Wednesday, January 10, 2007

A reality check on the Indian cell market ?

There is a storm brewing in the Indian Corporate world !!  Read the article from NY Times here.

Well, we all have done it while using cell phone in India.  Give a ring and cut the call.  Wait for the other person to call you !!  I guess the players are all banking on the volume of customers to compensate for low revenues and margins per customer.   India, as noted in the article, has one of the lowest tariffs in the world.  I couldn't help think of my visits to the famed "Jagdeesh market" in Abids, the commercial hub of Hyderabad.  You can find high-tech gadgets here at very low prices (don't ask where the seller got it from, you wouldn't want to hear). 

In my opinion, the most important thing that fueled the cell phone boom in India is the pay as you go cards and the influence of the distribution channel.  These recharge cards are available in low denominations (as low as a dollar) in the millions of paan dabbas, medical, kirana and grocery stores all over the country.  That was the masterstroke - inadvertently or by design the 4 P's came together beautifully to create a virtuous cycle that lead to the market boom.  Throw in a few "jagdeesh" markets per city and we have an astronomical growth rate of 7 million subscribers in a month and therefore the firms serving the market salivating at the prospects of their cash registers ringing.  Taking it a step further - in the US mobile providers are able to milk corporate subscribers, and consumers of media content, whereas in India, the cell phone would primarily remain as a phone, than a device to push content !

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