Great article in Infoworld…

…on the impact of tablets on the PC ecosystem and Android vs. iOS. Well worth the read. See The key mobile trends emerging from CES 2011

Thanks to Srinivas Mantripagada for sharing this.

Posted in Internet, Mobile | 1 Comment

Tablets: not a cheaper PC, but a better mobile phone…

…so said a senior consumer electronics executive in India. He went on to say that electronics retailers in India are bullish on the market opportunity for tablets, and are gearing up to work with both OEMs and mobile carriers to launch a host of android tablets in the coming months. The first few launches, Samsung’s Galaxy Tab and the OlivePad are both selling well. In comparison, netbooks have not done well in India as they were perceived to be inferior PCs.

In general, the sentiment in India seems to be that wireless broadband enabled tablets will do for internet access what mobile phones did for telephony. Far from being crazy, predictions of 200M+ broadband users by 2015 are now commonplace.

A leading indicator of the potential is recent announcements by Indian tablet vendors.

  1. At one of the spectrum, is Notion Ink’s Adam tablet which Engadget described as  “one of the most unique Android tablets on the market”. With its PixelQi screen and its Tegra 2 dual core CPU, its performance is impressive. However, the most impressive part is its user interface which is definitely a step on the Android UI.
  2. At the other end of the spectrum is the $ 35 (yes thirty five dollars!) Saksha tablet. The Saksha was funded by a Government grant,  designed jointly by the IITs and HCL is now launching it commercially in early 2011.  Press reports suggest that the Saksha has a 9” screen, 2 GB memory, a 500 MHz processor, a front video camera, and is built on the Android OS.

“Not a cheaper PC, but a better mobile phone…”. Maybe, perceptions do change reality. What do you think ?

Posted in India, Internet, Mobile | 3 Comments

Tablets: the next netbook or a true rival to PCs ?

The iPad was clearly “the product of the year in 2010” with 12-14 M units were sold in within 9 months of launch. As a point of comparision, 33 M netbooks and ~325 M PCs were sold in 2010. Furthermore, with every major computer, mobile and consumer electronics company launching a tablet at CES, the category is set to explode. Many analysts predict that more than 50 M tablets will be sold in 2011 with the iPad continuing to dominate, with 60% + market share.

Given its success, the iPad has clearly created a new category in the computing ecosystem. The broader question is how will it impact the rest of the ecosystem ? Here is my take:

  1. The iPad will further weaken the Wintel monopoly. If you consider tablets, PCs, and netbooks as a single category (which I believe one should), then Apple will be a top 3 computing device vendor in 2011. Equally importantly, most competing tablets are being designed around the Android/Chrome OS which is likely to make a further dent in the Windows market share.  Tablets have also enabled Nvidia, TI, Qualcomm and other ARM based chip vendors to take share from Intel.
  2. Tablets +4G will dramatically increase internet, especially video, consumption. While I have no hard data to this effect, my experience has been that tablets significantly increase digital media consumption, especially video, even for existing PC users. For example, with days of getting a tablet, my mother in law become a Netflix addict, and started use the YouTube and TED.com apps to see short clips. And even die hard newpaper/magazine readers are starting to read on tablets.
    PC based “digital home” and interactive TV (think Current TV) models have failed as most consumers don’t walk around with notebooks in their hands (I can’t imagine why not!).  Tablets and smartphones could change that paradigm. 

    1. Tablets (and smart phones) could become the control point for home automation systems
    2. Companies like Peel are enabling consumers to discover TV content on their tablets/smart phones, socialize with friends while watching TV and more easily integrate on-line video into TV experience. This is great news for Netflix, Hulu, and other online video service providers
  3. Tablets, and not PCs, will be the primary computing device in emerging markets. PCs are an intimidating, expensive and inconvenient (especially if you have small homes) experience for consumers who want to merely consume content. This coupled with the lack of internet access has stifled PC penetration in markets like India and Africa. Low cost 3/4G enabled tablets have the potential to change this paradigm. For example, Reliance Infotel is planning to launch a $ 200 4G tablet with data speeds greater than 1 Mps in India later this year. As others follow suit, I  think that there will soon be 100s of millions of consumers in emerging markets for whom a 3/4G tablet is their primary computing device. In fact, I think that its possible that even small business, will adopt tablets. For example mom and pop stores that do not use PCs today might start to use tablets as a substitute for POS terminals, while also use them to run basic accounting and inventory management applications.

To sum up,  I think that tablets will rival PCs as the computing device of choice with significant implications across the technology stack  (just think about the impact of Windows market share falling to less than 50%). What do you think?

Posted in India, Internet | 24 Comments

Bollywood in Cabo…

Earlier this week, in a post I postulated that, “in 10 years, it (Bollywood) will be the 2nd largest entertainment hub exporting movies, music, and fashion to the rest of the world”.

