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Mobile India 2010: No Innovation In VAS; Why G1, Nexus One Weren’t Launched In India


“India is not the most Internet-friendly environment yet,” said Google India MD Shailesh Rao, revealing this has been the conventional thought for years now. In his keynote speech at Mobile India 2010, Rao said mobile Internet is becoming a reality now in India and that he expects time spent on browsing to double in 2010. Active mobile Internet users spend up to 40 minutes per day on browsing, but it is not clear if he was referring to a global or India-specific statistic.

No Smartphone Launches?

On being asked why Google smartphones such as Nexus One and G1 were not launched in India, Rao blamed mobile networks for not being “smartphone friendly”. (Ed: we don’t agree)

What’s Next

Rao believes that the “real work on making applications, services and alignment of the ecosystem” would happen in 2010.When conditions are right, Google will be aggressive on the mobile Internet front, Rao disclosed, offering a peek into Google’s mobile philosophy for India this year:

  • The entry of environment-aware computing devices. Mobile computing will undergo a sea of change and hold transformative power with not just GPS but photo tagging and directional information, enabling services like m-coupons that are currently live in Japan.
  • More powerful devices and browsers that would make Mobile Internet browsing as PC-like an experience as it can. He noted that Android and iPhone contributed to only 13% of smartphone sales but 50% of mobile Internet traffic.
  • Simpler data plans will drive traffic growth. Rao gave the example of mobile operator Aircel, which offered in May 2009 a flat rate, inexpensive data plan to its 18 million subscribers. The plan resulted in the number of GPRS users on its network soaring from 30,000 in May 2009 to 1.7 million in October 2009 and data revenues growing by 7 times between January and October last year.
  • Mobile search will complement desktop search. Mobile search query patterns are different from PC search, and the number of search queries on weekends drops in case of desktop users but not by mobile phone users.
  • Walled Garden approach will no longer work. The personal computer has opened up the Internet experience to users who want to do more with the Internet. Their obsession with downloading CRBTs and ringtones will give way to users accessing the whole Internet, social networking etc.
  • Click through rates on mobile ads are higher than that of web based ads.

The VAS Innovation Dichotomy

The uptake of mobile Internet is being held back by the lack of enticing mobile applications that use GPRS. India has thousands of value added services firms but the majority are still focused on voice and SMS based VAS and the absence of innovation is a cause of worry. Dilip R Mehta of IIM Bangalore (who was previously MD of RPG Cellular and HMV Saregama) said that over the last six months, there have been no proposals for incubation of VAS startups at IIMB.

On the other hand, Harish Gandhi, Executive Director, Canaan Partners said that that there is no innovation occurring any more in India, primarily since the balance of power lies with operator.  Operators have an excessive focus on SMS and voice since these mass market applications are what make money. They hold the reigns and vendors are forced to comply: they are not personalising or creating new VAS. This is slowing growth and the reason why handsets remain low-end here, he said. Over the next 2-3 years, he expects sale of smartphones to grow and lead to appearance of richer applications. Operators will not be able to singularly take the Mobile VAS industry from its current $5 billion to $50 billion, they are just enablers, he added.

The ecosystem also suffers from the lack of enough venture capitalist money flowing into seed stage companies, according to Rao. But this is a result of vendors offering little differentiation in their products: a chicken and egg situation, Gandhi said.

Vishal Gondal, CEO, Indiagames added that the fundamental problem is the finite number of customers – of the GPRS base of 50 million, only 15-20% actually use it. So there are just 8-10 million true active GPRS users in the country.

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