A lot of data has passed through the Jio network since we wrote the last post on Jio in September ’16. More than 100 crore GB of data which by their own yield estimate of Rs.50/GB, is Rs. 5,000 crore of revenue lost for someone! In a little less than a day, the data freebie on Jio ends and it will become a paid service. In a few days after that, we’ll know what this massive freebie translated into, in terms of new customers and their value.
I’ve been using Jio for the last 5 months, first as a secondary mobile connection primarily for data (my guess is that most people who are still are using it, are doing the same) and now as my primary and only mobile connection. Hence, I’m mentioning below my opinion about a few things that I think have worked for Jio, and a few that have not, both from an end-user’s perspective and a marketers’.
First, what worked :
- Freebie and Prime strategy: The freebie strategy worked, and how ! Jio crossed the 50 million subscriber mark in 83 days, something its competitors in India took more than 12 years to touch. Then, in another 87 days they hit the 100 million subscriber mark. When competitors tried hard to match the initial tariffs / plans that Jio announced, Jio overwrote them with new Prime membership plans. Pricing annual Prime membership at a rock-bottom Rs. 99 ensured that they enrolled 50 million subscribers within a month and before the current go-live date of 1st April for paid services. So, on launch day, it might well have the highest number of mobile broadband users in India (Airtel, India’s largest telecom operator had between 41-60 million 3G+4G customers in 2016 according to various News reports). The Prime plan with low data tariffs has also ensured that they have a good chance of locking in customers for another year, experiencing and testing their network while Jio irons out issues.
- Unique customers / minimum duplications: Using the MyJio app and generating a unique barcode per device they’ve ensured – to a large extent – that there is only one Jio connection per phone / IMEI number. The unique barcode per phone and Aadhar based eKYC means Jio has very accurate knowledge about who their live customer is. This enables them to actually track ARPU (per user) rather than ARPU (per SIM) which is what the industry is compelled to track now. Remember, India has more than 12 billion telecom subscribers (November 2016) which is about 1.2 SIMS per phones in circulation (~760 million phones in circulation). Millions of disconnections happen when the regulator comes up with new rules for subscriber verification or when operators decide to clean up their Virtual Location Registers (a database of all the SIM cards being serviced on their network). By Jio’s own estimates the active SIMs will reduce by 330 million to 800 million with no voice arbitrage within a short time.
- LYF smartphones: In 2016, Reliance Retail launched their own brand of smartphones called LYF. Prices of these phones started from a very competitive Rs 3,999 and were probably aimed at pushing 4G phones into India (“fuelled the 4G ecosystem” in Jio’s own words). By Q3-CY 16, they started bundling free Jio SIMs and apps on these phones giving them a good base of customers who stress tested their network and service infrastructure. In that quarter, LYF smartphone share crossed 7% by volume and became the #5 brand of smartphone in India. More importantly, competition caught up, now all smartphones shipped in India are LTE enabled with 7 out of 10 being 4G enabled. That’s some good groundwork and substantial base for Jio’s 4G network.
- JioMoney tie-up with the Uber: In February, Uber and Jio announced a strategic partnership enabling payment of Uber trips using Jio’s mobile wallet JioMoney. Till then, Paytm was the only wallet option on Uber India and for Paytm, Uber was one of its biggest merchants, if not the biggest. While Jio gives out numbers of its mobile subscribers, it doesn’t give out details of adoption of their apps – which seems to be a small proportion of their user base (Google Play store indicates between 10-50 million installs of the Jio app while it’s greater than 50 million installs for Paytm). Uber gives Jio users a strong reason to migrate to using the Jiomoney app which will play a critical role for growth of Jio’s other media services apps – currently Jio is giving out free content worth over Rs. 10,000 per year to each Prime user.
What hasn’t worked and needs improvement:
- Jio4gvoice app: This was a master stroke and a necessary evil for acquiring more customers – there are already 124 million LTE devices, not all of them VoLTE capable – but one that has the maximum potential to alienate them too. Jio4gvoice is essentially a voice calling app that enables non-VoLTE (4G-LTE) devices to be used for making calls on the Jio network. When I checked the Google play store last, there were more than 50 million installs of this app (almost a proxy of how many non-VoLTE devices are being used on their network). On these phones, this app has to be always connected to their data network, to make and receive calls and SMSes and this drains the battery quickly. Added to this, every new update brings a fresh set of bugs with it. And because it is the only way to make a call on Jio with non-VoLTE phones, any bugs in this app are the first to be noticed and the most frustrating aspect of Jio.
