India MVNO Initiative - Device Players Going to Rock

As per the report published in new paper today, government received 80 request to get the license.
Under MVNO license one can buy the minutes and data from mobile service providers and resell it to end consumer under their brand name. 

Few years back Virgin Mobile attempted the same but failed miserably. 

In a current scenario, when wireless subscribers touched around billion and major chunk of users are still using feature phone will help potential MVNO players in big way.

Currently Device manufacturer are the center of attraction and offer bundled data to their buyer as value add. In that process mobile service provider acquire data user at much lower cost.

Entry of MVNO will help volume device manufacturer present both in feature phone and Smartphone to dominate the market.

The brands like Micromax, intex, lava, karbonn, Spice,  celkon will be the biggest gainer as they are very strong in  feature phone segment whereas some of the mentioned brands are also strong in Smartphone segment. 
The positioning of these brands will attract MVNO towards them for new user acquisition. 

The above brand may choose to ask for user acquisition cost which may run in $1 to $2 of additional revenue per user.This will be on top of their ongoing VAS revenue of around $1 to $5 depending upon the brand market share and reach ability.

These brands are very strong in rural sector when it comes to feature phone and now posses the potential of increasing their margin if all goes right with MVNO license allocation. The move is very good to get more penetration and help those to have mobility who is still deprived of that.

Why None of the Device Manufacturer Focusing on Feature Phone Segment - Missing the Masses

Indian Mobile Device market is witnessing major dynamic shift. Most of the device manufacturer are focusing on Smartphone and invest millions of $ in advertisement to promote their device whereas plays out with very low operating margin.

Post "Make for India" initiative initiated by Government of India, most of the domestic and international device manufacturers opened their factories or bought the assembly line from existing manufacturers  to ensure that they get the benefits announced by the government.

Indian Smartphone sell just crossed 100 million per annum which is only 10% of the total wireless user whereas command round 36% of the total device shipped in an year. It is interesting to note that there are more than 150 known and unknown Smartphone players operating in India and strongly feel that feature phone user will eventually move to Smartphone.

In my point of view, Smartphone players should correlated the earning dynamics of Indian population including poverty. They should also consider the average balance on normal device user and one will be surprised that it is even less than $1.

In a rush to capture Smartphone segment, most of the players are not monetizing feature phone or not investing in new features attached with Feature phone except some of the VAS player who provides games and WAP service. The Common comment from all that feature phone is having space constraint but if they want they can remove that constraint.

In any circumstances if Device manufacturer wants to make their venture successful then they must focus on feature phone and should also consider creating virtual VAS center.

How it can be done is simple and for that one should invest research $.

Why International Application Providers Are Targeting Weak Regulatory Environment Of India For Investments

In recent past, most of the companies are moving from wired level access to wireless level access mechanism post explosive growth in mobility segment post phenomenal adoption of Android mobile ecosystem. Many young and experienced entrepreneurs captured the potential opportunity in the Application segment given the explosive growth in Smartphone segment as access medium. The adoption of chat services both on text and voice level started the dynamics of the mobility segment. The success of WhatsApp acted as motivational factor for new entrant into the segment. The ongoing bubble in the Application segment where everything thinks of making money by reusing contextual pattern of mobile user created competitive environment among Application developer to rush for user acquisition.

The housing bubble burst, financial crisis, manufacturing downturn in US, EU and other part of world prompted investors to look for new avenue to invest. The tough regulatory environment in China, EU and US and language barrier prompted International Application Companies to turn their focus towards India. Given the huge consumer base of more than 744 million mobile users’, growth forecast in Smartphone segments and loosely coupled regulatory environment in India offered hassel free environment to application companies to gain consumer base faster than the other geographies. Most of the application developer works on the Application UI/UX and mapping it with basic backend system with a focus to capture only the contextual pattern of the user. Given the boom in Big Data domain, Applications instead of network domain are now considered the best tool to analyze the adoption trends. The main goal of Applications developers/companies are to collect the contextual pattern and accordingly push usages behavior centric Ad or other Application push.

It is also interesting that the Applications developers from sector such as BFSI, Utilities, Infotainment, Entertainment or Social are relying completely on Advertisement revenue compared user charging model. Most of the Application providers are not being able to charge consumer base given the regulatory environment in India. Even more interesting that most of the Application developer companies are not even aware of regulatory dynamics in India and for them legal opinion is equal to regulatory opinion.

Due to the segregated regulations and absence of Application regulation created an easy path for both domestic and international Application companies to push Applications to Indian consumers. Easy acquisition of userbase enables Application companies to offer selling points to their potential investors about prospects of revenue potential to prospective investor group. Many international Application companies are even clearly violating Law of Land by not adhering to the regulation w.r.t Telecom, IT and Cyber Security Law. Some of them only hire sales representative in India to run their business without opening office in India. Due to such companies engaged in collecting contextual pattern of users as well as playing with valuation game, Indian mobile users are getting more pesky calls, SMS as well as premium service redirect attacks. The lack of awareness among Indian mobile users makes it even more difficult for mobile operators to track premium number redirect attacks and inturn losing millions of dollars in lost revenue opportunities.

It would be disastrous for both PE investors as well as such companies engaged in taking undue advantage of current environment once combination of lawful agencies of India comes out with stringent regulation for such companies to operate in India. Such companies must recognize the power of open platform but should not misuse it as it would spoil the whole ecosystem. At the same time, applications users must be vigilant to raise unlawful activities of such companies so that law abiding application companies gets their deserve right to be successful.

Sony Facing Stiff Competition in Smartphone Segment

Sony strategy to use mobility devices to bring its loss making electronic business back into profitability is taking more than expected time frame. Post buying out Ericsson share and calibrated direction of targeting Smartphone segment to garner high margin is firing back. Sony generates 60% of its mobility division revenue from Europe and Japan whereas lags in china. The first evidence of loosing grip in its home turf is successful collaboration of NTTDoCoMo with Apple to sell iPhone. Still the dominant Smartphone player in Japan, the home turf market size of Smartphone is less than 25 million and Apple huge popularity is eroding most of the competitor market share. In US market, Sony only manages to collaborate with T-Mobile which in turn post merger with Metro PCS may offer some respite for Sony to gain traction in US market. Sony CEO admitted that they are moving cautiously in oversees market such as US and China in order to achieve set goal of capturing third position in global Smartphone market. Even after launch of Xperia’s series for the classes, Sony failed to convert Apple and Samsung loyalist to switch over to Sony. In Indian market, Sony volume is too low to mark any presence as well as contribute in Sony goal of selling 42 million for FY13-14. It would be interesting to observe Sony tactical move to position their product against newly launched iPhone where the entry price range of both the products are more or less same.