The Q2,2011 mobile phone shipment volumes and the market share report by IDC has a few interesting take aways. The report estimates that worldwide mobile phone market grew 11.3% year over year in the second quarter of 2Q 2011, despite a weaker feature phone market, which declined for the first time since 3Q09. Vendors shipped 365.4 million units in 2Q11 compared to 328.4 million units in the second quarter of 2010. The 11.3% growth was lower than IDC’s forecast of 13.3% for the quarter and was also below the 16.8% growth in 1Q11.
However, the feature phone market shrank 4% in 2Q11 when compared to 2Q10. The decline in shipments was most prominent in economically mature regions, such as the United States, Japan, and Western Europe, as users rapidly transition to smartphones. This was the first decline since Q3 2009 and reflected a combination of conservative spending and continued shift to smartphones.
For the overall market to grow by double digits year over year, despite the decline in feature phones, is testament to the strength of the global smartphone market. While this is not a new trend – smartphones have been the primary engine of growth for the last several quarters. However, the 2Q 2011 timeline is an milestone, because it does mark something of a transition point, as demonstrated by the growing number and variety of smartphones featured in the vendors’ portfolios. One might as well add a subdued demand from Japan given the Earthquake and component shortages.
In the OEM space, the same story plays out with Nokia loosing close to 10% market share and with shipments falling 20% YOY. High channel inventories in China, competition from Samsung in mi end and Chinese white label manufacturers in low end and a free fall on the smartphone space have led to Nokia’s loss. The story rings the same for LG as well which lost 19% YOY and 3% market share points.
Samsung which has had an impressive run lately both in entry and mid level in Europe and Asia and has catapulted to No.2 slot on the global smartphones list has registered 10% growth which is a shade lower than the 11% market expansion.
Apple thrived in China thanks to strong iPhone 4 demand. If Apple was to release a low cost iPhone as rumored, it could make major inroads and overthrow LG from the no.3 spot. That is quite phenomenal considering that Apple did not sell phones till about 4 years back.
China-based vendors gained share in India, West Asia, Africa and Southeast Asia at the low end.
In Western Europe, the market declined sequentially compared to the first quarter. The feature phone market declined while smartphone shipment growth slowed as phone makers and carriers reduced inventories in advance of expected third-quarter product launches.
Civil unrest in West Asia, North Africa and other Arab countries, impacted sales negatively.
In North America, smartphones once again took center stage, propelled by lower prices, key device launches, and enhanced channel marketing. In particular, Android-based devices extended their lead in the United States and took leadership in Canada thanks to Samsung, Motorola, HTC, and LG. Meanwhile, demand for feature phones continued to slide, but there still existed pockets of interest for voice-centric and quick-messaging devices.
The Latin America market growth was driven by low-cost smartphones, specifically those with social networking features. Lower smartphone prices, including those of the Android variety, are driving smartphone penetration in several Latin American countries. Price is expected to be a point of differentiation – as well as applications and device features – between Android players in future.
Data courtesy: Voice & Data magazine
The Indian Telecom industry grew around 15% during FY11 to post a satisfactory revenue of `166,168 crore compared to the `144,600 crore in FY10. In light of the fact that the environment was not conducive for telecom growth in the country, Revenue as well as growth rate made it all the more satisfying.
In terms of numbers, the industry sold 227 mn new SIM cards (not added that many subscribers), taking the total SIM card base to 812 mn and showing a growth of 39% over the year and monthly average additions of over 20 mn. Interestingly, 800 mn was the target set by the government, to be achieved by 2015, but the industry did it in 2011, four years before the deadline, albeit, in terms of SIM cards and not subscribers.
Other significant segments of the telecom business like NLD, ILD, VSAT and broadband also performed better than expected last fiscal. The total NLD market stood at `22,812 crore in terms of revenue compared to `17,118 crore in FY10 showing a promising growth of 33%.
The ILD market has shown steady growth of 10% with total revenue of `22,607 crore in FY11.
On fixed line, service providers are bundling broadband and IPTV to retain and attract customers but it is not helping; the industry showed a negative growth of 15.6%. Both BSNL and MTNL, which had a monopoly in fixed line services, have been badly affected. In terms of numbers, the fixed line market is estimated to be around `11,206 crore.
In terms of revenue numbers, broadband services was pegged at `6,846 crore in FY11 vis-a-vis `5,591 crore in FY10. Broadband has shown excellent growth of 22.4% thanks to large operators, especially BSNL, which has increased its coverage. The company is present in 100% districts and 98% block headquarters. So, in toto, the broadband coverage is available in more than 5,000 cities and 170,000 villages.
