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The multi-device ownership scenario amongst Indian internet users

Posted in Industry updates, Mobile Computing by Manas Ganguly on January 19, 2014

Multi device Ownership scenario

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Driven by a narrowing price gap, Smartphones begin to penetrate deep into Indian markets

Posted in Device Platforms, Industry updates by Manas Ganguly on December 29, 2013
India: Smartphone contribution to Mobile phones sales and %age

India: Smartphone contribution to Mobile phones sales and %age

1. Smartphone shipments to India exceeded 10 million units mark for the first time in Q3, 2013. For Q3, 2013, the numbers stood at 11.10mln mark.
2. The import numbers of smartphones to India have increased by 192% (Q3 2013 versus Q3 2012)
3. Coupled with the fall of volumes in featurephone shipments by a factor 25.5% (QoQ 2013 versus 2012), Smartphones now contribute 21% of the total mobile shipments in the country
4. Mobile phone markets in India have moved past the historic highs of 58-59 mln units/quater(Q3/Q4 2012).

Smartphones have now acquired the critical mass and threshold pricing (~Rs.3500-5000) to capture mass markets in India substituting the feature phone. The change agents for this rapid shift of consumer preference towards Smartphones have been the narrowing price gap between feature phones and smartphones.

Correspondingly, the number of internet users on handhelds (Smartphones) is expected to grow exponentially as per a recent IAMAI report which pegs a 20-30 million increase in internet mobile user base every quarter.

Indians on Internet

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India and Internet’s next billion

Posted in Internet and Search by Manas Ganguly on November 14, 2013

A recent report released by IAMAI and IMRB estimates 243 million internet users in India by June 2014 there by overtaking US(200 million users) and putting India at no.2 Internet population globally, behind China at 300 million. This study also states that the internet population in India would cross 200 million by October 2013 (exact number 205 million). The caveat served is that while all the 205 million may not be active internet users currently, but they would become “active” soon.

Internet demographics
Internet in India took more than a decade to move from 10 million to 100 million and only 3 years from 100 to 200 million. From here on, we can hope to develop a robust Internet ecosystem with a multitude of local and global players and a thriving Internet economy. Internet is now, clearly, mainstream in India. the number of Computer Literates in rural India by June 2013 has risen nearly two-fold to 125 Million. The number of internet users in urban India is 137 Million in October 2013 and is estimated to touch 141 Million by December 2013. In Rural India, there are 68 Million Internet users in October 2013 and will reach 72 Million by December 2013. Mobile Internet, too, has garnered a huge base among the Active Internet Users. This is a 18%+ jump over the June 2013 numbers, when there were 59.6 Million users in Rural India who have accessed internet at least once in their lives. Although this number is witnessing a steady growth, the penetration of 6.7% among the total rural population is still very low considering the huge rural population of 889 Million.

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Mobility driving Internet
The number of mobile internet users has also witnessed a steady rise, with 110 million mobile internet users in October, and is estimated to reach 130 million by the end of December. In June, there were 91 Million users accessing the Internet on mobile devices, with 70.2 million users in urban India. This number rose to 85 million in October and is estimated grow by 47% and reach 103 Million by December 2013. Rural India is not that far behind in this regard with a base of 21 Million Mobile Internet Users in June 2013. It reached 25 Million in October 2013 and will touch 27 Million by December 2013. Mobile usage and hence, mobile internet usage has seen huge jump from the 2012 penetration levels. Compared to the 0.4% mobile internet users in 2012, the penetration has grown to 2.4%, indicating a substantial growth in the mobile internet user penetration levels.

While Indians primarily use the internet for communication, largely in the form of email, social media is also an important driver of internet use in India. This facet of the IMAI report can be corroborated with data from other sources such as Facebook, according to which India had 82 million monthly active users by June 30, 2013, the second largest geographical region for Facebook after the US and Canada. Facebook does not operate in China.

Internet penetration in India is driven largely by mobile phones, with some of the cheapest and most basic hand-sets today offering access to the internet. India has 110 million mobile internet users of which 25 million are in rural India. The growth of internet penetration in rural India is driven largely by the mobile phone; 70% of rural India’s active internet population access the web via mobile phones. This may have to do with the difficulty in accessing PCs.

While the IMAI report paints an optimistic picture of internet use in the country, another report by the Broadband Commission for Digital Development, ranked India 145 of around 200 countries for the percentage of individuals using the internet.

