Month: August 2008

Put another way, on the mobile, VAS 1.0 was all about generating revenues from consumers. In India, this is a billion dollar business. VAS 2.0 will be using Free SMS Subscriptions as the anchor for monetising the right of way to consumers in multiple different ways. What will be valuable in this case is the Subscriptions Engine. What Search did on the Internet Subscriptions will do on the Mobile – generate an audience and create revenue streams.

The World of Subscriptions: Creating Right of Way, and Combining Invertising and Advertising

Now, the next question is how big can this be? Or put another way, what can users Subscribe to? And what’s the business model?

Free Subscriptions can be of two types: Content subsidised by Ads, or Content as Ads. In the first scenario, content is what subscribers want, and advertisers pay to reach these users. This is Advertising. Content can be professionally created or user-generated. Professional content can be regular content (“dailies”) or event-driven (“alerts”). In the second case, there is only promotional information sent primarily by brands – and that is what subscribers want. Think of it as Invertising.

SMS Subscriptions don’t necessarily have to have all of the content in them – given the limitations of 160 chars, they cannot. Instead, for some of the messages, we need to think of them as Signals, or Triggers – which can get the subscriber to act. The action can be a click, response back via SMS, a phone call. And the response on the SMS can also be followed by a voice call. So, essentially, the SMS becomes the starting point for generating engagement (when it is required).

(To be continued tomorrow)

The next point is: Pull or Push? Or put another way, Search or Something else? Search has succeeded big time on the PC, and so there is every reason to believe it should do well on the mobile also. My belief is that Search needs the mobile web – on SMS, the limitations are too many to make it work. Two chief ones: the cost of sending a premium SMS each time a search needs to be done, and the inability to always get an Answer that one is looking for. In countries like India, Search on mobile is probably better done via Voice where one can interactively fine-tune the requirement to get what is needed. (This is space where companies like JustDial in India are doing very well.) Pull-based Voice or SMS services will be limited due to their premium pricing, even though they can have mass appeal. This is where free incoming SMS will shine – and have the potential to be the next big thing.

In a way, we are already seeing free Push SMS – in the form of Spam. Users do not have the ability to opt-out, which creates frustration and leads users to start ignoring incoming SMSes from non-trusted sources. This brings us to the third point – on the mobile, it will have to be about Permission. As Seth Godin put it, “Mobile marketing demands Permission.”

So, taking the first three points together, we get the idea for the service: Permission-based SMS Subscription Services. This does not mean IVR (Voice), Search and P2A are not big. But there are inherent limitations which prevent the ideas from scaling. Free is a critical requirement for something to achieve mass numbers and scale. This is where SMS Subscriptions come in. The killer combination which gets over the limitations of SMS is SMS integrated with WAP and Voice (IVR / call centre).

(To be continued tomorrow)

So, the questions that come to mind are: What will be the dominant model on the mobile? What will create the $30 billion global market opportunity in the next five years?

For the purpose of this discussion, we will leave aside the existing VAS industry which is many billions of dollars in size – and covers ringtones, wallpapers, games, CRBT and music. This has been the biggest success outside of voice and P2P SMS. We want to look at those models where the user does not pay (much) – these models are likely to be equally big if not bigger than the VAS industry today. They will fall largely into three buckets – subscriptions, advertising and transactions (as do all possible revenue streams). User Pays is what the mobile industry has capitalised on very well with its inherent microbilling characteristics. The question for discussion is what else can be created beyond this VAS 1.0 business?

The mobile has many interaction channels – voice, SMS, MMS, mobile web, downloaded apps, and later, video/mobile TV. Of these, there are only two which work on every device – voice and SMS. We will focus on just these two. (In the future, it is possible for the mobile web to become the dominant interaction point – but even in Europe with its advanced networks, less than 20% of the mobile user base uses the mobile web.) So, the first point is that for ubiquity on the mobile, one needs to use voice and SMS.

(To be continued tomorrow)

I have put together some thoughts on what I think will be the foundation for the next big opportunity in the digital (internet-mobile) space – the next big evolution since Google created paid search. Over the next few days, we will start with a bit of history and then I will put my thinking on mobiles into context.

