Ronnie05's Blog

Are Telcos reading tablets wrong? (Blame it on the Dumb Pipe Syndrome)

Posted in Industry updates by Manas Ganguly on May 25, 2013

Amazon prepares to take it services global with a 190 country launch – riding on the success of its tablet- Kindle Fire. Elsewhere Apple has recorded its 50 millionth download and Android is racing Apple in terms of the number of apps on their stores. Tablet Phenomenon still on the rise, creating new opportunities for players across the value chain. ABI research reports that the tablet market will grow this year by 38% to 150 million units, worth an estimated $64 billion. The total number of tablets is estimated to grow by a projected 38% over 2012, and the total revenue will grow a projected 28%. Eeven the most conservative estimates foresee tablet sales surpassing 350 million units by 2016.

The Indian market for tablets is estimated to grow 100% (from 3mln to 6mln units in 2013). Given the largesse and state government doles in the pre-election year- this could translate into a number much larger than the 6mln estimated. As of today, the following are the key drivers of the tablet business-

1. Device Affordability
2. Affordability in 3G Mobility
3. Business and Bring Your Own Device (BYOD)
4. Platform maturity and Applications, Services for a
5. Vernacular matures as a platform
6. Government push on Tablets as a segment to connect the unconnected- Election Year!

However Operators, on a whole, are giving this wave a miss – happy to play the second fiddle by providing a modest data pipe. It amounts to selective deafness and blindness to the emergence of the digital native. Alongside, there is a persistent lack of clear strategies to deal with the Tablet phenomenon. Most Operators play it safe when it comes to Tablets, making few bold or innovative moves and treating it as yet another data terminal. However there is a clear need for a strategic roadmap in terms of services, enterprises, customers and segments. As of today, Operators are only strategizing basis improvement of bandwidth and milking the spectrum more effectively – all of that summarily categorized at LTE deployments.

However, if you consider the markets over the last 2 years – there is little that operators have done to capture the windfalls from the Tablet devices as a segment. Most of the profit pool is shifting across the value chain to digital content and service providers (Read Google, Amazon, Apple, Facebook) alongwith the Component manufacturers (Qualcomm, Allwinner, MTK, Samsung and others). As the Operator cash cows (voice and SMS) continue on a steady decline loosing out turf to IP services and social networks, there is very little observed shift to content and advertisement revenues.

I am privy to some operators working on integrated consumer touch point and UI strategies which works on the semantic framework , we are yet to see any real implementation of this. Again, a couple of operators have invested in media companies for content services – but these efforts havent seen the light of the day. In the meantime, the eco-system is drifting away from operators. There are still several potential plays that can help the Indian Telecom players protect their value shares – but operators will have to think beyond their existing businesses to innovate on these new paradigms to ensure continuation of their profit pools. The key is to emerge out of that dumb pipe syndrome.

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