- Network and Speeds: Jio might have the ‘capacity to carry 100% of India’s voice traffic’ or claim to have the ‘lowest call drop in Industry’ and offer the ‘BEST experience’. But, my experience has been quite contrary to these claims. On the move, the network has disconnection and connection issues leading to frequent call drops and inability to call back quickly. In locations like airports, they have serious network issues. JioNet could have helped in such high traffic areas, but it hasn’t been rolled out adequately and has since dropped from prime plans. As far as being the world’s largest data network goes, rarely have I obtained speeds above 1 Mbps.
- Call connection issues: It’s common knowledge now that Jio faced issues connecting calls to users of other networks as they didn’t get sufficient points of interconnect’s (PoIs) from other telecom operators. Though the busy hour call failure rate has dropped from the highs of 88% when they launched in September, it still hovers between 8-12% (Jio publishes data on their website on a daily basis). It is really frustrating that even after 6 months, a fair bit of this issue remains. Once Jio becomes a paid service, if this issue persists, it is going to cause more agony to customers.
- Customer service: I’ve already mentioned in my last post that the experience with Jio at customer touchpoints hasn’t been satisfactory. My aggravation with this increased last month. I had to make multiple visits to their store as well as make multiple calls to their call center to get clarity on some issues. Every time I was given a different answer, and many a times an incorrect one. Then there are other basic processes which don’t work – for example, DND activation via their app doesn’t work.
- Finally the Marketing:
- Relentless communication to existing user base: Either their CRM back-end has not been integrated to the payment back-end, or it is not synced frequently enough, or their marketers, data analysts and programmers are being plain lazy. Whatever the reason, existing users – even those who have enrolled into plans – have been bombarded with 100s of messages and push notifications (many of them incomplete) asking them to enrol into one of the various plans. People might ignore them as long as they are getting stuff for free, once they start paying, it’s a different expectation altogether.
- Advertising: They had a pug, a zoo-zoo and a catchy jingle / catchphrase as benchmarks to beat. What do they come up with? Flying balloons – lots of them! No wonder it made it to the bad set of the annual list of the best and the bekaar ads.
While it has got a number of things right, a couple of the above are real deal breakers. No network or frequent network disconnections and low speeds are going to turn off people even if they’ve subscribed into dirt-cheap prime plans. And it’s a matter of time before competition cuts their prices to a reasonable level and offers superior services.
Will voice services become a non-differentiator? Will data explosion start and / or continue with commencement of paid services of Jio? Will Jio be able to meet its grand 2021 vision of capturing more than 50% of the 3 lakh crore data market it is projecting ? A close watch on how these tactics by the incumbents and Jio play out through the rest of the year will give us a fair guesstimate.
Update (a day after this post ) :
Just as you thought the freebies won’t end, they’ve extended enrolment for prime till April 15th. This is probably because they could only enrol 72 million so far.
Then the free service goes on till July 1st. While they say this is to enable Jio customers to fully familiarise Jio customers with their services and enable digital payments for further purchases, I think the problem is somewhere else. 1 lakh towers will be added to the 1 lakh towers already existing in the coming months. There are “small pockets of congestion” on the network impacting service quality.
- Ravindra Ramavath
Since 2013, there has been an explosion of start-up activity in the Healthcare space in India. AngelList lists about 1,139 companies in the healthcare space in India. Fundamentally, the various activities that these start-ups are engaged in can be broadly bucketed into 9 spaces – locating and booking (doctor, pharmacy, diagnostic centres), telemedicine, managing health information, devices (fitness as well as medical), commerce, home care, practice management and networking / sharing within doctor communities, general information and content. Many companies are doing a mix of these activities.
A quick dig into the data from AngelList in the table on the side; as it shows, much of the focus of entrepreneurial activity so far has been on connecting doctors and patients, and on digitising clinic / hospital operations. There are just 11 companies listed under Electronic Health Records and it is at the bottom of the list.
Why is management of health information / Electronic Health Records (EHR), languishing with just a few focusing on it?
What are EHR?
