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Stanford University Program - Future of Indian Mobile Value Added Services (MVAS) Market December 8, 2007

Posted by chetan in : 3G, AORTA, ARPU, BRIC, Carriers, India, Indian Wireless Market, Intellectual Property, Japan Wireless Market, Mergers and Acquisitions, Messaging, Mobile Advertising, Mobile Applications, Mobile Content, Mobile Ecosystem, Mobile Entertainment, Mobile Gaming, Mobile Search, Mobile TV, Mobile Usability, Smart Phones, Speaking Engagements, Speech Recognition, US Wireless Market, Unified Messaging, Wi-Fi, WiMax, Wireless Value Chain, Worldwide Wireless Market , 18 comments

Stanford University Program - Future of Indian Mobile Value Added Services (MVAS) Market

Stanford University hosted a program focused on the Indian Wireless Market – Why Mobile?, Why India?, Why Now? Under the tutelage of Prof. Tom Kosnik of Stanford, Graduate Student Mohit Gundecha and BDA worked on a study looking at the Mobile Value Added Services (MVAS) market in India and presented their research at the event along with the release of their in-depth report on the subject. Prof. Kosnik started the evening by giving a presentation on his Global Leaders Entrepreneurs and Altruists Network (GLEAN) initiative. This was followed by a keynote from Jeffrey Belk, SVP Strategy and Market Development, Qualcomm (sponsor for the event) providing an overview of mobile growth in emerging and developing markets. The evening ended with a panel discussion on the opportunities and challenges of the MVAS space. This note summarizes the discussion from the event and our random musings on the market.

The panelists for the discussion were:

(above L to R)

Eric Allen, VP, FunMobility (Moderator)

Ashok Narsimhan, Chairman and CEO, July Systems,

Ojas Rege, VP, Global Mobile Products, Yahoo!,

Vin Dham, Executive Managing Director, NEA-IndoUS Ventures,

myself, and 

Niren Shah, Managing Director, Norwest Venture Partners,

It was an honor to be part of this discussion.

First, let’s do the numbers. As we have reported in our previous research notes, India’s growth has been going through the roof. We are likely to end up with over 80M net-add (subscriptions) for the year taking the overall tally to 232M. In the last 5 months, India has added more subs than China. By early April, Indian Market will cross US as the number 2 wireless market in the world. China remains untouchable with over 500M subs. Indian Government is targeting 500M subs by 2010. So, what does this all mean?

Couple of points on the numbers – Just like in other prepaid markets especially Europe, there is a lot of double counting of subs. Many of the unused SIMs are still being counted so the number of “actual” subscribers is less than the numbers that are generally discussed for the market. Secondly, the new subs that are being added are primarily voice subs and hence ARPU (esp. data ARPU is steadily going down for the market. Overall ARPU is approximately $8-9 with 8-9% from data services (where P2P SMS still dominates). Despite low ARPUs, operator margins remain good. The overall MVAS market is close to $1B. The revenue splits are approx 60% for the operators, 20% for the aggregator and rest for the developer and content owner.

Mobile Advertising Market in India – Having looked at the mobile advertising space in depth for our upcoming book, we found the Indian market one of the most active esp. in coming up with interesting business models both operator driven as well as new startups. One of the first in-application mobile advertising services was launched by Reliance, they have several other interesting programs in place that cater to the advertising industry. One of the mobile advertising campaigns that we discuss in the book generated over 21M impressions and won the Cannes award. Companies like mGinger have come up with simple pyramid viral scheme to use SMS mobile advertising. As Admob numbers indicate, the number of impressions are second only to the US market despite low penetration. Finally, operators in India are quite innovate when it comes to integrating the back-end for triple and quad-play unlike their western counterparts who have primarily focused on bill-integration vs. service and application integration.

So, who is actually making money? Clearly the most amount of money is in the infrastructure-related items. Infrastructure is something that is absolutely needed to expand and though the margins shrink quite a bit, it is somewhat made up in volumes. Unless you have unique Intellectual Property that creates barriers to entry, software and/or content companies haven’t had much luck (similar to the trends in China) as the local competition is stiff. Overseas companies who jump in without understanding the market lured by the growing numbers are destined to be surprised.