Based on today’s experience, it may already be happening. As we (Pooja and I)  were walking along the Marina in Cabo San Lucas at 11 AM, we heard the tune of Churake Dil Mera. We turned around and it was playing in Puerto Paraiso, Cabo’s best mall. We were the only Indian’s around, and it wasn’t for our benefit. Apparently, the Mexicans listen to hindi music!

When I got back to the hotel, I did some research, and international sales already account for 15-25 % of Bollywood ticket sales. And movies are exported to over 100 countries. However, the current market is largely NRIs (Non Resident Indians). What my Cabo experience indicates is that Bollywood may be developing a broader appeal.

Nirpal Dhaliwal of the Guardian UK argues that cultural differences make it impossible for Indian movies to appeal to a Western audience. Even if that is the case, there are large markets in South America, Africa and Asia where there are tremendous cultural similarities. In fact, the one thing that struck me through our trip to Cabo is how similar Mexico is to India, just cleaner. Hindi movies with Spanish sub-titles/dubbing could be a huge hit across Latin America.

What do you think ?

Posted in India | 4 Comments

India in 2020

Everyday, I oscillate between exhilaration and despair.

The market opportunities are evident. The energy, optimism, and passion of all Indians is infectious. The collective ambition to re-gain our rightful place in the world economic order is truly inspiring.

Yet, its hard not to despair. The infrastructure is abominable. The poverty and depravation is gut wrenching. The way the middle class treat their staff (maids, drivers, etc.) is inhumane.

Furthermore, the contradictions are inexplicable.

  1. In a country where incomes are 1/50th of the US, prices are mostly higher.  Yes, apples for apples, almost everything is more expensive in India.
  2. The Indian Administrative Service (IAS) attracts some of the brightest minds in the world, and yet our bureaucracy is our worst enemy
  3. Dr. Manmohan Singh, our prime minister, is an educated and erudite man who many regard as “the model of what a political leader should be”. And yet, our politicians are vile, uncouth, incompetent and corrupt.

Amidst all these dichotomies, the trajectory is irrevocable. In our lifetime, India will once again account for over 20% of global GDP, similar to India in 1700 and the US today.

In fact, in just 10 years,

  1. India will be the 3rd largest economy, with 1.5 B people of which 400 M can be considered “middle class”, and 500 M+ will live in urban areas.
  2. The NCR (Delhi and its surrounding towns) becomes a global metropolitan hub with 25 M + people and world class infrastructure. In all, there will be 100 + towns larger than San Francisco (~ 1 M pop.) all connected by 4 lane highways.
  3. There will be 10 (vs.3 today) world class international airports and 50 + (vs. 25) domestic airports.
  4. India will be the 3rd largest global hub for defense, aerospace and power equipment, the global hub for small car design and manufacturing and the 2nd largest global hub for ship building and repair.
  5. Every Indian will have a UID (vs. none today), 400 M + will have a bank account (vs. 75 M today),
  6. 300 M+ will have access to electronic fund transfer (vs. 10 M today) and 250 M + will have access to credit (vs. 15 M today). As a result, India will have 2nd largest electronic payments volume (after China), the 4th largest credit economy ($ 2 T +), and 5th largest market for insurance.
  7. India is already a huge mobile market. By 2020, it will be the # 1 cell phone market globally with 1 B + connections, the 2nd largest no. of broadband users (400 M+), and the 5th largest market for IT products and services.
  8. Bollywood already makes more movies than Hollywood. In 10 years, it will be the 2nd largest entertainment hub exporting movies, music, and fashion to the rest of the world.
  9. Indian companies are already global leaders in IT services. By 2020, several Indian carriers will be global players (e.g. Bharti, Reliance, TATA Telecom), 4- 5 Indian banks will be in the global 25, and TATA Motors will be a top 10 global automotive company.
  10. India is a land of entrepreneurs. Over the next decade, fueled by growing local markets, access to capital and growth in higher education (e.g. 10,000 engineering PhDs annually vs. 1000 today), India will produce its very own Google, a start-up that creates over $ 100 B in value.

In 10 years, I hope that despair will be a thing of the past, and we will all wake up exhilarated very day. In 10 years, I hope that we will all come to regard Hans Rosling’s predictions as incontrovertible.

Posted in India | 10 Comments

Android crushes Apple…

In several posts in July, including one titled, “Mobile OSs/Platforms: will Apple win in India?”, I shared data indicating that Android is gaining market share. I went on to predict that in India, Android will have 50% market share within 3 years, and that Apple will be relegated to 5th position behind Blackberry. I also predicted that this would mark, but a milestone for Android as it took global leadership. Well, recent data from IDC and Gartner suggests that this might happen sooner than 2013.