One generates so much health data without realising it; during any illness there’s the list of symptoms, medical history, diagnostic data (lab test, imaging…), treatment history (prescriptions and medications), progress notes etc., and even in the normal course of life there’s immunisation history (in the case of kids), allergies, biometric data (BP, sugar…), lifestyle choices (sleep, diet, exercise…) etc. These are all discretely recorded somewhere – on paper or as printed reports or as images or on wearable devices (including mobile phones!) – and then discarded later, except in the case of a chronic illness. Simply put, an EHR is a collection of all these medical records that are generated whenever an individual interacts with any healthcare service.
What are the advantages of systematically recording health?
Digitising health records has a host of rewards:
- Easy sharing of data with all stakeholders involved in patients care
- Better evidence based diagnosis and care as it provides a patient’s full history
- More accurate reporting by patients and faster diagnosis
- Better monitoring of medication or recommendation compliance / adherence
- Lower costs from reuse of old lab test results as well as from eliminating redundancies in data capture (and burden on office staff)
- Increases accountability of health care professionals
- Robust analytics including predictive analytics which can help governments make better health policy decisions or help insurers / medical product companies design and optimise their products better
In the case of India, recognising the importance of EHR to deliver Universal Health Coverage (UHC, ‘easily accessible and affordable health care to all Indians by 2020’), the High Level Expert Group (HLEG) constituted by the government recommended, ‘adoption of system-wide Electronic Medical Records’ (Recommendation 3.6.3).
So, coming back to the question, with so many advantages and a government push behind it, why are so few health start-ups working on EHR?
Who is generating the data and who’s digitising it?
Fundamentally, there are 3 places where this data is being generated – at the doctor, at the lab / pharmacy and by the user through devices. And there are multiple ways this data can be digitised – by any of the aforementioned or by an intermediary.
The best case to digitise information would be at the source – by the generators viz., the doctors or the hospitals. However, there are a number of reasons why this is not happening yet in India:
- Doctor’s maintain a record only when they see a long term need or opportunity. And, this need is felt only in some specialities where a patient can be retained longer or where the diseases are chronic. Some examples would be dentistry, gynaecology, psychiatry, paediatrics, diabetology and cardiology. Even in such cases, many a times, the physicians seldom take the responsibility for maintenance of records in any form. The general habit is to hand over the file to the patient who brings it for every consultation. Where the data is maintained by the physician, they use it to raise entry barriers and don’t give access even to the patient easily.
- In many other specialities, practitioners would argue that there is practically no reason to know a patients’ general history for certain illnesses. For example, in general medicine, most ailments are treated by assessing near term causes and not many doctors really bother about (or need to bother about) longitudinal health history before prescribing the next course of action. In many a case, history is disregarded as well and medical tests etc., are routinely redone though the previous ones are perfectly valid.
- Most of the current methods of digitising are cumbersome and demand extra time from the doctor. So these are not done in real time, passed on to low cost resources (usually interns and nurses) or are transcribed by an untrained third party later. Due to this, many a times, errors creep in; making the data unreliable and useless for future use.
- In spite of all these drawbacks, there is one place where massive health records are being generated at source – the hospitals – especially in the In-Patient Departments (IPDs). That’s because the rules under the Clinical Establishments Act were revised in 2012 , and then mandated ‘maintenance and provision of EMR/EHR for every patient’ for registration and continuation of all clinical establishments. However, most hospitals do it as a tick mark to meet compliance as data standards are still not in place (as of May’16, the Ministry of Health (MOHFW) was still seeking comments and views on the EHR standards from public). To meet compliance many small clinics and private hospitals scan and store hand written memos, and while many large private hospitals use EHR, they fail to deliver on the main criteria of standardisation and interoperability.
So, there are fundamentally two problems at source – behaviour change and lack of standards.
The second generator of massive amounts of health records are the numerous labs and pharmacies. And here is where the easy wins lie in digitising records but where there is little focus and attention from start-ups. Again, a host of factors stopping adoption:
- A lab is essentially a hotchpotch of instruments, each spewing data in its own proprietary format. The technicians then input them into the lab’s software which is mostly customised (a very fragmented custom software market exists in this space), which then gives out a report in a different format. The same is the case of pharmacies. A pharmacy can chose from hundreds of different software and enters data according to its own needs. One can enter the name of the medicine, test, doctor and patient in any way one desires. Lack of data standards, low integrity of master data.
