Impending threat to Video Centric Mobile Applications - More player's than User base

Indian economic directions and subsequent entry by players are generally dominated by one successful use case. In India, most of the companies hesitate to take the first step whereas the case is just reversed when it comes to other developed companies. That is the reason that being one of the greatest mind aggregator, Indian companies always act as service providers instead of owner of product or services or applications or be it anything else.

With the ongoing revolution underway in Telecom sector and slow death of Telecom operator centric Mobile VAS segment due to very stringent regulatory guideline in India; many VAS companies moved into Applications or platform or service category to survive. Reliance Jio, helped the ecosystem with a hope that India will be the market of data user and data centric products or applications or games or anything else will get adopted like forest fire.

Indians are generally fond of music, movies and cricket. The fall of MVAS business at operator level prompted major players like Hungama and Saavn to quickly change their strategy and moved into Application based content delivery through Device manufacturing delivery. Hungama even went one step further an launched their movie based applications. The slight success of both the player brought in number of players like Sony, Zee, Star, VIU, Eros and many more. Ironically, most of them went with open wallet and acquired user through heavy promotional activities instead of organic growth. Indian Telecom sector with Data ARPU of less than $2.25 in best case scenario trumped most of them as their content adoption went high for free content or till the offer period whereas they failed to get the expected growth rate for the paid userbase. I do agree that Indian Smartphone segment is growing but at the same time the mindset of the end user is to access default Video application YouTube.

In my point of view, the video applications player should come out with disruptive engagement model with end user wherein user start paying for the content instead of relying on advertisement which is not long term option

Why Optimism Around Home Grown E-Retailer Will Fade Soon.

The recent upsurge in e-Retailer segment business attracted analyst as well as retailer to claim explosive growth potentials in said segment. The CXO’s level of most of the Indian companies came out with growth projections which reminds me Telecom VAS forecast that happened in 2007. At least, Telecom VAS forecast came out as dump and many investors which include both PE and equity holders in publicly traded companies suffered huge losses.

Last many weeks, most of the print media focusing on growth potential in Indian Online marketplace and potential higher adoption of Indian consumer space includes WEB and WAP user base. All cheered Flipkart achievement of $1 Bn revenue club in short period of time and ended up comparing with the likes of Amazon and predicted that Indian Online e-Business is going to achieve multibillion $ club in next few years.

The recent investment by PE’s in Indian Online e-Retailers cheered many and as a result many new e-retailers jumped in fray with focus on valuation. E- Retailers also projected that the exponential growth of Smartphone adoption in India is going to offer them additional opportunities to create business but seems they missed many factors on ground level.

Some Of Them Are As Follows

1. How many e-Retailers are profitable?

2. How many users are using their credit card?

3. What is the cost of user acquisition?

4. What is the conversion rates w.r.t consumer visits?

5. The cost involved in payment mechanism due to CoD?

6. What is the repeat user percentage?

7. How many Smartphone users are using devices to place order?

8. Did e-Retailers offer guarantee to maintain security and privacy concern around device to offer seamless secure payment mechanism?

9. Who would be responsible for data theft in case of wireless hacking?

10. And many more

All investors are rushing to invest in e-Retailer in hope that down the line the online market space will mature and they will make money out of it. In my point of view, that is over optimism as retailers must focus on innovative approach to attract user and offer secure solution. Creation of Mobility Applications as well as offering product at discount to attract user is not going to work in long run. They invest heavily in promotions but given the total internet user base in India, it’s not justifiable.

India is a place of organized retail market and if e-Retailers want to entrench that segment to attract user towards their platform, they must focus on platforms and delivery mechanism supported with extraordinary consumer support management. Post aggressive push by International players such as Amazon it would be extremely difficult for home grown players to match them as International players already crossed the teething problems and exactly know the consumer dynamics and nodal points which works with consumers. Hiring top grad is not going to work but viral connection with end consumer is going to work. Indian marketplace is Atypical where any new approach gets lots of attentions. Once consumer experiences any issues then it’s a lost customer forever.

In the mobility approach home grown retailers must recognize that the money they spend on Print can be used to acquire consumers in one or another way. It would bring better conversion probability compared to current approach. In my views, early growth attach to any new sectors are in exponential curve and subsequently in high single digit. We must learn this aspect with growth story of Telecom sector. I also believe that some of the players would come up with strategy which is going to crack the potential and consumer adoption but for that strategy needs to be completely out of box rather than copycat.

Alcatel Lucent Continuous Restructuring – CEO Warning Signal

Telecom bubble burst impacted Alcatel Lucent more negatively than any of its peers. The emergence of Chinese competitors such as ZTE and Huawei added to its wounds and pressurized to sell premium products as commodity product. Post merger with Lucent Technologies and subsequent restructuring processes are not dying out. One after another assets sell out to human capital realignment is not helping company to push itself back to profitability. The other competitor’s are using Alcatel-Lucent’s focus, surrender; refocus back on strategic and tactical basis as confusing state of direction for the potential customer and snatching customer from Alcatel-Lucent with bare minimum effort. During last restructuring, the company decided to focuses on IP domain especially Mobile Broadband segment by leveraging some of the stand out product innovations. Few weeks back, Alcatel-Lucent came out with another round of restructuring and announced 10000 job cuts in which 900 would be from France. As one of the most vocal advocator for its citizen, even the President of France came out strongly and objected on the proposed layoff in France. It triggered protest and amidst of that the respectable CEO during an Radio Interview sent warning to all and suggested that for survival; it is unavoidable for Alcatel Lucent to sit tight without action otherwise it risk of disappearance. I feel sorry for Alcatel Lucent shareholders as they deserve the protection of their investment instead of that the virtual roadblocks are trying to be developed which may in turn would be disastrous for shareholders as well as employees. What if Alcatel Lucent go under lockout and in that scenario what would be the French Union take on the protection of their citizen job. I strongly believe that innovation driven company like Alcatel Lucent must survive to keep on bringing in innovation at the hand of many.