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Bus. Std: The Mobile Phone Revolution’s Lessons

December 2nd, 2004 · No Comments

My latest column in Business Standard:

A few years ago, the installed base of mobile phones and computers in India were about the same. Now, even as mobile phones march on to a figure of 50 million, the total number of computers in India nudges 12 million. Mobile phones are growing by about 2 million a month, while computers need about 6 months to touch the same figure. So, what caused this divergence in growth? Will computing take-off in India? Are there learnings for the computing industry from the cellphone world?

Let us start by looking at the utility of the two devices. After all, the decisions to buy (or not buy) are made by consumers. Cellphones in India filled a latent need of person-to-person voice communications. More than mobility, it gave people a phone which they sorely lacked thanks to outdated and incumbent-protecting telecom policies over the past decades. Communications is a basic need of people. And for long, this was stifled some of us remember the long waiting periods for a phone connection. Into this environment came the mobile operators. With a willingness to make investments and using cutting-edge technologies, they were aided by a global telecom recession which made equipment available at much lower prices. All of this resulted in great value for money for consumers as prices fell to a couple of rupees a minute and cheap handsets from Chinese and Korean makers flooded the market, forcing others to compete on affordability. This created a positive feedback loop wherein it is the masses who have adopted mobile phones and continue to drive growth. Reliance Infocomm’s entry acted as the dynamo for even greater affordability by lowering further the price barrier for the consumer.

Contrast this with the computer industry. Even though the device has general-purpose applicability in many scenarios, Indian consumers are caught between non-consumption of the hardware and piracy of software. A computer still costs about Rs 15-20,000 for the hardware, with basic software adding another Rs 20-25,000 to the cost. Besides affordability, the other challenge with computers is manageability. Viruses, Spam and Spyware have made life difficult for end-users. Put it all together and the net result is that the consumption of computing is a fraction of that of mobile telephony.

I would like to believe that we are today with computing where we were with mobile phones five years ago. There is a large potential market, but a few things need to be done to jumpstart consumption. Just like cellphones, computers too have the potential to grow by a factor of 10 in the next five years. What is needed to make this happen?

There are two key ideas from cellphones that computers need to adopt. The first is the creation of a zero-management user device, and the second is that of a subscription-based utility-like payment model. The underlying enabler for both will in fact be the broadband industry that is coming alive in India.

Total cost of ownership of computers can run into Rs 1,500-2,000 a month if one counts the cost of hardware, software and support. One way to bring down the hardware cost dramatically is to simplify the device. Think about the ease of using cellphones. That same simplicity needs to come to computers. The access devices can be thought of us thin clients or network computers, with processing and storage happening on the server. What does this is eliminate all support costs at the user end and also makes possible the delivery of applications and content without worry of piracy by the owners of the rights.

The subscription model is what the telecom industry is very good at. Investments in infrastructure are made upfront, and users are asked to pay a small monthly fee for basic services, with additional payments for value-added services. The pre-paid model has done very well in extending mobile phone usage to a mass market, even as the front-loaded computing industry model has limited it to the upper classes. Imagine if computing were also available like a utility. This can reduce the entry barrier and create a positive feedback that can then get software developers and content providers creating solutions for an ever-growing user base.

To bring the solution to fruition will require the creation of wireless broadband networks. In India, the last mile connectivity to homes and businesses has been a challenge. As of now, the two options are the copper line laid by the telephone company and the cable connection which carries television. In the first case, the incumbents (BSNL and MTNL) control most of the wired telephone lines across India and so far their broadband rollouts have been slow. The decision by the government to not unbundle the local loop has eliminated prospects of competition on this front. In the second case, the quality of cable along with the investments needed for upgrades have limited cable to carrying one-way content.

What India needs is a leapfrog to next-generation networks that can deliver broadband over the air to users creating a high-speed ubiquitous and pervasive data network. This can then enable deployment of network computers like cellphones connected to a centralised grid of servers which provide the compelling services that users need and are willing to pay for. In fact, given the digitisation that is happening in both voice and television, the network computer could in future be the converged device capable of providing a hybrid set of services to users.

To create a base of 100 million computing devices across India, there is, therefore, a need for thinking disruptively. The current model in the world of computing has gotten us so far, but will not take us further to make the vision of a connected computer accessible to every home, family and employee and build the digital DNA of India. We need to look at the other successful industry that has transformed communications in India in the past five years. Welcome to the world of commPuting.

Tags: Bus. Std. (ICE World) Column

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