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Mark Anderson’s 2010 Tech industry predictions

Posted in Industry updates by Manas Ganguly on December 15, 2009

Mark Anderson, strategist and visionary known for his sense and knowledge of markets around the world has released his list of 10 trends for 2010 which make an exciting read.Here are the ten:

1. 2010 will be The year of Platform Wars: netbooks, cell phones, pads, Cloud standards. Clouds will tend to support the consumer world (Picnik, Amazon), enterprises will continue to build out their own data centers, and Netbook sector growth rates continue to post very large numbers.

2. 2010 will be The year of Operating System Wars: Windows 7 flavors, Mac OS, Linux flavors, Symbian, Android, Chrome OS, Nokia Maemo 5. The winners, in order in unit sales: W7, Mac OS, Android. W7, ironically, by failure of imagination and by its PC-centric platform, actively clears space for others to take over the OS via mobile platforms.

3. All content goes mobile. Everything gets tagged, multi-channeled, and the walled gardens open up. TV and movie content, particularly, break free of old trapped business models. We are moving toward watching first-run TV and movies on phones, for a price. Which leads to no. 4.

4. MobileApps and Mobile Content drive MicroPayments, which move from niche to mainstream payment models. Payment for content will split along age lines, at around 35; above, pay; below, don’t pay.

5. The Phone vs. the PC: A Split Along Two Paths (enterprise vs. consumer).Note: The phone is now the most interesting computer platform, and it is driving innovation: software, business models, distribution. Netbooks are next up as drivers.

6. There will be a Cloud Catastrophe in 2010 that limits Cloud growth by raising security issues and restricting enterprise trust. CIOs will see the cloud as the doorstep for industrial espionage.

7. A huge chasm opens in computing, between Consumer and Enterprise (government/business.), with Apple, Google and most Asian hardware companies in Consumer, and Dell, IBM, Cisco, and MS on the Enterprise side. HP will straddle both. Before 2010, talk was all about unifying consumer and enterprise. Now, talk will be about their split.

8. Microsoft loses in its Consumer play: except for gaming, it is Game Over for MS in Consumer. This will make Consumer the place to be, where the most robust and exciting change artists will work.

9. News media that survive will move to the subscription model, in whole or in part, along age lines. (See no. 4)

10. Connecting remote data to people and things in real time will lead to a series of exciting new devices and applications. Possible examples: real time comparison and recipe-driven shopping, facial recognition (in social spaces) linked to bios, self-guided tours by phone, voice-queried information about your personal environment. Many of these are technically proved out today, but they will start to emerge as an exciting and brand new trend in applications in 2010.

Indian telecom story: Collaboration as a tool to Profitability

Posted in Industry updates by Manas Ganguly on February 16, 2009

The recession has not been able to put the spanner through the growth engine of Indian telecom Subscribers. It is adding the 10 million month after month and the engine seems good to keep chugging on at a fair and brisk pace. The ARPU are south bound, which has a direct relation to profitability. However, competitors collaborating with one and the other have been able to keep the costs light. Wonderfully well, collaboration has reduced the CAPEX and OPEX of the operators giving them the healthy booster shots in their profits! I had reported sharing of the infrastructure / towers/ sites in some of my earlier posts as well. This has the single biggest tool in terms of reduction of the Capital expenditures! It was under the government intiation that infrastructure sharing started off. The win win logic, was higher reach (which the government was persuing) and lower CAPEX which the Telcos were persuing while adding the numbers. Both these objectives were thus fulfilled by Project MOST! Operators today have set annual targets of 50 – 60% incremental sharing! The traffic varies from being heavy in the day times to being sparse in the night times. An analysis of the traffic for geographies also enbales switching off the sites, without impacting service quality and on the other hand, making savings on the OPEX! While project MOST is based on existing infrastructure sharing, roll out of infrastructure in weak coverage areas and sensitive areas is also happening through collaboration. So instead of 2 or 3 different towers in a newly opened geography, operators are agreeing on one site shared by the others. Three simple steps and yet, when CAPEX accounts for 31% of your Revenue and your OPEX is $ 6 (per consumer), with ARPU of $6 per month (implying no margins), changes in these figures can significantly alter your bottomline.