What this means for service providers, handset OEMs and the VAS eco-system?

1. 42% of rural India’s internet users prefer using the internet in local languages. The high prevalence of content in English is a hurdle for much of rural India. Hence Vernacular medium is now key to greter penetration2. Given the poor connectivity and the lack of 3G accessibility in India – one would need to design experiences on mobile and web differently making sure that content is served first and pages are kept light. One must plan for delivery of internet on EDGE/2.75G networks
3. With projects such as UIDAI taking wings – a lot of economic activity i.e banking, payments, money transfer would also migrate online – thereby concerns on security is key
4. WiMAX could have been a great local area internet enabler – but then this technology is done and dusted. Something like the Google Balloon could be a good solution – but it may be a few years away yet.

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State of Indian Broadband (2013)

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

The importance of broadband penetration as a GDP driver isnt lost on anyone – especially in a state like India – and while the internet connectivity in India hovers at the 10% level – there’s quite simply so much more that is to be done to enhance the state of broadband in India.

A recent report from Broadband Commission For Digital Development, a United Nations set-up, launched by the International Telecommunication Union (ITU) and the United Nations Educational states That broadband in India has already generated nearly 9 million direct and indirect jobs, while a 1% increase in broadband penetration has potential to add US$2.7 bn or 0.11% to Indian GDP in 2015.

India ranks a distant 122nd worldwide in Fixed Broadband Penetration per 100 residents.Third world countries like Tonga and Kyrgyzstan are ahead of India
India also ranks a far-off 106th in the Mobile Broadband Penetration across the world per 100 residents.
In terms of households with Internet for developing countries, India ranks better at 75.
Percentage of Individuals using the Internet across the world, India is at 145 and among developing countries is at 98.

In 2011, India adopted the National Optical Fiber Network policy. The results are not obvious in the current time-frame.

India is also one of the first countries to launch LTE (4G telephony). This could accelerate service delivery in sectors ranging from health to public infrastructure, and thus drive a significant structural shift in consumer behaviour over the next few years. However from the current context India’s Broadband does cast an inadequate and be-littling picture.

India Tablet Market (Q1, 2013)

Posted in Industry updates by Manas Ganguly on June 5, 2013

The inexorable march of the Tablet category is pretty much in place – even while the 5.7″, 6″,5.3″ form factors are gaining ground and acceptance in India. The Indian tablet market is set to double up from its 2012 numbers.

Q1, 2013 registered 905K tablets sold in India which was a 159% YoY increase from the Q1, 2012 figures. While this number was 21% less than Q4,2012 – that is explained by the seasonality of the purchase. The Indian Tablet markets pick has been faster in second halves owing to lot of factors.

Tablets Q1, 2013

These numbers are reported by CMR. As many as 59 domestic and international OEMs shipped their tablet PCs to India and led to a fragmented market with only 9 vendors beyond 20K tablet sales. However Indian consumers showed no bias towards International brands – as Datawind took the top honours with 15.3% of the market edging out Micromax at 12.3% Apple’s iPad mini enabled a come back to No.3 position with 11.3% market shares.

Leader Board

The leaderboard points to a sort of polarization of India Tablet user segments – one set looks primarily for performance and best-in-class build quality and typically opts for the high-end Apple iPad, while the other segment looks for a wide range of features at an affordable price point and opts for brands like Datawind and Micromax.

To round of this analysis, there are these three trends that would drive the adoption of the tablet segment in consumers as well as enterprises in the days to come
1. While 3G data enabled tablets contribute only 28% of the Total Indian tablet markets, it is expected that this segment will see some serious action and expansion in days to come with the possible launch of low cost 3G SOC solutions by MTK.2. 2013-14 being the election year, one would see a lot of government doles in terms of tablet devices.
3. Also, one of the other trends that i am betting to see a lot more is the customization of tablets for specific industrial segments as we will see tablets featuring more on the Enterprise BYOD space.
4. Solutions such as Vernacular based solutions, Micro finance/Micro Credit/Financial Inclusion, Insurance industry solutions, Healthcare/patient record/ Patient history digitizations apps, Agrarian and Retail Point of Sale Applications will be key to segment growth in the coming days.

Internet in Indian context – The prime mover

Posted in Industry updates, Internet and Search by Manas Ganguly on January 11, 2013

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.

