countries have gradually moved towards more diversity in their Internet infrastructure over the last decade. Sometimes that happens all by itself, as a side effect of economic growth and market forces, as many different companies move into the market and compete to provide the cheapest international Internet access to the citizenry. Even then, though, there’s often a government regulator standing by, allowing (or better yet, encouraging) the formation of a diverse web of direct connections to international providers.

How easy is it to disconnect the Internet- A World map.

Renesys – Internet Monitoring and Intelligence agency, lists out the risks of Internet black outs by countries and by the number f Internet gateways to the country.

• 1 or 2 companies at your international frontier-  Classified under severe risk of Internet disconnection.   Those 61 countries include places like Syria, Tunisia, Algeria, Turkmenistan, Libya, Ethiopia, Uzbekistan, Myanmar, and Yemen.
• Fewer than 10 service providers- Probably exposed to some significant risk of Internet disconnection.    Ten providers also seems to be the threshold below which one finds significant additional risks from infrastructure sharing — there may be a single cable, or a single physical-layer provider who actually owns most of the infrastructure on which the various providers offer their services.  In this category, there are 72 countries, including Oman, Benin, Botswana, Rwanda, Pakistan, Kyrgyzstan, Uganda, Armenia, and Iran.   Disconnection wouldn’t be trivial, but it wouldn’t be all that difficult.   Egypt falls into this category as well; it took the Mubarak government several days to hunt down and kill the last connections, but in the end, the blackout succeeded.
• More than 10 internationally-connected service providers, but fewer than about 40, the risk of disconnection is fairly low.  Given a determined effort, it’s plausible that the Internet could be shut down over a period of days or weeks, but it would be hard to implement and even harder to maintain that state of blackout.     There are 58 countries in this situation, ranging from Bahrain (at the small end) to Mexico (at the largest end).   India, Israel, Ecuador, Chile, Vietnam, and (perhaps surprisingly) China are all in this category.So is Afghanistan, reminding us that sometimes national Internet diversity is the product of regional fragmentation and severe technical challenges.  It’s true; the government in Kabul is powerless to turn off the national Internet, because it’s built out of diverse service from various satellite providers, as well as Uzbek, Iranian, and Pakistani terrestrial transit.
• More than 40 providers-  Extremely resistant to Internet disconnection.   There are just too many paths into and out of the country, too many independent providers who would have to be coerced or damaged, to make a rapid countrywide shutdown plausible to execute.   A government might significantly impair Internet connectivity by shutting down large providers, but there would still be a deep pool of persistent paths to the global Internet.    In this category are the big Internet economies: Canada, the USA, the Netherlands, etc., about 32 countries in all.

In many other cases, Physical pathways would be a limiting factor, even with multiple providers.  They are all sharing the very few long-haul fiber paths to/from a country which if taken out could lead to the black outs.

(This post is Inspired by a Renesys blog and quotes Renesys figures on the black out probabilities in nations)

What could be India’s next Killer app on Internet?

Internet was introduced to India in 1998 and over the last 14 years, Internet penetration has increased to 121 million (10.2% of India’s Population). India already is the 3^rd largest country in terms of numbers of Internet users globally.

Internet Growth in India

The convenience of train travel booking through the IRCTC website is seen as a significant catalyst to the growth of Internet penetration across India (Smaller towns, Rural areas included) and the grand old-dad of e-commerce in India. India, which is a conservative society in terms of Credit card spends, has never shied away from spending for Railway tickets online. Thus IRCTC is in effect India’s first killer Internet App.

IRCTC – Number of tickets sold & revenue (2003-12)

For a geography and an economy such as India, Internet would in future, be the tool for deliverance of education, healthcare, governance, information and banking to the masses. There is enough and more focus and push from the government to increase internet penetration in the
country. So what then could be India’s next Killer Internet App? The basis of “killer app” is increasing the Internet penetration. This is how it could really start working-

1. Vernacular Internet – With the Indic scripts and other language technologies coming to the maturity threshold, Internet in India would follow a vernacular path to massification.