Cricket, Bollywood, and Education remain the top categories for MVAS apps. Panelists were bullish on new MVAS applications and services around UGC, LBS, high-end segmentation, and enterprise applications. Everyone agreed that the next couple of years are primarily for educating the market and subscription acquisition and it will take another 2-3 years for the MVAS to mature and take off. Unless you are in for the long haul, tread carefully. This market is not for the faint-hearted. IP issues can pose significant risks and challenges.

Jeff thought 3G rather than WiMAX will drive growth in the Indian Market, while Vin suggest Fixed WiMAX is going to be significant. I think the primary use of WiMAX will be to provide Internet connectivity to desktops and laptops and for backhaul of backend systems.

We kind of joked that Indian market might become the second largest market for iPhones within a few months given the pace of unlocked phone shipment to the region.

A question was asked how is working with operators in India different, if at all? Apart from a larger value chain share, things are quite similar. Indian operators do exhibit the desire to move fast and they can take an app to the market quite rapidly where some of their western brethren can keep trialing forever.

You can access the released report here.

You can watch the video from the panel discussion here (Part I, Part II, you can access other videos from the evening on the same page).

Prof. Kosnik and Mohit are launching a new program called “Mobile Momentum” to create an ongoing dialog between Silicon Valley companies and the vibrant mobile industry in Asia. I have signed on as the founding member of the advisory board and look forward to working with entrepreneurs and companies on both sides of the pacific to share thoughts, research, and best practices.

If you would like to receive my slides from the event, please let me know.

2008 promises to be even more exciting than 07. Happy Holidays.

Your feedback is always welcome.

Chetan Sharma

Pacific Northwest Wireless Summit December 7, 2007

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Am getting involved with the Pacific Northwest Wireless Summit coming up in Vancouver next month. More details here.

Stanford Event

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The Stanford event on Indian Wireless Market was great. Got to meet some interesting people, had a good discussion on the market, and caught up with a few of my friends. Seattle rain unfortunately followed me down there. I will be doing a summary of the event over the weekend.

In the meantime, some significant developments - VZ and AT&T had a change of heart and have declared their affinity to Android and Nokia launched “Comes With Music” program with free music for 12 months. Brilliant. While the industry is focused on operators vs. Google drama, Nokia is quietly shifting the pillars of the ecosystem. Stay tuned for some really interesting developments in 2008.

India to become the second largest mobile market by Q1 2008 December 3, 2007

Posted by chetan in : US Wireless Market , 2 comments

Back in May 2006, in my report on the Indian Wireless Market, I estimated that India will cross US in second half of 2008. It was a pretty bullish forecast at the time as rest of the analysts were forecasting 2010 for such an event. The growth in the past few months has been stunning and I think India will be crossing US as the second largest market by first week of April if not early. Given that rural expansion is starting to happen, India might cross US by end of March.

Stanford Program: Why Mobile? Why India? Why Now?

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The program being put together by Mohit Gundecha and Prof. Tom Kosnik of Stanford University is shaping up to be a pretty good event. It is already sold out many times over. I have taken a peek at the report being released by Mohit and gang, pretty good stuff, be sure to check it out on Wed after it is released at the event.

Indian Mobile Market is running on steroids right now adding 8M+ subs every month. The market has added the most number of subs in the past 5 months. China and India are running neck-and-neck.

I am really looking forward to the discussion, meet old and new friends, and hear and learn from other panelists. Hope to see some of you down there.

I will post the summary of the event later in the week.

Mobile Advertising Book Update

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We got the edited manuscript back and so we are heads down reviewing the edits and adding things that have transpired in the last 3 months. That’s the challenge of writing a book on a fast evolving space, pretty much every month there is a significant announcement. We plan to complete editing in the next week or so and then we move into typesetting of the book by end of the month/early Jan.