  1. IDC just announced, that in its opinion, Android will become the 2nd most popular mobile platform by 2013. That prediction will probably be true by next year since Gartner just announced that in Q2 2010, Android is a close #3. Android now has 17.2% market share vs. 1.8% a year ago; its ahead of Apple, nipping at RIM’s heels and has half of Nokia’s market share.
  2. In the US, Android is now the #1 platform ahead of RIM with 34 % market share while iOS has 22% share.

Its still early days in this platform war. Too early for Android to declare victory. And too early to rule Microsoft out. Microsoft’s secret weapon is its developer ecosystem which it put to good use against Netscape, Linux, and is now trying to align behind Windows 7 Mobile. Who knows if the developers will come? But if they do, the legend of the rising phoenix may still hold true. What do you think?

Posted in Mobile | 2 Comments

Make My Trip IPO: Flash in the Pan or Harbinger of the Future?

Make My Trip (MMYT) IPOed yesterday on the NASDAQ, and posted the biggest first-day gain for a U.S. initial public offering since 2007. It is valued at over $900 M, and more than 9 X forward revenues. By comparision, Naukri is valued at $ 750 M. MMYT also happens to be just the 4th Indian company to list in the US while there are 200+ Chinese companies listed on US exchanges, and at least 14 Chinese companies went public in the US in 2010 alone.

Back to my question. Is MMYT a Flash in the Pan or the Harbinger of the Future? I happen to believe its the latter, and over the next decade, 10s of Indian internet and technology companies will list on US exchanges.

  1. The internet in India is taking off and while there is unlikely to be an Indian Baidu (because English is so widely spoken), there could well be an Indian Tencent or Shanda or Amazon or Zappos or….
  2. Venture capital has been around in China since the early 90s while venture funded companies were as rare as the Indian snow leopard till a few years ago
  3. The biggest change in India in the last 5 years (IMO) is the change in scale of ambition. To illustrate the point, let me share a story. I recently met a college classmate who is now a very successful investment banker after more than a decade. Over a drink, I asked him what his goal was, and without batting an eyelid, he said, “I plan to make $ 100M in this gig“. I almost fell off my chair!
  4. Till recently, the Indian economy was both too small and growing too slowly to create global scale companies. In 2000, China’s GDP was just over $ 1 T (more than 2 X India) and in 2010, it will be around $ 5 T (more than 3 X India). With Indian growth rates finally creeping above 8 % on a sustained basis, the Indian economy will be $ 3-4 T (current prices) by 2020

What do you think? What needs to change to make this happen? Who do you think will ring the bell on NASDAQ in 2015?

Posted in India | 4 Comments

Is Google Over?

Fortune’s latest cover story argues that Google “is transitioning from a growth company to-and there is no other way to put it-cash cow” It goes on to say “that ranks up there with being a former super model”

Google clearly has challenges:

  1. Its search business is expected to grow at 15-20 % p.a. instead of the 30-40% growth it enjoyed till recently
  2. Google’s social networking initiatives have failed while Twitter and Facebook are becoming plausible alternatives to search (at least for certain use cases)
  3. Despite making ~ 80 acquisitions (for more than $ 6 B), and entering half a dozen new businesses, Google still makes 99% of its profit from search.

Yet, it may be too early to write Google off. Afterall, search accounts for 3.5 % of time spent online and almost 50% of total online advertising spend. As Google and others figure out how to extract more value from the other 97% time spent online, the pie will continue to grow. And Google has several aces up its sleeve:

  1. Android is now selling 200,000 new phones every day, and has surpassed the iPhone. While Google makes very little revenues from the Android OS today, since the OS is free, over time, the ad revenues could exceed its current search revenues. After all, Google makes more per PC user (via search) than Microsoft does from selling Windows, and there will probably 1 B+ internet connected mobile phones by 2015
  2. YouTube accounts for 10% of all time spent on-line and 43% of all on-line video. And this is the beginning: on-line video consumption is up 100% YoY. A recent comScore press release indicated that 178 M US users watched 30.3 B videos in April 2010(100% growth YoY), and yet these numbers are a fraction of the time spent watching TV. On-line viewership will continue to take share from TV. As that happens, its anyone’s guess how much of the $175B that advertisers spend on TV (WW) will move to on-line video. Given’s Google’s dominance in on-line video, is it beyond the realm of imagination that Google might have a $ 10B + video advertising business by 2015?
  3. Google’s display advertising platform (acquired via the acquisition of DoubleClick, Teracent and Invite Media) is growing at 40% YoY and will probably do $ 1 B in revenues in 2010.

Clearly Google has competition. And thank god for that! But it’s a little early to write it off!

