Today the 24-year-old, who earns $450 a month and lives in a one-bedroom apartment in suburban Mumbai, forks over about $20 a month—for calls, of course, but also for ring tones of Bollywood hits, movie tickets, e-mail, and mushy text messages to his girlfriend.
Annexure
Mobile Services Boom in India [Source accessed at
http//businessweek.com/ print/globalbiz/content/apr2008/gb2008044_497327.ht
m]
Indians are using their cell phones—some 300
million have subscriptions, vs. only 30 million
PCs—as a “one-stop shop” for everything from
e-mailing to banking
Two years ago, Mumbai call center employee
Vijay Parihar used his Nokia mobile phone for calls and sending occasional text
messages to friends, spending about $7 monthly.
Today the 24-year-old, who earns $450 a month
and lives in a one-bedroom apartment in suburban Mumbai, forks over about $20 a
month—for calls, of course, but also for ring tones of Bollywood hits, movie
tickets, e-mail, and mushy text messages to his girlfriend.
If he had enough money to invest, Parihar says,
stock market quotes, too, would beep on his phone. “My handset is an extension
of myself, a cool, one-stop shop for my personal needs,” he says.
Parihar is part of a growing group of Indian
consumers who want more from their phone than just talk time. That’s a blessing
for Indian carriers that are looking seriously at new services to enhance
revenues.
The numbers are huge Indians spent some $250
million on extra services for their mobile phones last year—including text
messaging, music, wallpaper for phone screens, cricket scores, games, and Web
surfing—and that number is expected to reach $1.7 billion by 2010.
Cell Phones Trump
Why is demand for such services particularly
great in India? For starters, there are just 30 million PCs in the country, so
e-commerce on the Internet still has a long way to go. Cell phones, on the
other hand, are becoming pervasive.
Nearly 300 million Indians now have
phones—making it the No. 2 mobile market on earth—and some 8 million new
subscribers sign up every month.
These young, mobile-savvy folks have high
aspirations but are under served in everything from banking to entertainment.
Getting to them via their cell phones is the best way to provide much-needed
and valued services.
“We have to look at ingenious ways to reach out
to these customers,” says Pankaj Sethi, who oversees such offerings at Tata
Teleservices, the telecom arm of $50 billion Tata Group.
Mobile Content Providers
The demand for these services has given birth
to a slew of companies that develop mobile content in English and regional Indian
languages. The market in India is so hot that even multinationals such as
Google (GOOG),
Yahoo! (YHOO), and Microsoft’s (MSFT) MSN have
become major participants. These players have tied up with more than a dozen
top telecom providers including Bharti Airtel, Vodafone, Reliance
Communications, and Tata Teleservices, to offer local information such as movie
schedules, taxi services, stock quotes, news, and hospital and business
listings.
The range of offerings is vast. Some companies
offer downloads of prayers from Indian guru Sri Sri Ravi Shankar for the New
Age set, and for the more traditional, recitations from Hindu religious text
the Bhagavad Gita are available for 75¢ a month.
Airtel, India’s leading cellular operator,
offers weather updates and crop prices to farmers, and sells mobile banking
services, which allow customers to make purchases in stores and book train and
flight tickets using their mobile phone instead of a credit card.
Revenue Direction
There are some complications, however. About
25% of India’s 1.1 billion citizens own a phone. These new users, who use
cheaper handsets but want the same services available on premium handsets, are
largely from fast-growing smaller cities and towns. India’s average revenue per
user is $10—one of the lowest in the world—compared with $12 in China and $30
in the U.S. A cellular phone call can cost as little as 1.2¢ a minute, vs. 8.4¢
in Pakistan and 3.5¢ in
China. So while there’s scope for making
profits beyond the basics, most services remain a luxury for many Indians.
“Companies, however, are convinced that non-voice data revenue is the
direction,” says Ray Tsuchiyama, Tokyo- based head of emerging markets at
Nuance mobile and consumer services.
It helps that Indians are text-message crazy.
Indians sent some 25 billion short text messages last year, and together with
ring tones they make up about 80% of the services Indians use. While India’s
rates may not seem like much in a global context—it costs 25¢ to book a flight
on the mobile phone and 75¢ for a music download—given the numbers of Indians
now using phones, those numbers can add up fast.
Consequently, mobile companies want to increase
the share of their income that comes from these services, currently 10% of
revenues and 13% of profits on average, to about 20%. That would put Indian
carriers near the top among worldwide cellular companies. Says Manoranjan
Mohapatra, chief executive officer at carrier Bharti Telesoft “India is leading
the way for mobile solutions globally.”