VSAT services industry accounted to `467 crore, thanks to government, education, R-APDRP and RRB.
It is expected that the industry will build upon the growth maintained in FY11 and use BWA and 3G as levers for increased growth in the coming fiscal. 3G will play a bigger role and so will data services as they will have to go hand in hand.
While Tablets are the hottest gadgets and are eating away into the netbook and laptop global markets, thereby inducing most of the PC makers to make their own tablets to keep their toplines and bottomlines in shape. Blame it on the iPad which got the Tablet juggernaut which started and the Android tablets which are eating into the low, mid and high end of the tablets segment currently. The IDC forecast for Tablet growth globally compares starkly versus the PC sales.
However the story in India has been somewhat different in Indian context. While tablets have become an aspirational device for people who possess more than one computer, the sales units are around a 100K on an annual basis led mostly by Samsung. One sees a lot of tablets in airports and on planes, but that is where the device has been able to create a niche. Its far from mainstream acceptance.
Factors that impede Tablet penetration in India:
1. Limited Features such as lack of USB port, CD/DVD drives, software and memory upgradation
2. Tablets by nature are used for consuming content – playing, downloading, social networking, apps. However, a tablet is far behind the laptop in terms of content creation. In emerging markets such as India, content creation devices will always be in more demand than the content consumption devices.
3. Wireless broadband and 3G networks are till in infancy and WiFi hotspots are still are in India.
4. Where-ever the broadband services are available, the costs are high and the speeds are un-uniform, not to speak low as well.
These may be the negatives but that doesnot end the story in India. As with all devices, Tablets will take their time to hit the sweetspot in pricing and proposition in the markets.
1. Internet in India is growing by multiple factors and the young population is increasingly turning to digital avatars as a way of life. Facebook, Twitter lead the way in the Indian way of self expression which in turn fuels internet growth
2. Broadband and other connection techniques are on the up as higher data speeds are breached and 4G a possible reality by 2015-16
3. The number of tablet makers in the country have multiplied. 6 months back we only had Apple and Samsung and now we have Moto, Olive, HTC, Blackberry, HP in the fray. This should be a case where supply will create its own demand
4. White labelled Mid end tablets @ Rs.6K-10K backed by Telcos will be an interesting device proposition to the first time laptop buyer. Given that attachments such as docking ports, key pads and more are to follow, the tablets will develop the tablet habit.
5. Enterprises and Schools will also allow tablets as an easy media machine: cheap, handy, portable and with much less hassle than laptops.
Data is big… just how big is something that isnt expressed in numbers really! Not at least till you have the metaphors of data in the context of common understanding. In this post today, i feature a presentation from Cisco’s Dave Evans. Apart from the data metaphors, it is amazing to see how our lives will change in next 10 years due to technology advancements.
Mobile subscribers growth is slowing down. If it was a lingering doubt that i had expressed in my last post, May 2011 subscribers data adds a solid brick of evidence that subscriber growth is decelerating.
Highlights of the May month numbers have been:
1. 13.35 Million new mobile subscribers were added taking total tally to 840 Mln.
2. Wireline subscribers reduced by 0.15 mln – the tally stands at 34.40 mln.
3. As of May 2011, there are 554.75 Million Urban subscribers as compared to 294 million rural ones.
4. Urban Teledensity (154%) is nearly 5 times higher than rural (34%).
5. There are 2 urban subscribers for every one rural mobile subscriber in India
6. Mobile Number Portability requests increase from 85.41 lakh subscribers at the end of April 2011 to 105.70 lakh subscribers at the end of May 2011.
7. Active wireless subscribers in May 2011 stand at 588.13 Million, which is about 70 percent of all mobile subscribers!
8. Broadband subscription reaches 12.12 Million in May-2011 from 12.01 Million in April-2011.
While ARPU has been southbound for a while now, the trend that is building up is a slow down in subscriber acquisition as well as MNP numbers starting to look up. For 2 quarters, Telcos have tried their muscle in trying to stop subscribers from jumping ship. However, with absence of improvement in quality of voice and data served, users are now making the shift. AN example here is that of Videocon which was languishing at an ARPU of Rs.8.5 and now to add to its miseries are customers as they jump ship. A reported 1.86 lakh subscribers exercised MNP in Videocon this month.
The growth now on is to come from the rural segment and there are choices that the TRAI and DoT are considering to encourage operators to travel deeper into rural India. Two options are currently being considered, one of them being subsidies to Telecom operators as an incentive for furthering the rural reach. The other option is about utilizing the Universal Services Obligation Fund (USOF) fund chest which is around Rs.20,000 crore currently to fund rural expansion. I guess we would see something on this front before the end of the year.