Posted in Internet, On-Line Advertising | 2 Comments

Rodinhood…

One of my favorite blogs is Rodinhood by Alok Kejriwal. Alok’s latest post on What Entrepreneurs must learn from Fashion Models!” is both hilarious and insightful. Its a must read, in my book.
Posted in Personal Reflections | Leave a comment

Gandhian Innovation

HBR calls it Gandhian innovation, the BusinessWeek refers to it as jugaad, and Carlos Ghosn (Renault/Nissan CEO) calls it frugal engineering. These are just some of the buzzwords used to describe a uniquely Indian model of innovation, one that builds global quality products at price points that are affordable for the Indian masses. While the Indian IT Services story is very well known (Infosys/Wipro/TCS and dozens of Indian out-sourcers charge a fraction of their global competitors and still have higher margins), there are many other equally impressive examples:

  1. Bharti Airtel which charges 1cent/minute (vs. 8 cent/minute in the US), has an ARPU of $ 5 (vs. $50 in the US) and is still the one of the largest and most profitable carriers in the world.
  2. Narayana Hrudayalaya (NH) Heart Hospital in Bangalore charges less than $ 2000 for open heart surgery (vs. $ 100,000 in the US) and has mortality rates that are comparable with or better than the US/UK. If you like details, this case study on Indian innovation in healthcare is worth a read.
  3. The Tata Nano, India’s $ 2000 car, attracted a lot of publicity when it was launched last year.
  4. Nirma’s success against Unilever in the 70s is less well known but no less important. It re-defined the detergents market by launching a product that was priced at ~1/5th of Surf, the market leader. Today, Nirma is a $ 1 B company (in revenues) and has led the way for many other Indian multi-nationals in the CPG space.

My personal favorite is EMRI, an emergency response management (medical 911) service. EMRI was initially set up by the Satyam foundation and is now supported by the GVK Group. It offers emergency response (think ambulances) services to almost 400 million people across 7 states. EMRI handles 60,000-80,000 calls a day, has a fleet of 2,600 ambulances and responds to 7000 emergencies/day. Its average response time in urban areas is 14 minutes and ~30 minutes in rural India. And it has achieved these amazing statistics within 6 years of being set up, with Indian traffic and after spending 1/200 of what it would cost to build similar infrastructure in the US. And off-course the cost per emergency is ~ 1/50th of the cost in the US.

This is just the beginning. Over the next decade, there will be 100s of such success stories. 100s of Indian innovation led companies will become global market leaders in pharmaceuticals/healthcare, software (products), infrastructure, telecom, consumer packaged products (CPG), automobiles, and energy services. These companies will leverage:

  1. The exploding domestic market to develop and perfect their products/offerings and then roll them out globally. Bharti, Tata Motors, Bajaj and Godrej are all global companies today, but none of these would have been possible without a substantial domestic market.
  2. The Indian talent pool with its associated cost structures and their willingness to travel/live abroad for extended periods of time. While costs are rising in India, especially for software engineers, it is still possible to hire skilled functional talent (think designer, teacher, lab technician) for less than 1/5th of what they cost in the US.
  3. Access to venture capital and private equity that has deep pockets, patience, and a global perspective
  4. Access to global skills/expertise via acquisition and/or partnerships. The Nano is a great example of this – Germany’s Bosch designed the engine management system, Italy’s IDEA and Trilix did its styling, America’s Johnson Controls built its seating system, and Japan’s Toyo created its engine cooling module. Other Indian companies like Fortis (acquired Parkway) and Godrej are making global acquisitions to acquire brands and/expertise. Godrej has leveraged acquisitions (e.g. Tura in Nigeria, Megasari in Indonesia and Issue group and Argencos in Argentina) to acquire distribution and critical mass. As a result, it doubled its CPG business to roughly $ 1 B in the last 2 years

While the opportunity is immense and there is a lot of momentum, there are a few challenges ahead.

  1. Management talent. India lacks great product managers; people like Girish Wagh who built the Nano. CEOs are also in short supply, especially CEOs who have the experience of building substantial businesses and yet are willing to bet on a start-up (and all that it involves). More broadly, even when you can find them, seasoned India based executives are now as expensive as the Bay Area, and much more risk averse.
  2. Angel investors/super angels. For start-ups, the first source of capital is friends and family and then angel investors. There is lots of annectodal evidence and now even an HBS study to show that angels play a critical role in the supporting start-ups through their earliest years.
  3. Lack of a supportive ecosystem for young companies. Start-ups depend on cheap real estate (one can’t imagine the Bay Area without its $1-2 /sq ft/month sub-leases), an easy to do business environment, and board members/advisors who will invest time in return for the joy of mentoring and a modest amount of equity. Getting off the ground is so hard in India that it puts an undue premium on a certain type of operational/execution skills, and often deters innovators

All of these are solvable challenges, and Indian jugaad will have a role to play in crafting uniquely Indian solutions. If you have ideas or know companies that you believe are stepping out, do drop me a line.

Posted in India, Personal Reflections | 9 Comments