ET had an interesting article a couple of days ago on declining SMS usage in India –http://economictimes.indiatimes.com/Indians_dont_just_talk_less_…
While the absolute number of SMS’s sent continue to grow (simply because Indian operators continue to add subs at a mind-boggling rate), the average SMS message per user fell significantly in the Sep. quarter relative to the June quarter – a trend that apparently began in late 2006, according to the article. While a number of possible explanations are put forth for the decline, I think the biggest factor is that with over 200m mobile subscribers we’re now well past the 70-80m subscribers who are English literate (I’ve seen some numbers as high as 100m for the English literate population). With over 50% of the user base unable to send/receive a “standard†text message, is it any wonder that SMS usage is falling? The bigger question in my mind, is when the operators will wake up to the fact that Value Added Services beyond SMS (yes, operators treat SMS as a “VASâ€, simply because its non-voice, rather than a source of differentiation) is not something they can continue to soft-peddle if they want to stem the inevitable decline in ARPUs. Operators also need to take a long and hard look at their revenue sharing arrangements (in India 60-70% of VAS revenue goes to the operators vs. 25-30% in most other countries) since that’s leading to a chicken and egg situation – smaller share of the VAS pie stifles innovation in VAS and lack of compelling VAS applications means operators continue to milk whatever they can from SMS based quasi-VAS services. On a related note, the opportunity for non-text based as well as multi-lingual applications is real, and compelling. There are 3-4 companies in this space, but there’s room for many more. Would love to hear thoughts from others.
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Deepak,
I was looking at bulk SMS a while ago. MTNL Delhi had a scheme for 5p/SMS for 1L SMS/month. By far the cheapest I saw but do not know how good the service is.
When I am writing this, I am comparing asia pacific consumer (and respectful with questioning)!
When Indians would try to reach Asia Pacific market, rather than typical Indian Consumer model.
If Indian consumer or market is not ready so be it.
Do we know our consumers? What’s the purpose? How does Average Revenue makes sense in any revolutionary model (population would decrease it)?
Why testing platform is binded by mindset?
Suramya
Deepak,
I also don’t think the time has arrived for GPRS based VAS applications in India. Best is to follow the SMS application layer. VAS services, to be successful requires two key things: 1) a cultural Go-To-Mobile mindset for all things data related and 2) A supporting environment/framework of abundantly available data and applications.
Both of these are lacking in the Indian market as of now and probably for the foreseeable future. The US is getting better with data, but it was a late starter. Japan is probably the best example of the two critical success factors, and not surprisingly you find ARPUs in Japan are skewed disproportionately towards data. As for Moneyoga, if you plan to support applications for mobile platforms, you’ll have to deal with various handset differences and these issues will overwhelm your efforts.
I tend to agree with what Krish said. First, let the momentum be unleashed. With 90% of population on prepaid with sorry ARPU’s , expecting users to pay 3 Rs/sms for activating callertunes is not sound marketing strategy. It might work for voting for an Indian idol contest etc but thats not sustainable long term.
On an absolute scale, a large number of people might pay for these because the TAM is unbelievably huge. But the potential is immense. The immediate and medium term goal should be to enable large percentage of users to take to these services in a big way, making fancy ringtones nearly as ubiquitous as sms. Let there be free ringtone sharing services among CUG’s etc.
Real monetization should come ( and will come) later. Until then, VAS will remain what it is – niche profit making opportunities.
I would like to take a different stand on the GPRS vs. SMS VAS.
The uptake of VAS has nothing do with whether its GPRS based
or SMS based. Do you think consumers really care about what the
underlying technology is?
As far as consumers are concerned, only three things matter.
– the service should be easy to use – no multiple steps.
– the service should always work – at least 99% of the times.
– the service should be used by my peers
If you notice, SMS scores 3/3 on this where as GPRS fails
on three accounts.
The real problem which GPRS faces is that its just too damn
difficult to figure out. To make it work.
and on top of that, when I finally manage to get it to working
I realize that none of my peers really use it.
Blackberry is heavily used because the thing just works.
What Operator+RIM give you in your hand is a completely
configured solution – for you.
And the definition of ‘need to have’ and ‘good to have’ keeps
changing with network effect.
SMS is one such example. It was a utility. Not a necessity.
10 yrs back, you could always call. Even today you can do that.
but today you can’t live without that feature.
2 yrs back. Facebook was just another SNS. -one of the better ones.
Today, Fb accnt is no more a ‘good to have’. Its a need to have.
Same with many other products. Your comments.