Rakesh Mahajan, Vice President (Marketing) and Business Head (VAS and Incubation) at Bharti Airtel, joined the company after a stint at Orange, prior to which he spent six years with British Telecom in BT Global Services, driving BT’s Mobility business for enterprises across Europe, US and Asia, with Strategy, Marketing and Product Development responsibility focusing on new products and services. A few weeks ago, Mahajan spoke at length with MediaNama, elaborating on his talk at VAS Asia 2010, about how he’d like to see entities in the content and services ecosystem approach Mobile Value Added Services (VAS). Part one of this two part interview:

MediaNama: Is the lack of innovation at the product level in the VAS ecosystem worrying? How is approach to services in India different from that in Europe?

Rakesh Mahajan: Innovation is critical. In Europe, the model is different. Typically, the operator does the research, defines a set of requirements, and finds a partner or builds it himself. When I was at BT, that concept to market (c2m) was nine months. And we were wildly successful when we brought it down to 5 and a half months. Here it’s much faster, and the c2m is much shorter: we take a broader ecosystem approach, and the (telecom) operator guides but doesn’t prescribe. I say I want more in rural, and people come up to me and tell me they’ve got an interesting proposition. There it’s much more of a supplier relationship, while here we encourage and then we filter.

The model here is different, the cycle time is much faster. The flip side of that is we’re not spending enough time focusing on the customer. I’ve met more than 100 partners, and barring about 5, every single one started the conversation with “I’ve got fantastic technology, what can we do with that?”. There’s limited customer research, and this is what is coming out as need in the market. Someone should say ‘here’s some insight and on that basis I’ve got some interesting technology’. What happens is that the products that come out of the eco-system generally are very technically interesting but the market need and consumer need is not very well understood.

MediaNama: So is that why one finds that a lot of products are pushed into the market one after the other, and then you see what works…?

Rakesh Mahajan: Bang on. But there are always pros and cons, right? The explanation could be that with 1.2 billion people, if you take too long in accessing the market, the market is already gone by the time you get there.

MediaNama: Or it might be that, with 1.2 billion people, there’s always a large market. You just have to know which market to go after…

Rakesh Mahajan: Correct, so there are different perspectives, right? My point is that even if you don’t want to do tons of customer research – if you are a five man shop, I don’t expect this huge documented research – but all I expect is some basic insight, that says that I’ve talked to 20 customers, and that’s a start. That gives me a context to the conversation. We start the conversation the wrong way around. But Europe was like this too at one time.

The second point is that when we look at the market, it’s just not exciting. Forget exciting, it’s not even good, when you look at basic meta-tagging. You go to a WAP site and search for Katrina Kaif and what comes out? You might get her, you might get Bipasha, or Pamela Anderson. There’s no context. It’s an endemic problem. If I look at basic WAP text right now, there’s no jazz to it. If my maid buys a phone for Rs. 4,000, and yet she’s getting basic SMS text messages and alerts. We are not giving her something that excites her. So we (the industry) just keep having to push stuff, to say try this or try that. As opposed to her friend saying, ‘this is cool why don’t you try this?’ As an industry we’re just not really vigorous with our segmentation.

MediaNama: But it boils down to what data you have, in terms of user information that can be used for that segmentation. No one has as much rich data as a telecom operator. Do you have that infrastructure to actually analyze that massive amount of data?

Rakesh Mahajan: So there are two parts to it right. One, if you come to me with an insight and say I need 15 to 17 year old males in this sort of geography, do I have that basic information? Yeah, but I have to put my hat on and say, ok, this is what it looks like. I have to decide.

MediaNama: And you can’t give access to that data to any service provider? They don’t have access to the data that you do.

Rakesh Mahajan: People always say that. You know, let’s pretend I did. Then what would you (as a service provider) do about it? Like if I tell you there are 83 consumers in this hotel 19 to 24 male, subscribing to Cricket Alerts, with balance of 50 rupees, what would you do? What would you do that’s different? If you come up to me and say I’ve got a segment roughly this shape that has roughly these sorts of devices as a proxy for some user interest or whatever.

I mean there’s no doubt that most of those technologies are interesting and fascinating. But what’s the need that it’s fulfilling? Is it the need of my OpEx perspective as a telco, or is it the need that the consumer has? What’s the consumer need? So my second key message was – get the consumer focus back into the eco-system. Look, it’s a big market and it is going to grow really fast. What’s interesting is how are we going to grab that market?

The third point that I made was about language, and immediately everybody said “vernacular”. But that’s not it. With every operator in India we still say MMS. We need to talk the consumer language, not vernacular. Vernacular is a sub-component of that. Instead of MMS, the minute you say picture, and that you can send a picture, it transforms things because suddenly it becomes real and personal. I’m not dismissing vernacular as an issue, but you need to talk the consumer language first.

MediaNama: There’s a premise that the reason why voice based services have grown is that voice takes care of the language issue, in terms of vernacular…

Rakesh Mahajan: Sure. My other point was that we need to enable better search and discovery. The minute that you can enable voice based searching, simple IVRs instead of a short code. Someone used an interesting analogy – right now, we’re in the era of DOS before Windows. We’re teaching customers how to do programming – Dial *54321#. I’m not saying that it is…look, we are where we are. My issue is where are we going?

MediaNama: So the problem is that the “Windows” that is coming up, is an ecosystem is focused on the handset manufacturers or Android, and where the Telecom operator essentially becomes a pipe.

Rakesh Mahajan: Let me not react to that (pipe), but my answer is that on devices and the ecosystem is that if I go to villages and sell a SIM, and there’s no phone, my SIM is useless. So we have to work with handset manufacturers, and we do, whether Android, Symbian, Windows 7. The reality is that we have to work together. Device is part of the equation, it’s not the only part. That’s what takes me to my next point – search and discovery, the long tail.

MediaNama: There’s an application store, and search available for applications. But there is no real strong search and discovery mechanism for services.

Rakesh Mahajan: Correct. Hence the reason I broke them out. My services have to be more easily discoverable. There are comfortably thousands of services. Right now we force consumers to remember things they shouldn’t have to. That’s why the push based SMS, OBD industry that has been set up works, because consumers don’t remember. We have to make our services more interesting and relevant to consumers. We have to make them easy for consumers to find, search and share. We need for to have every service launched to have a viral nature. Not for any other reason, but that you help get your own service out to others. The long tail will exist, and our App Central is very relevant. We now have 71,000 applications.

MediaNama: How will anyone ever find anything in that app store?

Rakesh Mahajan: Correct. It has to be discoverable. You have to make the linkages and recommendations strong; (telling users that) “Users who bought this, also bought this other service”. This is what Amazon did. We have to, as an industry, embrace that. Our app store is one of the top 5 in the world. The largest part of its success is our focus on user interface (UI). If you get the UI right, you’ll get repeat usage. We’re continuing to enhance discovery. We get more and more downloads per user, and we need to introduce better recommendation capability and virality.

Tomorrow: On quality, churn in VAS, operators as pipes, standardization of revenue shares, virality and customer targeting