- Each lab and pharmacy is an enterprise in itself. There are approximately 5.5 lac pharmaceutical retailers in India and organized retail contributes to less than 3% of total pharmacy retail sales. Many of them hand over handwritten bills or give out prescription medicines over the counter. Organised players control only 15-20% of diagnostics industry revenue. This fragmentation compounded by lack of digitisation and regulation amplifies the previous problem manifold and makes interoperability of data virtually impossible. Also, demand hugely outstrips supply so even these organised players don’t see any merits in long term engagement of captive and existing customer base.
So, again two big problems at the pharmacy or lab – lack of standards and regulation.
The third place where information digitisation can be done is through the user. This is what Google Health tried and what Microsoft HealthVault and some of the Indian health care start-ups are attempting. Users have to either manually enter health records, upload the data or authorise these companies to access their lab results, prescription history, and visit records from various partner labs, pharmacies, hospitals, and clinics. They can also connect their home-health devices and push data to a central repository. These companies would import, clean and merge potentially separate health records into one centralized health profile. Here again there are a host of barriers to digitisation:
- Many a times, the user doesn’t get electronic copies (especially of medical images which are difficult to scan). While one gets hard copies, manually entering information into a system is both painful and cumbersome. Even if one has the patience and enthusiasm to do it, errors happen due to limited understanding of the technical data being entered. And a big negative feedback loop is added, if doctors are not interested in looking at this data either due to habit or distrust of this data.
- One of the two reasons why a user would take the effort to organise and / or digitise his health history is the opportunity to use those for preventive care. However, prevention as a plank has seldom motivated Indian consumers to adopt something.
- Discerning consumers also might be concerned about confidentiality and security issues with data uploaded onto servers of relatively unknown third party players. Who will own data uploaded? Who all will access these records and for what purpose? These are all pertinent issues that the user has to be reassured about before uploading sensitive health data on the internet.
Though a company like Google tried this user driven approach to EHR to help one “make smarter choices”, it shut operations in 4 years.
Are there any successes? What are the reasons for the same?
There are some countries where information is digitised, of course, and a big part of it has to do with Government push both in terms of defining and enforcing standards and also forcing behaviour change via regulations.
In the UK, where health care services are free at the point of use to permanent residents via the NHS, it’s in the governments’ interest to set up the IT infrastructure to bring more efficiency and effectiveness into the delivery of healthcare. In the US, where insurance covers the high healthcare costs and pays the service provider directly, it’s in generators (doctors and hospitals) interest to maintain records in order. Then recently, Obamacare in USA both incentivised adoption at the beginning and penalised non-compliance later resulting in fast digitisation in Healthcare. That prescriptions are managed by a handful of third parties is also another big enabling factor.
Some home-health (especially fitness) device manufacturers have had limited success in terms of generating health information from users. Most of it has to do with real-time gathering of data, automation and gamification. But the data generated through these means is too trivial to be of use to impact healthcare in a significant way.
To summarise, digitising health care in India still remains a hard nut to crack under the existing circumstances – the size and complexity is just a small aspect, there are bigger behavioural and regulatory problems at play. Learnings from NHS and Obamacare show that a heavy external push from the government is required for entrepreneurs to focus on this area and succeed.
Our last post mentioned, “roll out of 4G LTE and imminent data price wars” in anticipation of the Reliance Jio launch. And, a couple of days before we posted the infographic, Jio opened up their ‘freedom offer’, which was restricted earlier, to everyone ; it’s now probably becoming the ‘welcome offer’.
My interest in Jio was piqued the moment I saw tweets with screenshots, especially this one, of the data plan from ANI_News, which was live tweeting the AGM. The reason was my current mobile plan. I use a Rs. 1,299* plan that my current mobile operator offers (with a discount of Rs.783, they call it a 3G promo offer) for which I get, “299 minutes of free talk time”, “200 free local sms” and “1GB data” on their 3G network. My primary reason for choosing this plan was the data pack. I calculated that I needed about 1 GB of mobile data for on-the-go occasions and for everything else, there was my unlimited home wi-fi of which I consume about 6-8 GB of data on my phone every month. Now, with the Rs.499-M plan of Jio, which is less than half of my current mobile plan, I can get 4x (and more) the data at 10x speeds. What’s more, I can do away with my home wi-fi connection! The only thing that stopped me from going in for a Jio connection earlier was that my mobile phone (Oneplus One, running CyanogenMod) wasn’t a device originally listed in their device FAQ.