The Shift from Internet 1 (Portals) to Internet 2 (Search)

The early days of the Internet were all eyeballs and monetisation via banner (graphical) advertising. The business was about creating portals and destination sites like Yahoo and AOL were doing. There was also some eCommerce going via the likes of eBay and Amazon. These were significant opportunities but they paled into what was created by Google with the simplicity of paid search. Of course, Google did not create the base model – that was done by Overture (GoTo.com) which was later acquired by Yahoo. But Google refined it to perfection. Search captures intent – to find or buy. Google first fixed the search content, by using the link structure of the Web with its PageRank algorithm. This made finding easy and brought Search back in vogue. It then used the keywords that users were searching for as the thing to sell ads on. On the ad front, it did three things: it used auctions to let the market set the pricing, it only charged base on the click (performance), and it created a self-service system for advertisers wanting to buy. All of this created an infinitely scalable, global solution. And an ecosystem of companies around it (the likes of SEO, SEM, etc.). Google did not need to worry about the demographics of its users – the pay-per-click model (as opposed to the impression-based graphical display model) automatically took care of appropriately matching the two parties. This basic system today will account for $30 billion in revenue, of which Google will take three-quarters – all of this has happened in the past 5-6 years. The graphical display advertising, which has been around for a decade, will account for $20 billion in revenue strewn across the rest of the hundred million Internet sites. So, the second version of monetisation on the Internet (paid search) overtook the first set of monetisation ideas (graphical display ads).

[We are now seeing the emergence of the next Internet – built around Social interactions and Media. The standard bearers for this next-generation are sites like YouTube, Facebook, Skype and PayPal. Widgets are also a powerful emerging force, as is Mobile. We will now shift focus to the mobile, because this is an area where India is one of the world leaders in its consumer base.]

(To be continued tomorrow)

Here is the list of companies I have invested in over the past 3-4, and what they do. Netcore is the company I run full-time.

Netcore: Enterprise Mail + Security; Mobile Data
Novatium: Sub-$100 Network Computers
Rajshri Media: Bollywood-centric Broadband Video Portal
mChek: Mobile Payments
Midas: Wireless Communications Equipment
New Horizon Media: Language Publishing (Books)
ValueFirst: Enterprise Mobility Solutions
Yos: Personal Healthcare Records
Greynium: Local Internet Portals and Classifieds
Intelizon: Solar for Rural Electrification
MobiFusion: Consumer Mobile Apps

Two companies I have recently committed to investing are both in the education space:
Pathfinder: Knowledge Publishing
Global Talent Track: Vocational Education

My new investing has slowed because I find very little time outside of Netcore and the current portfolio to spend time on newer opportunities.

While I was in Singapore with Bhavana and Abhishek (who is now 3 years, 4 months), I bought a 63-piece jigsaw puzzle for Abhishek. It had all kinds of ‘transportation vehicles’ in there — aeroplanes, cars, buses, vans, boats, and so on. And the pieces were nice and large. Abhishek has been doing the jigsaw puzzle daily for the past few weeks! And that’s bored me no end, since he only focuses on the road vehicles, and has me do the air and water ones.

So, in our hunt for more jigsaw puzzles, I discovered ten of them — from my childhood. My mom had kept all of them in storage. And in a day, Bhavana and I were having competitions at night doing the puzzles. They range from 150 pieces to 1500 pieces. Some of them are going to take a few days to do, given that neither of us can spend more than an hour or two daily on them.

As I started doing the tougher puzzles, memories of my days from my teens doing these puzzles started coming by. It was something I would enjoy a lot (along with listening to BBC’s World Service on my shortwave radio). Jigsaw puzzles have an amazing attraction — building the picture piece by piece, using a mix of luck and logic. I am doing one 300-piece puzzle now which has a picture of 2 kittens. It looked fairly trivial when I started, but now I think I will be spending quite a few hours on it!

What started as a toy for Abhishek has now me engaged. Abhishek knows how to find the “edge pieces” – and he has his mother’s eagle eyes. Now, if only, I can delegate the “integration” activity to him…!

Here is my typical weekday schedule:

5:10 am: Alarm 1 goes off on my iPhone

5:17 am: Alarm 2 goes off on my iPhone

5:25 am: Manage to wake-up.

