Posts filed under ‘Consumer Trends’

Jio – An Audacious Gamble or Bold Game-Changer ?

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’.


jioplansMy 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.

jiolaunchThe 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…

  1. 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
  2. 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.
  3. 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.
  4. 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.

By,

Ravindra Ramavath

 

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September 13, 2016 at 8:38 am 1 comment

Mobile Penetration, Mobile Data Speed and Consumption in India

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.

 

mobile

 

[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.

{The Cisco, Ericsson, CMI and TRAI reports are sources for this article and infographic, and can be accessed at the links given.}

  • Ravindra Ramavath

September 8, 2016 at 3:05 pm Leave a comment

Infographic – India expenditure data , rural

We’d earlier shared a set of infographics on per capita expenditure on various categories in urban India (https://escape-velocity-blog.com/2015/08/19/infographic-india-expenditure-data-urban/ ), and the trends over time therein (https://escape-velocity-blog.com/2015/09/22/infographic-india-expenditure-trend-urban/ ). This post shares similar data for rural India.

India MPCE - Expenditure data - Rural

The first point to note is that the average MPCE (monthly per capita expenditure) is much lower for rural India vs. that for urban India (Rs. 1429.96 vs. Rs. 2629.6 respectively). Hence, while the absolute value of expenditure on various categories may be lower in rural India, as a percentage of the MPCE it’s much higher. For instance, though the average monthly spend on food is Rs. 622 per capita, it is 48.6% of the total per capita expenditure ; this is closer to the proportion spent by the poorer fractiles of the population in urban India. One area on which folk in rural India spend much less than their counterparts in urban areas is housing, others are education and transportation. In almost every other category, the proportional spends (spending on category as a % of average MPCE) of rural folk are actually higher than those from urban areas.

 

  • Ravindra Ramavath

 

June 6, 2016 at 11:55 am 1 comment

Infographic – India expenditure trend, urban

India Expenditure Trend Urban - trends

  • Urban India has seen an increase of 128% in MPCE(URP) based on current prices
    • Real MPCE (measured using a price deflator with 1987-88 as base) has increased 29% between ‘04 to ’11, a CAGR of 3.7%
  • Share of food in MPCE declined by about 4pp in urban India between ’04 -’12 , you can clearly see the light green band receding from the right end
    • A few more points that are not shown in the graph :
      • Within foods, except for Milk, fruits & Beverages, all other products categories tracked have fallen in contribution.
        • While Milk and fruits has increased by 1pp, beverages have increased from 15% to 18% within foods
      • Cereals have registered the largest decline – from 24% to 19%
    • Among the rest of expenditure, durable & minor durable type goods has seen the highest jump of 2.4pp followed by rent at 1.4pp and clothing & bedding at 1.3.
    • Also, notice the steady rise in medical and education expenses
    • Proportion of spends on entertainment have also risen, albeit off a small base

The method of computing MPCE is rather interesting ; next week we’ll share an infographic on that too.

  • Ravindra Ramavath

September 22, 2015 at 2:47 pm Leave a comment

India – Internet Statistics

India-Internet

Since we’ve received some questions after the last two posts, we felt that it was time to share some more data on this topic. As this info-graphic is quite detailed, we may write a post or two on some of the implications of the numbers in this one , but you’ll have to wait a week or two to read those.

  • Ravindra Ramavath

 

September 9, 2014 at 5:52 am 1 comment

Desh mera rangrez hai babu

A few months ago, I was one of the faculty at a programme that imparts training in the basics of business to micro-entrepreneurs from rural areas (CREAM training programmes run by Tree Society). The audience comprised villagers running simple businesses such as a cycle repair shop, furniture making, honey collection and selling, beauty salon (or, as they pronounced it,‘saalun’), barber shops, a wedding decorator, etc. Most of them were between 20 to 30 years old, all but 3 were men.

During one session, we were trying to illustrate the importance of adding product / service features that consumers value the most rather than others, given the ever-present constraints of cost and resources. We’d made our point using several simple examples and the audience seemed to have grasped it too, however they seemed slightly somnolent after a heavy lunch and we wanted to wake them up with before we began the next topic which was math-heavy.

So we decided to use an example of a product that was ubiquitous even in villages and used by everyone, that was feature-heavy, and from a category where the fortunes of companies selling the product had gone through ups and downs. One product fit the bill – a mobile phone. We began by asking the audience to tell us what features they wanted in a mobile phone, and which of those were must-haves and which were nice-to-have. Internet and multimedia were amongst the first few mentioned by the audience, followed by aspects related to how long the phone would last – sturdiness, a warranty, good battery strength etc. Basic features such as call quality, sms etc. were mentioned much later, almost as an afterthought.