An year end analysis of Revenue and Subscriber market share trends in Indian Telecom Bazaar

Posted in Industry updates by Manas Ganguly on February 11, 2009

The top 6 operators in the Indian Telecom space are thus stacked up in terms of Revenue market shares and subscriber market shares! It is not surprising to find Airtel at the tip of the heap both in subscriber and revenues. However, It is Vodafone that is almost par with Reliance in Subscribers and trounces it in the revenue market share by a whooping mile! In fact Reliance is so low in terms of revenue shares that the no 4 (BSNL/MTNL) and no 5 (Idea) are biting at its end! Tata Teleservices comes up last in the list!

1. Airtel seems to consolidate its national footprint quite handsomely with a 14% increase in revenue shares. It has the highest ratio of revenue to subscribers! Again indicating that Airtel seems to have built some stickiness with the high ARPU consumers. One would imagine so beacuse high ARPU consumers do a lot of travelling and Airtel gives them the seamless connectivity!

2. Idea has seen a 22% increase in its revenue share, with an increase in its circles coverage from 12 in 2007 to 15 in 2008. Drop in ARPU has not been compensated as much by subscriber addition, which is why the index stands low amongst all the GSM private entities!

3. Vodafone traditionally is one of the higher ARPU players! However, its launch in C Circles seems to have taken some of the sheen away from its revenue/ subscriber index i.e most of the acquisition that has happened in thesecircles has been low ARPU consumers.

4. BSNL + MTNL have seen erosions both in revenue share as well as in ARPU! Also it has lagged the growth rate of the telecom market in 2008! No wonder then that, they are rushing into 3G to boost their ARPUs/Revenues!

5. Reliance and Idea, the CDMA operators have had a bad year! more people are choosing GSM services over CDMA. There appears to be a churn from CDMA to GSM as well. There is a erosion in higher end consumers who probably are flocking to GSM players as more and more are opening up to all circles! Indian CDMA operators have consistently seen a decline in Revenue Market share from 21.6% in Q3 FY08 to 17.9% in Q3 FY09. While GSM operators managed to gain the loss of CDMA operators and now control a whopping 82.1% of the Indian wireless space. Will the trend change with Sistema’s entry into the space ? Or something needs to be changed in the CDMA ecosystem to make it fit in the context of the second largest wireless market in the world ?untitled1

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Indian Telecom: Entry Barriers and Incumbents Wrath

Posted in Industry updates by Manas Ganguly on February 9, 2009

Incumbents wrath: I had defined this term for players in the market who are well settled and entrenched in the market with an established network all over. These are the incumbents who grow because of an established network presence, a brand that consumers are aware of and sheer economies of scale. By leveraging these points of strenght. these players are able to fight late entrants and challengers more effectively. The analogy is to some one who is firmly based on a hill and can roll off rocks down the hill to ward the challenger who intends to take over the control of the hill!

That is certainly what is happening between the incumbents (Airtel, Vodafone, Idea, Aircell) and the challengers (Datacom, Unitech, Swan Telecom, Shyam, Loop and Reliance Communications). The piece under contention is the mobile termination charge which one operator pays to the other when the customer of the further uses the roaming charges of the later. This is 30 paise a minute charge as of today. This is charged to the consumer as the cost of roaming.
With an all India footprint (or 80% coverage), the incumbents effectively donot have to pay termination charges. The full coverage ensures that calls are terminated within their network. So for instance a Airtel call from J&K will not have to pay the Airtel network at Kerala the termination charges! However, a Swann call from Delhi, will have to pay a Vodafone network in Pune, since Swan is not present in Maharashtra. It will take Swan at least an year to get into Maharashtra! The incumbents have either been pocketing the termination charges or passing them to consumers “no roaming charge” kind of schemes.
This puts the pressure on the challengers who would from day 1 not have the comfort of their network everywhere! Thus they will mandatorily have to pay the 30 paise charge! Thats a point of disadvantage!
TRAI is trying to mediate a free termination or a 10 paise termination charge! Only thatthe Lobby of incumbets is trying to put a spanner in the wheel by claiming that such a waiver will affect their rural roll outs as this would reduce revenue!
TRAI has to take a stance and i would vote it does so for the consumer’s good.
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