5:50 am: Go for walk (in my building) or do Yoga, for 25-30 mins

6:30 am: Waiting for Abhishek to wake up (check email / news websites on iPhone; think)

6:45 am: Abhishek wakes up. We play, read, and generally keep busy.

7:50 am: Give Abhishek bath and have bath. ABhishek is then off to play-school.

8:15 am: Breakfast, and read the newspapers

8:30 am: Leave home; go to temple with Bhavana, drop her back home, and then to office

9:15 am: In office

1:00 pm: Lunch

6:30 pm: Leave office, takes about 35-40 mins to traverse the 6 kms to home

7:30 pm: Dinner

7:45 pm: Play with Abhishek till he sleeps around 9:30 pm

10:30 pm: I go to sleep

1:00 am: Alarm goes off for me to take Abhishek to the bathroom!

Sundays are much more leisurely — will take Abhishek out on a bus ride or to a bookshop, depending on what he wants to do. Bhavana can override us both should she want to go window shopping in a mall. Some Sundays we go to Bhavana’s parents’ home so Abhishek gets to spend time with his grandparents and younger cousin, Hriday.

Today, I turn 41. Last year, I wrote about my first 40 years. So, to ensure that the story is kept updated and since I did very little blogging during the past year, I am writing about the year that just went by for me.

On the business front, the focus was almost entirely on Netcore and building the MyToday service. It was one of the busiest years for me since 1999. I finally had found something that worked – from the many ideas that we tried in Netcore over the past 7-8 years. The free SMS subscriptions service grew rapidly, and with that came more challenges. Tackling those and laying the foundation for monetisation was what much of the year was about (besides our failed attempt at raising venture capital). This was a year when vision started being converted into execution. We still have a long road to go, but the journey of a thousand miles has begun in full earnest.

On the personal front, Abhishek, our 3+ year-old son, consumes all non-work time. There are days when I wonder if I could swap places with him mom, so I can be with him all the time! The Singapore vacation that we took in mid-June was an absolute delight (until I lost one of our bags in the taxi the night before we were leaving). Nowadays, as a family, we are into jigsaw puzzles — some of them from my childhood days.

It was a year of two new toys: the iPhone that I bought last August and the Amazon Kindle (an ebook reader) that I got from the US in May. That reminds me — there is a toy train set that I had bought a year ago that still lies unused, waiting for Abhishek to grow up a little more, so it can have a long life!

The only regret that I have is that I didn’t blog at all for much of the year. But now, I have decided to re-start. It will be much more personal — unlike the linking to articles that I used to do earlier. I will try and write daily. Life has so much variety so hopefully that should not be too difficult!

[This is the second part of the article I wrote for Outlook Business. Part 1 is here.] 

What does it take for us to make this future a reality? How can we make computing available to every family, every employee and every student in India? There are three triggers that are needed to create the foundation for a Digital India:

Ubiquitous Wireless and Wired Broadband Infrastructure: For too long, India has been hamstrung by short-sighted telecom policies. We need to treat broadband as core and critical infrastructure, just like roads, ports, airports and power.

Low-cost Access Devices with a Utility Computing Model: We need to reduce the entry barrier for consumers and small- and medium-sized enterprises to adopt computing – in essence, replicating the mobile revolution of the past five years on the broadband front. To do this, computing needs to become simple and affordable – and this is where network computers and mobile internet devices can play a central role.

Content and Applications: There needs to be an open platform allowing a wide array of providers to offer their services and bill them. Just like the mobile ecosystem has an in-built microbilling facility through the operators, there needs to be an equivalent micropayments option that consumers have to the business model for monetisation is not reliant only on advertising.

To get to the future from where we are today, we need to think about the innovations needed on the two Internets that exist today. The PC-based wireline Internet has about 30-40 million users, with a majority of the users using cybercafes. With only 8 million computers in Indian homes, this Internet is still a long way from becoming a utility in people’s lives. The mobile-centric wireless Internet can potentially reach a significant portion of the nearly 300 million cellphone users in India. However, the reality is that other than voice, there are only two services which touch a large fraction of this user base – SMS and ringback tones. The mobile-as-India’s-computer paradigm still has a long way to go.

