Dream 500 Million Smartphones in India is the first in a series of thought leadership conclaves organized by BGR India. Jayanth Kolla, partner and founder of Convergence Catalyst shares his views on how India will reach the 500 million smartphone users milestone.
India is slated to be one of the biggest smartphone markets (by volume) in the world for the next few years. According to Convergence Catalyst estimates, at the end of June, 2014 the installed base of smartphones in India had reached 120 million devices. As per our estimates, over 500 million unique mobile device owners in India are currently using non-smartphones. That is a considerable upside, and at the current growth rate, India will reach the 500 million smartphones mark soon.
Following are some of the key enablers, drivers and imperatives for the road to 500 million smartphones in India:
- Evolving Consumer Landscape
1992 was the year of economic liberalization in India (which opened up the market and offered umpteen number of choices to Indian consumer), which was also the year of Cable TV introduction in India. The early Cable TV Natives in India are currently 22 years old and are entering their first fulltime jobs, experiencing financial independence.
Internet arrived in India in 1995-1996, and the first lot of Indian Digital Natives is currently entering college. And, the early Mobile Natives are entering their teens. The exposure, attitudes, priorities, influences and most importantly, the choices of this set of consumers are completely different from their predecessors. And, most importantly, this group is going to be the primary decision makers and influencers as far as the adoption of mobile industry products and services are concerned.
The conventional methods of consumer segmentation and targeting (basis chief wage earner of the house, average household income, share of wallet, etc) and ways of reaching and influencing the potential decision makers (through conventional marketing channels and incentivized retail outlet promoters) will seldom work in future.
Going forward, the potential Indian smartphone consumer will be confident and well informed, and needs to be influenced in an unprecedented manner.
- The First Phase of Indian Mobile Revolution Was Driven by Executives from FMCG Industry, The Next Wave Will be Driven by Internet Folks
One key commonality between Manu Jain of Xiaomi, Vikas Agarwal of OnePlus, Amarinder S Dhariwal of Micromax YU and Anand Chandrasekaran of Bharti Airtel (apart from all of them being the Indian CXOs of prominent mobile companies) is that all these executives have successfully launched and run Internet-based products and businesses, before their current roles. Currently, we are witnessing the introduction of new breed of business decision makers into the Indian mobile industry.
The first wave of Indian mobile industry was driven by FMCG (Fast Moving Consumer Goods) folks. Key executives from HUL, P&G, Pepsi, etc., had joined the mobile industry and infused the much needed consumer-centric focus and approach to a technology-heavy, inward-looking industry.
Going forward, as smartphones become prevalent, key personnel from the Internet world, who can build over the existing consumer-centric approach through essential understanding of digital products and services, use of Internet as an effective distribution and marketing platform (primarily targeting the afore-mentioned group of consumers), ability to manage scale and most importantly, understand and leverage ‘Network Effects’ will play a key role in the evolution of smartphone-centric mobile industry growth in India.
This era will also necessitate the infusion and large scale growth of “Product Marketers” in the industry – professionals with the requisite technical aptitude to understand what it takes to productize a technology, and the necessary consumer understanding and business acumen to package it in a way to make it valuable (not just attractive) to the end users.
- Localization Will be Key
Of over 1.25 billion people in India, only ~150 million of them speak English. As smartphone-led mobile products and services grow beyond the early adopters, the availability of regional language based Communication, Consumption and Creation tools become imperative.
Currently, there are over 2 million mobile app developers in India. And, as per Google AdMob team, this number is expected to increase to 3 Million by 2017, making India the largest base of mobile app developers in the world. Currently we are witnessing early signs of apps for India market being developed and adopted. By the time India reaches 500 million smartphones, this ecosystem will be catering to the unique Indian market needs.
Currently, there exist a number of structural challenges including lack of adequate wireless spectrum, non-harmonized frequency bands, devices and equipment, and lack of sufficient backhaul infrastructure, that could potentially hinder the evolution of smartphone as a primary media consumption and creation device, in the near term.
However, there is a potential opportunity for innovation using smartphones as a primary hub for Connected Devices based solutions evolution. The bandwidth requirement for data transfer for many of the Connected Devices / Internet of Things (IoT) solutions is not significant, and can be serviced with current Indian mobile data networks, provided sufficient coverage. Indian mobile carriers, with sufficient strategic focus and execution, have a unique opportunity in aiding the development of innovative IoT apps and solutions and to help the country leapfrog into the next era of technology evolution, thereby garnering significant early mover advantage.
All this will lead to the development of unique localized, innovative apps, solutions, and revenue and business models in a smartphone-centric Indian mobile industry.
Jayanth Kolla is founder and partner of Convergence Catalyst where he advises various global and Indian companies on market entry, business growth, product and service offering strategies, and investment advisory for India and emerging markets.