First rule of first principle thinking, do not use first principle thinking when a mental model is available

Category: India

We are not a VAS company

This was one of the most resonating message delivered by Viren Popli,(head of Star TV, mobile entertainment) as a representative voice of content & media companies in the Mobile VAS 2008 event put together by IAMAI. Now this might sound like a bold, foolish or even cocky message depending on which stable you belong to but it speaks volumes about the tremendous pressure that the current mobile value chain structures are in right now. I think the usage of term VAS itself is more than a matter of nomenclature, it reaffirms the telco as the centre of network view of the world which is not how inter-networks function. As rightly pointed out by Viren we should stop using that term. If you are a company in the mobile space I think you should also seriously think about usage of that term. From what I know I am sure IAMAI is thinking about it hard too.

More about the whole Mobile VAS 2008 event held two days ago.

What went right

  • A packed house with a very diverse crowd consisting of 10-20 % technology companies, 10% operators and the rest as content and media companies.
  • The first , third and the last panel discussion were great discussions with extremely interesting insights.
  • For a change this was not an event for me where the same faces were seen again.
  • Most of the speakers were very eminent and knew what they were talking about. So it was a great download of substance for me.

Things that could have been improved

  • 5 panel discussion back to back with very tightly packed seating arrangements with delegates literally elbowing each other made the whole day mentally as well as physically exhousting.
  • 2 ( 2nd and the 4th) of the panel could have been done away with to provide more interacting/networking time. (Especially the one on Enterprise Mobility discussion as it was a barrage of marketing pitches from most of the panelists)

My key takeaways from the event.

  • The low hanging fruit in the so called VAS market has been taken away.
  • There is a large amount of uncertainty in the future of this market(next version), the industry players are divided and are debating amongst themselves whether the market is supply constrained or demand constrained.
  • There is a tipping point in the making and some relatively unknown player will shake up the market and wake rest from their slumbers. (I subscribe to the belief that it is supply constrained ūüôā )
  • Contrary to what many would have you believe 99% of what is posited in the next generation market of mobile VAS is hype and that includes solutions from old players, telcos and heavily funded startups.
  • Newer value chains will be much much different from the old ones (trumpets are being sounded already, see the title of the post)
  • Clearly older players in the market will definitely have an edge even in this times of turbulence and they will exert their influence based on their past learnings.
  • Mobile Advertising is one of the most hyped up topic and half the people in the room are already doing mobile advertisement or planning to do it in the near future but very few realize of what it is.
  • Technology companies are not putting as much as effort understanding the media business as media companies are putting to understand the technology business. I was aghast at how much media companies knew about mobile and how much less of the reverse was true.

To sum up the question is the following

Next generation of the value creation ( & subsequent establishment of value chains) are non initiated because of a coordination failure, who should be a catalyst for it. VC & private equity capital through investment in game changing startups, fat media companies or Telco who have traditionally played that role.

    Attended Proto 08

    I could finally make it proto. Despite my general disappointment about the innovation scene in the technology space I think that events such as Proto and Headstart are great platforms to help startups irrespective of whethere they are innovative or not (of course one could endlessly argue on what is the definition of innovation).

    I could not make it to both the events blame it on the date clash of these events. On the positive side of the event what I liked was the way it was put together, all well coordinated and extremely professional. There were few good talks both in the business and the technology section, among the ones that I attended talks by Mohanjit, Roopa, Alok  and Rajesh jain were good. Few of the other talks were boring and some more were plain company pitches. What I missed in proto was the exceedingly high energy level that exuberates in any event at chennai (especially in comparsion with the past ones such as blogcamp, wikicamp and others ). Also there is more talk about Innovation than actually there is (I think it is a generic economic problem ), this is a sentiment that was shared by Aashish as well while we hung out together at the event.

    Companies that I liked that  presented there are Mobisy/MobiTop (a platform making mobile development easy ) : They have an extremely good value proposition for making development on mobile easy. They are quite well known to the bangalore mobile community already.  Synovel (colloboration suite based on Mozilla/Thunderbird): They are some of the best programmers I have ever seen and I know them since college and they are also globally respected open source officianados. My favourite example among the the companies that presented is http://www.atOneplace.com,  a marketplace in which I think the value created is equal to the transaction costs eliminated by removing the friction in a real estate purchase.

    I expected many VC’s to turn up but it was mostly the crowd of¬†freshly minted management grads who might have been newly inducted as trainees at these VC firms which I think is not a very good thing. (From what I heard from Keshav and others Headstart was able to get actually about 10-12 VC’s to the event and not just VC firm representation in the event. Hmm!! ). Many of the startups that presented seemed to have gained from attending proto as they could source new leads in different aspects which is a good thing.