Looking at it another way, for the real boom, the wireline Internet needs more devices (home computers) and the mobile Internet needs more services. What will it take to make both happen?

To solve the device problem, one needs to rethink computing in a world where broadband exists – and thus make computers affordable and manageable. For this, the answers lie in borrowing two ideas from the mobile industry – create a device that costs Rs 5,000, and combine it with a monthly service charge of Rs 500, and make the device simple to use without requiring its owner to become a technology expert!

The solution to these twin challenges lies in thinking ‘thin’ computers for Indian homes – connected over DSL or cable to servers over high-speed networks. All the computational processing is done at the server-end, and the network computers become simple ‘on-off’ devices – without compromising on the performance that current desktop computers offer.

To make the mobile Internet a reality in India, two changes need to happen, and they have to be driven by the mobile operators since they are the ‘gatekeepers.’ First, an open publishing platform is needed to allow anyone to create a mobile website that is accessible by everyone – just like on the PC Internet.

Second, mobile operators need to change their billing philosophy for value-added services. The bulk of the revenue that users pay must be given to the content providers. Mobile operators should, instead, charge for packet data flow through their ‘pipes.’ At a broader level, just like NTT Docomo did with its i-mode service in Japan in 1999, Indian mobile operators need to encourage the creation of a value-generating ecosystem.

Taken together, these innovations can help build the Digital India, and create a framework for other emerging markets to emulate and provide a large domestic market for companies to finally think India First.

I wrote an article for Outlook Business as part of their Independence Day special issue (August 23 issue, page 96). The title given is “Waking Up to a Digital Dawn.” The first part is a small story set in the future.

Pooja lives in with her parents in a modest two-bedroom apartment in a middle-class neighborhood in Mumbai. She is studying in class V. It is early in the evening. Entering the living room, she switches on a light and then pushes a button on a little blue box the size of a shoe-box sitting next to a monitor. The monitor lights up immediately displays what looks like a PC desktop. A little dialog box blinks, “Who is it?” She types her login name “pooja101”. “What is our secret word, Pooja?” She responds.In a flash the desktop changes to resume where she had left off earlier that day when she had accessed “MyComputer” at the school computing center. An ad appears in a little window. It lasts for about 10 seconds informing her of a sale on school supplies going on in her neighborhood supermarket. She clicks on the “ToDo List” and makes a note in there to buy some stationery and dismisses the ad window.

Pooja is in a hurry to get to her assignment from the biology class done. On the desktop, that file sits exactly as she had left it. She “googles” for some more information on ‘platypus‘, collates a few images and videos together, and adds a voice-over commentary. Satisfied, she mails it off to the teacher, well before the 9 pm deadline.Now comes the part she really enjoys. She is learning French. She clicks an icon and a streaming video resumes from where she had left off a few days ago. It is a multimedia course and it is world-class and on top of it all, it is free. She takes a little test in the end and is happy with the results. Later her father, Ashok, logs in and balances his checkbook, pays a few bills, and makes a call to his brother in the US. After Pooja and Ashok have gone to sleep, their mother, Lata, logs in via the NetPC. For the past year, she has been working as a Tutor for a local education company. She likes it because she can work the hours she wants – without ever having to leave home. More than the extra income, she is glad that her teaching skills now are helping students the world over.

Next morning, Ashok , who is an executive with a media company handling their international operations, has a weekly international business review meeting at the office. He logs in to the video conference and talks with each of the seven region heads. He still remembers the time a few years ago when he had to travel country by country and be away from his family for long periods of time. This is now a thing of the past with live interactions via video with anyone he desires as often as he wants.Ashok’s thoughts were interrupted with a message from his assistant who informed him that he could check the latest episodes. Ashok now views the episodes online directly from the producer’s studio before they are transferred to Hong Kong for uplinking to all international channels. With the big data pipes, Ashok has been also able to save on huge tape costs. Ashok is a happy man as he winds up his work and goes to sleep. He has not only been able to save time, but was also recently promoted because his was the most profitable department. He was able to this because he grew the business and managed his costs well across travel, tapes and other operations.

(Part 2 is here.)