2. UID aided- The UID would be key to provide an identity to every single individual in the country which is stored centrally and accessed by different services (Banking, Loans, education, professional, travel etc). Adhar which means basis in Hindi would be the fundamental construct to empowering people of India

3. Financial Inclusion – The government currently is working on a Direct Cash Transfer Scheme (DCTS) as a part of the MGNREGS ( Mahatma Gandhi National Rural Employment Guarantee Scheme) – financial inclusion which would reach the population at the bottommost layers of the social and economic hierarchy. Alongside there would be others such as Payments, Banking, Money transfer etc.

To me, these three aspects (Vernacular medium, Aadhar UID project and DCTS under MNREGS) coming together would form India’s next Killer App – which will enhance penetration across social levels, geographics and economical classes opf people. The Internet was the information super highway when it was designed. Connecting people to this super highway would be India’s next killer Internet App.

Rise of India’s Digital Consumer (Part I)

One of my earlier post deals with the e-commerce industry in India at this point of time. This series of posts will examine  the rise of India’s digital consumer.    

There are 124 million Internet users in India today, a growth of 41% Y-o-Y, out of which, 20 million users are through smartphones and tablet computers. Acccording to eBay, this number is expected to grow  100% over the next one year with the number of such devices growing everyday. comScore also reports India to be the fastest growing online market amongst the BRIC countries and India’s explosive online growth story will continue because, most online categories in India currently show below average penetration compared to global averages. With 124 million internet users, India is at a 10% level internet penetration. In correspondence to the rapid growth of Internet in India, Forrester estimates eCommerce revenue in India to increase from $1.6 billion in 2012 to $8.8 billion by 2016 accelerated by the increasing penetration of internet on mobile and social media.

Now heres the dope- for a country which is supposed to be technology phobic or plainly donot have access to technology because of the economics, Over 94% of the evolved internet shoppers surf internet, 87%  of the users compare product prices online and 68% of them have made online purchase using their smartphones and mobile devices.

As Internet penetration and the smartphones and tablets price accessibility increases – this will lead to increase in mobile commerce (mCommerce) volumes in India. Online purchasing through
mobile phones is catching up fast in non-urban and rural areas and the ratio between rural and urban buyers would be 1:10 right now but it may go up to 6:10 over next two years. Consumer Internet shopping habit is now forming quickly with most of these users using their mobiles as a window to transact ‘anytime and anywhere’.

To be continued.

Big Data: Controlling the beast by its horns

(This is the third of series of posts on Big data and the Internet of Things. Read the first, second and third posts here.)

I look for hot spots in the data, an outbreak of activity that I need to understand. It’s something you can only do with Big Data.” – Jon Kleinberg, a professor at Cornell

Researchers have found a spike in Google search requests for terms like “flu symptoms” and “flu treatments” a couple of weeks before there is an increase in flu patients coming to hospital emergency rooms in a region (and emergency room reports usually lag behind visits by two weeks or so).Global Pulse, a new initiative by the United Nations, wants to leverage Big Data for global development. The group will conduct so-called sentiment analysis of messages in social networks and text messages – using natural-language deciphering software – to help predict job losses, spending reductions or disease outbreaks in a given region. The goal is to use digital early-warning signals to guide assistance programs in advance to, for example, prevent a region from slipping back into poverty.

In economic forecasting, research has shown that trends in increasing or decreasing volumes of housing-related search queries in Google are a more accurate predictor of house sales in the next quarter than the forecasts of real estate economists.

Big Data has its perils, to be sure. With huge data sets and fine-grained measurement, statisticians and computer scientists note, there is increased risk of “false discoveries.” The trouble with seeking a meaningful needle in massive haystacks of data, is that “many bits of straw look like needles.”
Data is tamed and understood using computer and mathematical models. These models, like metaphors in literature, are explanatory simplifications. They are useful for understanding, but they have their limits. A model might spot a correlation and draw a statistical inference that is unfair or discriminatory, based on online searches, affecting the products, bank loans and health insurance a person is offered, privacy advocates warn.