The moment the phone compatibility issue was taken care of with the Jio4g voice app, I was in the queue for a Jio SIM. The Aadhaar card based activation was a breeze and I had the Jio SIM about 30 minutes later – most of which were spent standing in the queue. Barring the face-to-face interaction with the Jio representative at the store, experience with Jio at other touchpoints hasn’t been satisfactory. I couldn’t get through to the Jio tollfree number easily to enquire about the compatibility of my phone on their network. When I did, I had to wait about 20 minutes and then talk to an untrained customer care associate who asked me what the, “brand name and model was for a Oneplus One” (even the rep at the store wasn’t that clear, all he said was, “if you’ve got an offer code on MyJio app, the phone works”). Activation took about 3 days since the day I got the SIM, and I got to know about it only after another call to the tollfree number because the activation SMS didn’t reach me.
Having used the Jio network for almost a day now, the overall usage experience is nothing great to write home about. I couldn’t place any outgoing calls to numbers on other networks barring Jio ones and an MTNL landline. Calls from other networks, including MTNL, to a Jio number don’t go. While I could receive SMSes on the Jio number, the ones I sent out weren’t received on numbers on other networks. The much touted 4G data speed too wasn’t in sight. I was getting download speeds ranging between 60-500 kbps. There are also other minor niggles in the app which will hopefully be ironed out soon – the Jio4gvoice app is always on, draining the battery more than necessary and I found the 4g connection drops when I am on a wi-fi network.
While there is bound to be some confusion, delay and a few niggles with a new launch – especially one with such grand objectives , there are a few things that are a complete master stroke by Jio…
- Free welcome offer of 3 months (unlimited calls and internet):
- Though they haven’t lived up to their promise of “5 minute walk-out-working” Aadhar based signup, people are willing to wait days for activation because everything is free as of now
- It allows Jio to stress test their network with a lower number of users at higher usage before they ask more people to pay-up for less usage in about 3 months
- If these users are delighted with the network (in all likelihood they’ll be, at least with the data network), the word of mouth they’ll generate is going to a huge marketing push
- Not porting numbers right now:
- Though the FAQs say you can port, they aren’t doing it right now (or rather the Jio rep I met in the store told me so). Imagine the additional headache of training their entire team to answer additional porting questions from customers. Coordinating porting with other telecoms and then intimating date and time of porting to new customers. Worst still, service disruptions during the porting process lasting hours making thousands (or lakhs) of customers angry
- I suspect, this is also probably forcing customers that are unwilling to let go of a number they’ve had for ages, to use Jio as a second network more for data than voice (and they have an “activate data only” option as well).
- As an offshoot, in the near term, demand for low cost dual sim 4G phones is probably going to hit the roof
- With the data from those using voice on Jio, Reliance can negotiate better with incumbents for more interoperation points and lower charges. Thereby providing better voice experience by the time they launch paid services in January 2017. (Read more about it here: “Jio supporting their demand for PoIs for 22 million users quoting 50 million call failures”, “TRAI set to reject higher interconnection charges from telcos”)
- The other thing which I suspect is going to happen is that while Reliance Jio has full visibility of which networks people are coming from or going to switch from (thanks to the data they are collecting during the signup), the telecom operators are in the blind as to how many of their existing users are trying out Jio. Come 1st January, the blindsided operators, might lose millions of subscribers at one go.
- Possibly converting a whole segment of feature phone / pre-paid users to smartphone users :
- This is just a hypothesis based on observations of those in queues at a few Jio stores. If the free voice calls and free SMS lures enough of those using features phones on pre-paid cards towards smartphones, and if they experiment with downloading music and video and are satisfied with the experience, and if a sufficient number continue on the Jio network after Jan 1st, then smartphone usage would have penetrated a whole new segment. Three big Ifs, I recognise, but the combination has the potential to be a game-changer.
