CHETAN SHARMA

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 the 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

 

Coming Feb 2008

"Today's youth spends more than 15 hours per day with their phone. One can imagine what a tremendous business opportunity mobile advertising is. Authors of this book explore the critical aspects of this opportunity with analytic rigor, in-depth analysis, and practical insights. I strongly recommend it for anyone involved in mobile and advertising industries."

Dr. Yasuhisa Nakamura, Executive Director, NTT DoCoMo,

Coauthor, Wireless Data Services: Technologies, Business Models, & Global Markets

 

“As mobile emerges as the last true individual “channel,” understanding where the marketer fits will be critical… Mobile Advertising gives us a map of this powerful emerging platform.”

Larry Weber, Author, Marketing to the Social Web;

Chairman of W2 Group, Inc. (including Racepoint and Digital Influence Group)

Coming Soon

Chetan's Interviews with two Industry Pioneers for The PiTech Magazine (a magazine that focuses on IITs, IITians, and Technology)

Padmasree Warrior, former EVP & CTO, Motorola, CTO Cisco: The Future is Mobile

What will the mobile device in 2012 look and feel like?

The mobile device in 2012 will become an extension of your persona. In other words, it will know your preference, know where you are and will understand the context of what you need. This will simplify how people access communication, information and entertainment.

Ravi Venkatesan, Chairman, Microsoft India: Microsoft: Innovating from, for, and with India

How do you see PC computing evolving over the next 5-10 years?

If you look at the emerging new world of work and lifestyle, an always connected environment where users want to access data from wherever and at any time, one can safely talk about the emergence of non PC devices as the center piece of the digital era.

Recent Publications/Media Interviews/Mentions

The New York Times Google Enters the Wireless World
Bloomberg News US Mobile Advertising Market
GigaOM Google Launches Mobile Phone Platform: Android
Nikkei Electronics Google Android and OHA
Christian Science Monitor Hurdles ahead of Google's cellphone plan
O'Reilly OnLamp Google Calling: Inside Android, the gPhone SDK
PR Week The Buzz of Google's Android
Inside Digital Media Google's Android
Wireless Wave (CTIA) A Continental Idea
Podcast (CTIA) Global Mobile Market: Does the US Measure Up?
Conference Coverage CTIA Wireless IT & Entertainment 2007 Roundup
Research Update Global Wireless Update 1H 2007
Research Update US Wireless Market Update Q3 2007
Whitepaper What is your Patent Portfolio Quotient (PPQ)?
Whitepaper Unified Mobile Data Platform
 

 Upcoming Events

17 Jan Pacific Northwest Wireless Conference, Vancouver BC. Chetan will be discussing research from his upcoming book on Mobile Advertising
11-14 Feb 3GSM World Congress, Barcelona
1-3 Apr CTIA, Las Vegas
26-27 Jun Global Wireless Security Conference, Kuala Lumpur. Chetan will be giving a talk to leading CTOs and CIOs on Mobile Security trends and opportunities
July Seattle Mobility Conference

In addition, Chetan will be doing some private briefings to carriers, content providers and enterprise solution providers

Track the progress/discussion of the Mobile Advertising Book

 Upcoming Research

December 2007 Roundup
February 2007 Global Wireless Market Update
© Chetan Sharma Consulting 2007. All Rights Reserved.
Chetan Sharma Consulting is a consulting and advisory firm helping companies in the mobile and voice communications sector. Our expertise is in developing innovation-driven product, marketing, and IP strategy. We've helped companies like NTT DoCoMo, Samsung, KDDI, Alcatel-Lucent, Sony, Virgin Mobile, KTF, Sprint Nextel, Reuters, Disney, Qualcomm, Infospace, Reliance, BEA, HP, Merrill Lynch, Cincinnati Bell, Bain, SAP, Vulcan, American Express, and many others. What can we do for you? www.chetansharma.com

 

If you have questions or suggestions or feedback on this subject or on the wireless & mobile industry at large, please contact us at feedback@chetansharma.com - we look forward to hearing from you.

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