Despite the caveats, there seems to be no turning back. Data is in the driver’s seat. It’s there, it’s useful and it’s valuable, even hip. It’s a revolution. We’re really just getting under way. But the march of quantification, made possible by enormous new sources of data, will sweep through academia, business and government. There is no area that is going to be untouched.

Channelizing and Structuring Big Data: Data First Thinking

(This is the third of series of posts on Big data and the Internet of Things. Read the first and second posts here.)

There is plenty of anecdotal evidence of the payoff from data-first thinking. The best-known is still “Moneyball,” the 2003 book by Michael Lewis, chronicling how the low-budget Oakland A’s massaged data and arcane baseball statistics to spot undervalued players. Heavy data analysis had become standard not only in baseball but also in other sports, including English soccer, well before last year’s movie version of “Moneyball,” starring Brad Pitt.

Artificial-intelligence technologies can be applied in many fields. For example, Google’s search and ad business and its experimental robot cars, have navigated thousands of miles of California roads, both use a bundle of artificial-intelligence tricks. Both are daunting Big Data challenges, parsing vast quantities of data and making decisions instantaneously.

The wealth of new data, in turn, accelerates advances in computing – a virtuous circle of Big Data. Machine-learning algorithms, for example, learn on data, and the more data, the more the machines learn. Take Siri, the talking, question-answering application in iPhones, which Apple introduced last fall. Its origins go back to a Pentagon research project that was then spun off as a Silicon Valley start-up. Apple bought Siri in 2010, and kept feeding it more data. Now, with people supplying millions of questions, Siri is becoming an increasingly adept personal assistant, offering reminders, weather reports, restaurant suggestions and answers to an expanding universe of questions.

Google searches, Facebook posts and Twitter messages, for example, make it possible to measure behavior and sentiment in fine detail and as it happens. In business, economics and other fields, decisions will increasingly be based on data and analysis rather than on experience and intuition.

Retailers, like Walmart and Kohl’s, analyze sales, pricing and economic, demographic and weather data to tailor product selections at particular stores and determine the timing of price markdowns. Shipping companies, like U.P.S., mine data on truck delivery times and traffic patterns to fine-tune routing. Police departments across the country, led by New York’s, use computerized mapping and analysis of variables like historical arrest patterns, paydays, sporting events, rainfall and holidays to try to predict likely crime “hot spots” and deploy officers there in advance. Data-driven decision making” achieved productivity gains that were 5 percent to 6 percent higher than other factors could explain.

Big Data and the Internet of Things.

(This is the second of series of posts on Big data and the Internet of Things. Read the first post here.)

With a 18 fold increase expected in the next 5 years timeframe Data is the new class of economic asset, like currency or gold.With growing multiplicity of data sources, Big Data has the potential to be “humanity’s dashboard,” an intelligent tool that can help combat poverty, crime and pollution. Privacy advocates take a dim view, warning that Big Data is Big Brother, in corporate clothing.

What is Big Data? A meme and a marketing term, for sure, but also shorthand for advancing trends in technology that open the door to a new approach to understanding the world and making decisions. There is a lot more data, all the time, growing at 50 percent a year, or more than doubling every two years, estimates IDC. It’s not just more streams of data, but entirely new ones. For example, there are now countless digital sensors worldwide in industrial equipment, automobiles, electrical meters and shipping crates. They can measure and communicate location, movement, vibration, temperature, humidity, even chemical changes in the air.

Linking these communicating sensors to computing intelligence and gives rise to what is called the Internet of Things or the Industrial Internet. Improved access to information is also fueling the Big Data trend. For example, government data – employment figures and other information – has been steadily migrating onto the Web. In 2009, Washington opened the data doors further by starting Data.gov, a Web site that makes all kinds of government data accessible to the public.

Data is not only becoming more available but also more understandable to computers. Most of the Big Data surge is data in the wild – unruly stuff like words, images and video on the Web and those streams of sensor data. It is called unstructured data and is not typically grist for traditional databases. But the computer tools for gleaning knowledge and insights from the Internet era’s vast trove of unstructured data are fast gaining ground. At the forefront are the rapidly advancing techniques of artificial intelligence like natural-language processing, pattern recognition and machine learning.