- Of course, a large chunk of these users may turn out to be shrewder / more value-conscious than we give them credit for and may stop consuming data for entertainment once they have to pay for it. They might yet continue with Jio for voice calls, in which case though Jio would have succeeded in switching users from competing networks, the task of changing their usage behaviour and increasing ARPUs would still remain. Worst case, if the voice connectivity on Jio networks is poor (as it is currently) , they may switch back to their old networks and it’ll be a bet gone horribly wrong – the mother of all promotional offers, one that induced a lot of free trial, but generated little conversion or loyalty.
- Having to install MyJio + Jio4gvoice apps to generate offer code prior to getting a SIM:
- Even before Jio gives out the SIM, they have access to pretty much everything on a prospect’s phone – read and modify contacts, call log, calendar, sms, location – via this placeholder of an app called MyJio. Add Jio4gvioce, they can have everything else from your phone – identity (personal and device), camera, media (photos and everything else on your phone and sd card), microphone. Not many users in India are educated or knowledgeable about how much data an app can access and transmit.
Anyway, returning to our last post…
- Price wars are imminent: Airtel has already cut prices. BSNL announced that it will match Reliance “tariff-by-tariff”. Vodafone and Idea are yet to announce their plans.
- Mobile data consumption is set to explode: In the previous post, we mentioned that there are, “33.9 Million mobile users (~11% of total mobile internet users) who consume over 2 gigabytes of data per month”. Now, Reliance Jio claims, ‘the average monthly data consumption per user has exceeded 26 GB’ in April-June quarter and they had, ‘over 1.5 million test users’ even before the test launch. That’s a 13x jump in average data consumption by a smart phone user! That might be the best case of course, but considering that one gets 4GB of daytime data and unlimited night time data over mobile networks and 8 GB over Jio public wi-fi hotspots, even in the Rs. 299 (pre-paid) and Rs.499 (post-paid) plans, these averages aren’t going to hold for long. This might be the stimulus the telecom industry needs during a time when the average data ARPUs are falling ( as data prices have largely remained constant while average ARPUs have been falling, my hypothesis is that new users being added aren’t consuming as much data).
- Collateral damage – voice calls: There has been much acrimony already between Reliance and other operators. Reliance Jio has accused incumbent players like Bharti Airtel and Vodafone of not releasing sufficient inter-connection ports to terminate a voice call in another network (news report 1, 2). I think it’s a moot point because, eventually, people using Reliance Jio (or other networks matching Jio’s data prices) are going to be doing a lot more of VoIP and video calls. Operators are not going to choke on incoming voice as they are currently claiming, they are going to choke on incoming data.
- Collateral damage – entertainment apps: The SOP 5 with the Jio SIM is, “Install Jio Apps” and the MyJio app installs a Chat, Cinema, TV, Music, Magazine, News, Storage/Drive, Money, Fashion app. My hypothesis is all the lesser used or upcoming or limited content or me-too apps in these domains are going to really find it difficult to survive. I also think DTH operators are going to suffer a bit. I definitely don’t find it worthwhile to pay for a big bundled pack every month when I view only 1-2 hours of TV a week. If I can access those few shows online, I am definitely going to cast them on my TV and disconnect my DTH.
- Data services as the imagery drivers: We also mentioned, “Indians are still more concerned about voice quality than data services” and that, “among smart phone users elsewhere, data speed is considered to be the most important factor in determining both network performance and satisfaction with an operator”. India is going to catch-up to this paradigm soon. The provider who has better data network and app content is eventually going to win and Reliance Jio has already built a huge lead in it.
The last time, Reliance launched a mobile network, it brought the voice prices down. Hope they do it for data now. All in all, exciting times ahead both for users and watchers.
In this blog post, we mentioned that India is the #2 market in terms of Internet users behind China. But did you know that India was the #2 telecommunications market in terms of subscribers since 2008?
The telecom revolution stated in India on July 31st 1995 with a mobile call between the then WB chief minister, Jyoti Basu, and Union communications minister, Sukh Ram. Since then, mobile phones have permeated everywhere in India. There are 1,036 million telecom subscribers, 97% of these being mobile subscribers. The urban mobile teledensity is a mind boggling 147, 3x higher than rural at 49 (overall mobile teledensity of 79.2).
With such high penetration numbers, every telecom operator is now turning towards data to increase revenues. The growing smartphone penetration in India, driven by cheap handsets is expected to fuel this. In 2016, smart phone shipments are expected to overtake that of feature phones with analysts pointing out factors that can drive the average price of a smartphone further down from Rs.10,700/- in 2015.