What almost every person below 30 in that audience wanted was to be able to access songs and video on his mobile phone; even if they didn’t know how to download them, they knew that they wanted to be able to store and listen to them or watch them. Many didn’t really know exactly what internet and multimedia meant, but they did know that such phones guaranteed them access to songs, clips, pictures and games. Many of these young men already had cheap smartphones, those that didn’t were quite clear that affordability was the only reason for not buying one. In hindsight, maybe I should have expected this given the lack of entertainment options in a village, and that a lot of these people ran businesses where they spent significant amounts of time just waiting for customers to visit their outlet.

This article from the Mint gives the results of a TNS survey on mobile phone usage in various countries across the world ; while the survey was probably carried out in urban centres, it’s worth a look anyway. Listening to music turns out to be the No. 1 activity that Indians engage with on their mobile phones, the next are playing games, sms/text messaging and taking photos / videos, in that order.

Clearly the villagers that I met reflected a widespread trend.

  • Zenobia Driver

September 17, 2013 at 12:47 pm 5 comments

Technology – Age No Bar

A few months ago we ran this post on how toddlers are adapting to the latest technology and how it is changing their interaction with other common things.

But it is not only the young ones who are adapting but also the elderly, especially so with the arrival of grand children (or in some cases, great-grandchildren) in their families.

An-elderly-old-woman-uses-iphone

Example A, 83 year old great-grandmother of 4 toddlers now, lives in Mumbai with her family spread across Dubai, Europe and the US. When she first became a great-grandmother 5 years ago, she switched from a regular Nokia phone to a Blackberry “so that my grand daughter in Dubai can send me pictures everyday over BBM”… not only did she pick up the lingo, but also familiarized herself with using it very proficiently, and loving the fact that now she could not only get her great-granddaughter’s pictures but also “check updates on the rest of the family through BBM updates”.

Two years after this, she bought an i-Pad to “…. to Skype with my growing babies…. how else would they be able to see me and hear me… I tell them stories and sing songs to them and they love it… I love seeing their reaction.” Last year, she was mighty impressed with her daughter’s iPhone5, and decided to move from Blackberry to iPhone5 because “all my grand children have now moved from Blackberry to iPhone, they are all on What’s App now, no one BBMs, so I thought why not move myself. Plus iPhone allows me to Facetime with them all instantly.”

Moving from a Blackberry to an iPhone is not always easy, the interfaces and interactions are completely different and she always manages to surprise me with her willingness to try and readily adapt new technology.

 

Example B, 65 year old grandmother to a 2 year old now, lives in Mumbai, but daughter and grandchild live in Dubai. She only got a phone a couple years ago, a regular no-fuss Nokia, only on the insistence of her daughter who worried about her. But as her grandchild was growing up, she felt the need to be in touch, so she learnt to use a computer and found it very cumbersome and complicated, but still managed to somehow use Skype after some struggle with the poor internet connections, high start-up times of computers and the need to coordinate times with the grandchild and daughter to actually talk over Skype. Frustrated with this, she decided she needed an easier way to be able to see her grandchild when she wanted, so she went to the market on her own, explained her problems to the mobile dealer and came home with a fancy new Samsung phone, with all requisite apps downloaded and ready to use! Surprise surprise to her daughter! She now uses What’s App very well and is happy to just get photos and video clips of her grand child instantly. She recently self-taught herself to record audio and video clips herself and send them to her grandchild as well, and she is mighty proud.

 

Example C, 58 year old who recently became a grandmother, in the past always argued with her children about buying her a simple phone when they’d get her phones with a camera or with a radio or with a touchscreen, etc. But as soon as she had spent one month with her granddaughter and it was time to go back home, she knew she had to find a way see her grand-daughter when she pleased. So she asked around amongst her friends and after having figured everything out, asked her son to get her an Android phone! Android phone! Son was shocked to know that she even knew that there were Android phones, leave alone what an Android phone was!!! Promptly she asked for What’s App to be downloaded on to it and voila! she could get pictures of her granddaughter on her phone. Not only that, now she can proudly show her pictures to her friends, family, trainer, beautician, anyone who asks, cause it’s right on her phone!!

 

I don’t know if its the love and affection that a grandparent feels towards their grandchild that has made them adapt to new technology, or whether we owe it to the developers who’ve created interfaces which are so simple to adopt and so intuitive that even people, especially women who’ve hardly ever used calculators and computers in their prime, are so quickly and deftly adapting them.

 

  • Roshni Jhaveri

May 6, 2013 at 6:46 am 4 comments

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