Whichever way it is Innovation at reaching out and monetizing telecom services has been a bottleneck and with the wellspring of net subscriber adds slowing down, it will be interesting to see how operators fare on a lot of operational and profit counts!
Gaming takes the cake in terms of Apps and its stickiness with users.Average mobile gamer plays approx 7.8 hours per month where-as an iPhone user plays the most at 14.7 hours per month & Android users play 9.3 hours p.m. This data was released by Nielsen for Q2,2011.
An interesting survey of top 100 grossing games on the Apple Apps store in January and June of 2011 by Flurry yields an interesting trend in terms of gaming. Games occupy more than 75% of all top 100 grossing apps in the app store, it’s the single most dominating business model in the mobile apps industry today. The interesting result of this survey is the growth of revenue from Freemium games at the cost of share decline of Premium-paid up games.
Stickiness is the key to success of all gaming because this then provides compelling spending opportunities and branding spaces for consumers as well as sponsors. The best example is that of Zynga which with its Farmville and Cityville franchises has worked its way to a $1bn IPO.
A freemium model with in-app purchases, is perceived to be advantageous as it can induce higher trial and usage rates. Also, when a network of friends opts in to play together, their group profiles and consumption can be an interesting hunting ground for brand ads and sponsors. Those who consider buying or paying money on the gaming app will anyways be doing it if the game appeals to them. Thus in terms of appealing to larger initial masses, a freemium app definitely beats out a premium app. The other problem with a premium app is that without any trials on the game, it is a difficult choice to invest on the game upfront to the users.
Freemium and Free-to-play is here for good.
Last September, Apollo joined Aircel to launch a tele healthcare delivery project. Tele medicine and tele triage facilities were made available to over 45 million subscribers of Aircel under the project then. Apollo at present has a capacity to cater to 100 million users. Apollo Hospitals has tied up with Idea Cellular and is in talks with three more telecom service providers for its mobile healthcare delivery programme. The company also wants to rope in insurance companies and other private sector firms to widen the network. The programme is also trying to rope in insurance companies, who already provide coverage to the patients, and can extend it to mobile health, thus making the service free of cost. With the subscribers of new service providers incorporated into the programme, Apollo expects to provide the service to 300 million users in 12 months. Apollo is expanding the service with more number of telecom service providers and is also adding more associated services in the platform.
MVNO has been a concept that has been scorned at after the debacle of the Virgin-Tata Teleservices MVNO effort. Sunil Bharti Mittal had written of MVNOs in a statement in 2009 and the industry seems to have forgotten the MVNO concept. I have always maintained that MVNO done the right way will be a business model that could create difference in the end game: revenues and bottomlines. Towards this, I had many months earlier provided the examples of European MVNOs who are engaged in delivering differentiated value to consumers.
To me, the Apollo model is a ideal and exemplary manner of launching MVNO services in India even though it is not referred to as MVNO services in the first place. Tele Medicine/Healthcare is an invaluable tool in health care as it helps patients to get service from doctors even in remote areas without the need of patient’s physical presence at Doctor’s clinic. The patient data is collected through various processes like history, data-entry, biometrics and integration of medical equipment. The data is stored and shared between healthcare professionals to diagnose, treat and follow-up be it (regular treatment, post–surgery etc).Some of the significant benefits are, reduced patient health risks; enhanced access to care for patients living in rural/remote areas; reduced healthcare delivery costs; saves time and travel; minimized hospital admissions and objective and timely clinical information.
Tele-Healthcare is a model consumer need and business opportunity and tele-healthcare delivery could be a huge platform. It would work on three levels
1. Tele-Triage: Treatment of common ailments which could take the crowd out of the clinics and hospitals. The Tele-healthcare provides an essential touchpoint for quick resolution of the common and daily health problems.
2. By integrating other services such as insurance, the platform could be versatile in terms of cross functional integration: Insurance, Medicine, Hospital services and more. This would take the pain out of healthcare services.
3. At a higher level, specific devices and healthcare apps could get integrated to deliver higher order medicine/healthcare services to people. Imagine not having to go to the clinic for bllod tests every week and instead doing the test at home and sending the relevant reports to the doctor.
From a business model perspective, Telecom Service providers need to look at services such as Healthcare, Learning and Long Distance education, utilities as a means of augmenting their drying profit streams. The sooner the better. MVNOs are promising in this space.