    I think overall it was a  bag of mixed response for me personally at proto.

    Announcing MoDeMO

    We are announcing a day long event called MoDeMo in december to showcase cool things/products/services in mobile in India. We hope to see demo and usage of interesting mobile service/products, hobby and/or commercial projects in the event. This is meant for anyone who have anything related to mobiles to showcase or demonstrate. Register here if you have any cool things to show

     

    Note: PPT’s are banned in the event as they kill braincells.Due to various constraints participation is limited to 100 participants showcasing demos.

    Mobile Web Requests India ???

    First it was Admob and now it is Russ with Mowser (long ago it was Scott Rafer) who is saying that India generates a large number of mobile web requests.

    This is quite very puzzling to me as it is to many. I have never witnessed use of GPRS/WAP or have not used it myself much (which by no means is any indicator as I also don’t use CRBT, wallpapers etc). Personally what I do with GPRS connection is check mails and occasionally read blogs and that happenes only when I am travelling.

    I am trying hard to find out who are these people generating so many requests and what are they looking for. Just yesterday I happended to read a slightly old post from Amit @ Labnol about about how to use Mowser and other proxy based mobile content adatation engines to view regular websites through dialup connections. More than one third of the 9.2 million (pdf) internet users that TRAI estimates (pdf) India has are dialup users.

    Many of these requests that Russ is seeing could be regular web users on dialup using mowser to enhance their browsing experience. (if it is really the case then I think it is really cool – IMHO it’s an Indian Jugaad). Russ did you check the hits that you are getting are really from mobile browsers ?

    Wow factor , where is it ?

    The other day Rajiv, Raja and myself were heading to do some conspiration for MoMo (psst can’t let that out ūüôā ) and had pretty interesting conversation about valuation/innovation in the Indian context. The initial topic of discussion was the difference between percept value & real value, applications and R&D came up and were comparing and contrasting the facebook valuation with Navini networks buy out by cisco in the same week. Rajiv details this topic in his blog while Navini is a pioneer in beam forming antennas and WiMax and it involves very deep technology R&D and IP but facebook has 40-50 times of the valution of Navini.

    Rajiv asked this question whether there is an Indian company that will see such kind of valuation , the answer we all agreed is no but the following question is what is more interesting. Can we name atleast one company from India that can be called us cool or innovative before even thinking of higher valuations ? Not surpisingly there was not a single company ( from India) that we could come to think of which has a wow factor in it or something that can be called as a game changer.

    Tata’s 1 lakh car project was one contendor as it can be potentially a game changer but we could not identify many companies and say hey these are cool !.

    What is your Wow Company in India ?

    Indian mobile data and GPRS is a supply side problem

    The more and more I come to think about it , I think the lack of uptake of mobile data is a supply side problem rather than a demand side as it is drummed up to be.  I am a little tired now of  hearing the myth of 50-10-2 about GPRS since the last two years which is that   there are 50 million GPRS capable handset, 10 million GPRS enabled hanset while only 2 million active GPRS users. Now come on even the total mobile numbers have more than doubled since the last two years.  Also whatever is in supply is completely tangential from what is demanded and which ironically gets  portrayed like this. There are large enough number of users tapping their mobile key pads ( or willing to do that) to access some kind of mobile data other than SMS/voice but they find it hard to get anything meaningful. Asif Ali of Mobil-Worx has good data points to back up this argument.

    Crazy Mobile Growth – What are causes ?

    I am really scratching my head to find out¬†who are the influencers for the Indian mobile markets ?¬† What tips consumer market behaviours here.¬†¬†what are the information that Indian¬†mobile buyers¬†use before purchasing a mobile. A friend’s recommendation, TV ad, recommendation websites.¬† I read/watch all the top Indian mobile blogs, forums & ¬†news snippets, TV shows¬†but I doubt from what I have seen that these really cause much of what is happening ?

    Is the main stream media(MSM) the sole channel for demand creation. If so then how did Windows Mobile ship more than a 1 million unit recently ?  Was it because of extensive print/TV marketing campaign or did retailers play a major role by cross selling or upselling. What is causing Nokia to have increasing growth even in smartphone category in India ? How and why are people in villages and tier 2 cities purchasing N Series phone ?

    What are the market drivers leading to such accelerated growth. I speak to many mobile industry thought leaders, implementors, service providers , vendors but none seem to have a clue. Everybody is happy seeing these change and wants to leverage & exploit but nobody seems to have any answer of why it is happening.