While users in India are still more concerned about voice quality than data services (and the leading telecom operator has tried to take the high ground on this aspect with the open network campaign), among smart phone users elsewhere, data speed is considered to be the most important factor in determining both network performance and satisfaction with an operator.
[Here’s a quick look at the data in the infographic above (2015 data) :
- 1,010.9 million wireless telecom subscribers
- 311.7 million wireless internet subscribers
- 60% of these connections are on GPRS/Edge networks
- 36% on 3G technologies such as HSPA/WCDMA
- & only 0.8% of connections are on 4g networks technologies such as EVDO/CDMA/LTE
- The average mobile connection speed was 1,016 kbps with…
- … the average 2G speed at 77 kbps
- … the average 3G speed at 1,932 kbps and
- … the average 4G speed at 9,415 kbps
- The average mobile-connected end-user device generated 149 megabytes of mobile data traffic per month
- Average non-smartphone generated 49 megabytes of mobile data traffic
- Average smartphone generated 430 megabytes of mobile data traffic per month
- 9x more mobile data traffic per month than a basic handset
- Within this, the average 4G smartphone generated 1,256 MB of traffic per month in 2015, compared to 430 MB for non-4G smartphones.
- Average tablet generated 1,671 megabytes of mobile data traffic per month
- 34x more mobile data traffic per month than a basic handset
- There are an estimated 239 million mobile connected smartphones, 23.9% of device connections, and they generated 69.1% of total mobile traffic
- Incidentally, India has overtaken Japan to become the world’s third largest smartphone market
- There are 3.8 million tablets, 0.4% of device connections generating 4.2% of total mobile traffic
- In India, mobile video traffic is estimated to grow 20.8-fold from 2015 to 2020, a compound annual growth rate of 83%.
- Currently, web and other data applications generate about 48% of mobile data traffic, Video generates 40% , streaming audio generates 10% and file-sharing the balace 2% of India’s mobile data traffic
- Currently web browsing, emailing and social networking are the top three internet activities on smartphones ]
What these numbers tell you is that Indians are embracing the internet on the mobile, not PC. And this mobile Internet is currently work and social networking related. Going forward it will be increasingly video.
However, the quantum of consumption is still low. For example, the 430 MB consumed at an average speed of 2.643 kbps by an average smartphone on an average mobile connection is good enough to stream about half a movie in SD quality from Netflix. And, if you are going to use a social network like Facebook exclusively, it will last you about 4-5 hours (1 -2 MB per minute). These are of course averages. There is always the pareto principle, 33.9 Million mobile users (~11% of total mobile internet users) consume over 2 gigabytes of data per month. And it is from survey of these users, that you hear the hype about mobiles and apps.
The next few years are going to be exciting in this space, launch of multiple high spec smartphones at Rs.10,000 price points, roll out of 4G LTE (and imminent data price wars) and better last mile connectivity will further fuel mobile data consumption.
- Ravindra Ramavath
Our last post was on the penetration of e-commerce and the proportion of retail sales contributed by e-commerce , across 5 countries. After reading it, one of our loyal readers asked us for some more information about e-commerce in India. Hence, this time we’re looking at the total value of e-commerce sales contributed by various categories of purchase / transaction.
The pie-chart above shows the proportion of e-commerce sales contributed by various categories in India :
(Data source: IAMAI IMRB Icube 2015 )
- In India, the total value of e-commerce transactions was a whopping Rs. 125, 732 cr in 2015, and it grew at 28% CAGR between 2012-15.
- That online travel drives a bulk of e-commerce revenue in India is a fact that anyone who reads a newspaper is aware of ; this chart adds the details – 61% of the total e-commerce revenue of Rs. 1.25 lakh crore was driven by online travel. Of this, domestic air tickets are the largest chunk, followed by railway tickets, and then international air tickets.
- While online travel grew at a CAGR of 30% over the three years from ’12 to ‘15, rail tickets (17% CAGR) and domestic ticketing (22% CAGR) are slowing down the growth
- What we typically call e-commerce and should more accurately be termed e-tailing – i.e. the purchase of various types of products online – is actually just 30% of the total value of e-commerce transactions.