Internet Growth India

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.

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Infographic: Indian Tablet Markets: Charting the growth curve

Posted in Industry updates by Manas Ganguly on January 8, 2013

2012 has been a year of tablets! (indeed). The Indian tablet growth story is very much in line with the global growth in tablet and tablet based consumption. Here’s an infographic that relates to the growth of Tablets in India and the segment wise splits.

Tablets - Indian Growth

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

Posted in e-commerce, Internet and Search by Manas Ganguly on November 19, 2012

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 3rd 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.

Aadhar II

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.

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The flight of Tablets in India

Posted in Industry updates by Manas Ganguly on October 9, 2012

Fall in Entry level pricing has been instrumental in driving tablet sales in India which peaked at 5.5 lakh units in the second quarter of 2012, growing 59% over Q1, 2012 as per CMR report. This is a 6 fold increase against the Q2, 2012 numbers and it is in line with my expectations of 2.5 million tablet units to be sold in india in CY 2012.

Micromax emerges as the surprise number.1 beating the fancied Samsung and Apple – Micromax cornered 18.4% of the market compared to Samsung’s 13.3% and Apple 12.3%. During 2Q 2012, 47.4 per cent of tablet sales were from new entrants in the market with a strong focus on addressing application areas in the Education and Entertainment segments. This trend demonstrates clearly that vendors are positioning their devices at India’s youth. Close to 90 vendors launched their tablets till 2Q 2012.The average selling value (ASV) of the tablets in 2Q 2012 has dropped to little above Rs 13,000 from Rs 26,000 in 1Q 2012, as a majority of vendors in early 2012 launched their products in the Rs 5,000-10,000 price range.

The major feature ternds include WiFi connectivity, 7″ form factor, Android OS as the de-fault, 1GHz processor speeds and 512MB RAM.

Indian tablet personal computer (PC) market will touch 7.3 million units by 2015-16 from around 1.7 million units in the current year (CMR Data). My estimates put tablet numbers in India to touch upwards of 2 million units in CY2012. The developing ecosystem of this device will also ensure adoption by many users.

In contrast to tablets, desktop sales grew only 11% and notebook sales grew 26% in last 12 months and will slow down given the cannibalization by tablets category. Also a lot of government effort is twards driving Tablet adoption based on use-case specific internet applications.

PC Sales in India – Q2 2012 (Gartner)

Posted in Industry updates by Manas Ganguly on August 29, 2012

India PC market registers 17% growth in Q2, 2012 over Q2, 2011. The combined desk-based and mobile PC market in India totalled nearly 2.9 million units in the second quarter of 2012. Consumer buying accounted for 50 percent of total PC sales in the second quarter of 2012. Consumer PC sales grew 24 percent sequentially, which emphasizes the fact that media tablets are not yet cannibalizing the PC market in India like in the West. Consumer growth is being primarily being driven by entry level products. Computer makers such as HP, Lenovo, Asus and Samsung registered more than 50 percent growth in the consumer segment. Ultrabooks are still finding it difficult to penetrate the market. However, with the availability of the new Intel processor and declining price points, adoption of Ultrabooks would increase in coming quarters.

Laptops, which grew 54 percent compared to the second quarter of 2011, helped drive overall market growth. White boxes (including parallel import), which accounted for 45 percent of the overall desktop market, declined 18 percent in the second quarter of 2012 in comparison to the second quarter of 2011. The launch of Windows8 will impact the category in terms of certain vendors who will GTM the Windows8 first.

Lenovo has swung from a No.4 position in 2011 to No.1 position in 2012 basis a large TamilNadu govt order for the ELCOT project. On the other hand, Dell’s market share reduced by more than a fifth to 12.9% as compared to 16.7% in Q2 2011.

With Diwali coming up in November, the PC market is expected to continue showing momentum in the near future. Gartner believes that gifting during festivals along with subsequent shipments for the ELCOT deal will lead to further growth in the market. The study also reports a 25% growth in consumer purchases, which amounted to 50% of total PC shipments in Q2 2012.

From a long term perspective, it is unclear how the PC market will shape up when the average Indian turns to tablet as the primary computing device. While tablets have been eating into PC shipments – that hasn’t happened yet in India. The iPad posses less of a threat to PCs in the Indian market at least for now, because of its hefty price tag.

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