    The growth rate seems to be following an exponential pattern akin to what you see in viral growth trajectory . But then there are no examples of viral marketing in India.  I can count many examples of word of mouth in India but viral marketing is almost non-existent. (The difference between the two is that message passing in the former is decay function and hece non exponential growth curve while the latter is an increasing function) . Which is what led to me to question at the beginning of the post. Who/What are the influencers ?

    Quest is on to find it out ? Any ethnographers or marketeer or anyone else knows any bits of the answer ?

    Open Coffee Club India

    ¬† ¬† ¬† ¬† ¬† ¬† Open Coffee Club¬† starts in Chennai and in Bangalore. This should result in a regular meetups and creation of informal network/community of entreprenuers and would benefit entreprenuers interacting with each other. But I think the unique thing about Open Coffee Clubthat differentiates¬† from other meetups & camps¬† is that this open movement was championed by a VC/investor, Saul Klein who started this a few months ago is a partner at Index Ventures. This to large extent prevents skewed participation from the VC community in many open movements. Aided by its regular meets this provides a possibility for sourcing advisory capital for an entreprenuer which so far has always been bundled with venture money.¬† It would be great if¬† Siddhi,¬† Vaibhav , Ramjee could rope in an investor (angel/VC) who would be simillarly passionate about the cause of creation of an entreprenuerial ecosystem. Last when I checked with few VC’s I knew they were shy to participate but I think they are not to blame because contrary to currently prevalent belief the ratio of VC/entreprenuer is very low,¬† given this VC participating in things like this knows that they will be barraged worser than what happens in the rapid fire round of Koffee with Karan ūüôā

    Big Media vs Individual – Indian Media

    Nikhil has spurred up an interesting conversation @ contentsutra about big media and individual content creators.Read the entire post and don’t miss out the comments section as it has pretty important thoughts.I have been following this debate in many places¬†and now it’s spilled over to this side of the globe.

    As much as I want just like Nikhil to hail ‘user generated content’ aka UGC (I dislike that term but using it for the lack of a better term) I certainly don’t think Indian media market is prime for it yet.The main reason for this is that the media value chain in India is the same as the older form of other media markets with the¬†scarce part¬†still being distribution and marketing. Put in another way media markets¬†are still a function of distribution and content.¬† This is not directly observable but evidence for this could be seen through the still rising numbers¬†of TV viewership (while elsewhere¬†it is declining)¬†and increase in average ad time.

    Elaborating on this a little further the following two are the two main important reasons.

    • Slightly shifted supply curve

    Technology is certainly driving down the cost of production but not much as it is still very expensive to create content ( creation devices such as cameras/recorders and bandwidth costs/horrid publising platforms/syndicators/aggregators). To think about it intuitively try to ascertain the ratio of  uploads/downloads that happen in any user generated sites specific to India.

    • Unmoved demand curve

    Another most important aspect is the lack of demand for user generated content. In other media markets there was high demand for user generated media because consumers were saturated and tired of mass media.To think about it how many examples can be recounted that have come out in the last one year which is a user generated vide/audio/post which has caught the imagination of the Indian audience.

    The new industry structure (promised through this UGC) that seems so exciting is possible only when the supply curve shifts considerably and the demand curve moves outwards so that we derive a new equilibirium and industry order.

    No company can do much about the shifts in the demand curve except wait/prepare for the opportune time.   But the parameter that it has control over could be worked upon. But on the whole treating UGC as a yet another fad opportunity and trying to build a business through plain concept arbitrage in India might be extremely risky.

    Some things mentioned in the post which I specifically do not agree with.

    “There are innumerable instances of blogs with consistently great content”¬† – Quality on an average erodes with UGC but this is really not the point blogs will trump newspaper despite¬†of that fact.¬†Blogs on an average give better news experience is how I might put it.

    “Life magazine shut offline publication in the US earlier this year” does not indicate anything about the¬†Indian market, the media markets of developed country and developing countries are vastly different.

    Property rights (fight for editorial space) as rightly put is certainly going to assume new meaning in this phase and it would be most fun to watch how this pans out.

    BPL Mobile TV

    BPL is set to launch mobile TV and looking to getting one million users using the service in six months. What are they smoking ??!!! Either the HT reporter has massaged the message a little more than what is necessary or the executive quoted has no idea of what he is talking about.Nokia Widsets which I think is one of the finest example of extremely fast adoption of a mobile data service/app  took a little more than a 6 months to reach 1 million user base in a global market. If only BPL can achieve what they claim  then they can be gauranteed a place in the Indian Limca Book Of Records.

    With more of such announcements on mobile TV happening in India since last year and everytime each of these announcement claiming it’s a first in India I am just totally confused on what mobile TV really is. ( IMO a unicast certainly can’t be called TV)

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