- However, e-tailing grew at a CAGR of 80% from ’12 to ‘15
- The 3 categories within ‘e-tailing’ that are driving the growth are ‘Mobiles phones’ (126% CAGR),’consumer durables’ (135% CAGR) and ‘home furnishings’ (94% CAGR).
- The ‘Food delivery’ segment , albeit relatively small at just 1.4% of total e-commerce, also grew by leaps and bounds with an 89% CAGR from ’12 to ‘15.
Now that we’re familiar with the data for India, let’s compare the proportional split of e-commerce sales in India by category with that in the U.S. :
(Data source: IAMAI IMRB Icube 2015 ; eMarketer Apr 14 for US showing 2015 projection, validated through other sources )
- In e-tailing in India, there is an over-dependence on ‘computers, durables and consumer electronics’ as compared to the U.S. – almost 50% of total e-tailing in India vs. 22% in U.S.
- If we benchmark to U.S., most categories in India – e.g. ‘apparel’, ‘personal care’, ‘home furnishings’, ‘books’, ‘auto and parts’ – have the scope to grow faster than ‘computers, durables and electronics’. Of course, benchmarking to the U.S. is something that could led to wrong conclusions too, as so many e-commerce firms in the hyperlocal space have seen recently ; hence the need to tread carefully after investigating consumer needs, current satisfaction levels and the nature of the gap
- Interestingly, ‘Auto and components’ is something that hasn’t taken off in e-commerce in India at all, while in the U.S. it is 10% of e-commerce by value. The Indian online car market is limited to ‘second hand cars’ which is mostly a ‘classifieds’ business.
- Ravindra Ramavath
In Q4 ’15, India surpassed the US to become the #2 market in terms of Internet users behind China. However, e-commerce sales in India are nowhere near the value they generate in the U.S. or in China. So here’s a look at internet penetration, digital buyers and e-commerce sales of the top 5 countries by total retail Sales.
We’ve been interested in this topic for a few years now ; in this post almost two years ago we tried to gauge the penetration of e-commerce in four BRIC countries by comparing the proportion of their population that was active online vs. the proportion of population that actually shopped online. In today’s post, we’ve gone one step further and looked at the value of sales originating from those that shop online, i.e. the proportion of total retail sales value that is contributed through the e-commerce channel. For this purpose, the countries that we’ve chosen are those that are the top 5 in terms of total value of retail sales, namely USA, China, Japan, Germany and India, in decreasing order of sales value.
[Since there’s a lot of information in this infographic, here’s how to read it :
Each of these five countries is linked to two sets of concentric circles, one in the top half of the chart and one in the bottom half of the chart. The set of concentric circles on the top had population numbers and that at the bottom has sales figures. Now for the details.
Let’s consider India as an example. The outermost circle in the top set of concentric circles for India tells us that our country has 925 mn people aged 14 years or more. The circle inside it shows that of these 925 mn people, 221 million or 24% are internet users. The innermost circle shows that only 82 Mn – or 9% of the 925 mn people – are digital shoppers and make online purchases of goods and services other than travel and events.
The bottom circle linked to each country shows the total value of retail sales and the proportion that is conducted via e-commerce. For instance, total retail sales in India are estimated at 818 Bn USD, and that conducted over e-commerce is just 14 Bn USD, or 1.7% of the total.]
So in spite of all the hype around this channel and the huge spend on advertising by the e-commerce players, a mere 9 % of our population shops online, and these purchases account for only 1% of total retail sales. Why only 1% ? Either due to a lower frequency of shopping online vs. visiting a retail store and / or due to a lower value of goods being purchased online. The latter seems unlikely since a large proportion of online sales are for mobile phones and accessories, followed by apparel and footwear, so it must be the low frequency to blame. Two big obstacles for e-commerce to surmount are now clear – the low penetration of online shopping amongst internet users, and the low frequency of online shopping among those that do shop online.
On to our neighbour China. While 56% of their total population is online, over half of these make purchases online. No wonder that sales through the e-commerce channel are 15.9% of total retail sales in China, as the bottom circle shows.
Surprisingly, though the US has a far greater proportion of population that makes purchases online ( 65% of its total population buys through e-commerce), these account for only 7.1% of total retail sales. Wonder whether it’s the ugly frequency problem rearing its head again, or whether it’s due to low unit value of goods purchased.
- Ravindra Ramavath