Once the Indian mobile subscriber base touched the tipping point, thanks to better coverage and reducing prices, telcos started focusing on getting more out of their users. Everyday the biggest challenge was to ensure sustainability and profitability constrained by hyper competition and inconsistent regulatory environment. As users matured on the network, their expectations from their network providers moved from basic voice to quality and value of services. Users are now listening to music, clicking pictures, and becoming socially active on the online social media platform.
The movement towards bundled offerings of data, devices, and services is changing the dynamics and the consumption of VAS. Though the average revenue per user (ARPU) has declined over the years, the VAS APRUs has consistently increased and gone up by 28% in the last one year. Currently, it stands at 27% of the ARPU according to IAMAI. However the VAS market in India is still evolving.
Users are moving to more data enabled devices and use of mobile to access internet is creating a whole new mid-tier market, consequently changing the device landscape in India.
- Data enabled devices (both GPRS and 3G) now constitute approximately 70-80% of the installed base
- Mobile data due to 3G services and data dongles’ high adoption is widely accessible across India
- Entire ecosystem development is visible
- Young, savvy, and literate population is wiling to spend (more than 60% population is under 35 years of age)
- Strong demand for regional and multi-lingual content
- Enterprise Mobility Solutions :
- m-commerce (payment, remittance, and banking)
- m-health/m-education/skill development
- Video (mostly peer-to-peer communication) on mobile usage increasing rationale being large, young, and mature users covering network and devices
The reasons for this transition are simple
- Operators are focusing on data services making them affordable along with per day/per unit pricing for various apps like messengers and daily internet
- sage charges
- Consumers are upgrading to feature phones and smartphones and this is precisely the reason feature phone consumers have started upgrading to EDGE/3G enabled devices
- Devices have become more cost-effective and feature rich and people aren’t buying devices just for voice and text messaging anymore. Pre-loaded apps are fast becoming device differentiators
- Improved features like better and faster processor, long battery life, and preloaded applications like Facebook, Instant messengers like BBM, Google, MSN and Yahoo!, push-mails, etc
- Tablets are gaining foothold moving beyond feature phones/laptops and PCs
Factors Affecting Consumers Device Buying Pattern
However devices choices are changing the consumer device buying pattern. With more and more devices being launched the price points as well as features are being focused upon by the manufacturer.
Of the approximately 14-15 mn devices sold per month, nearly 1 mn devices are 3G enabled and around 7-8% are smartphones. As the devices war moves from feature to app ecosystem, operating system, and use of phones for data and video (supported by increasing screen size), the focus will move from brand to platform.
Having said that, data throughput is improving and there are less session timeout, thanks to effective edge service providing good data experience. Form factors for devices have never been more diverse. Interestingly, 2.5G smartphone is an emerging segment and even 2G smartphone segment is too big to be ignored. Feature-rich handsets cost of acquisition for 2G segment is low and if prices fall below `4,000 then touchscreen and other relatively new features will drive greater demand.
Devices continue to be a status symbol in both the consumer and the enterprise markets, determining enterprise purchase decisions. Consumer purchase decisions are determined primarily by form factor. Enterprise VAS looks more promising now.
- Enterprise users are looking at smart devices to aid in their efficiency and productivity, cost saving, and work-life balance
- Enterprises have stable churn and higher ARPUs than residential subscribers
- Business spend on mobile data is increasingly strategic and is growing steadily
- The business case for enterprise data solutions is justified in terms of process efficiency, productivity gains, and inevitably RoI
Tablets are gaining foothold and moving beyond feature phones/laptops and PCs
- 1 mn tablets by end of 2011
- Second most important market in consumers mobility devices
- TOI, HT, NDTV, India Today, ET, Mint, Business Today, Nat Geo, Condenast, NY Times, and Angry Birds together contribute to over 75% reach of the Indian tablet space
- Average time spent on tablets = twice that of smartphones
- Magazines to leverage digital in a big way
The high device adoption rate and evolving ecosystem will drive cost-effective mobile high-end services in 2012 and beyond. This will lead to more and more services moving to mobile/tablet environment.
The Evolving Social Beginning
The introduction of multi-screen arrangements using social, mobile, and interactive channels and building a cohesive social CRM has changed the way content is being consumed. Thus data and devices will play a big role supported by networks.
Over the next 24-36 months, expansion of 3G services and launch of BWA services, VAS will move into an overdrive, provided it meets ‘user experience’ and ‘price points’. Mobile data opportunity has significant robustness today and will accelerate in future.
The stakeholders, ie, service providers, content creators, and handset manufacturers will need to show greater collaboration to achieve the full potential of VAS.
- The future growth in VAS is expected to be broad based in contrast to the past where fewer services dominated the VAS scene
- Regional and multi-lingual content and services will provide the impetus for future growth
- Healthcare, banking, financial services (Transactional VAS), consumer, and retail services along with the government to citizen services will be a major driver for affordable VAS services across all sections of the society
- Video on the network has the potential to change the dynamics and become a viable VAS service
The author is co-founder,