Marketing & NGN: Contextualizing to Emerging market needs

Colombo, Sri Lanka, 7-10 April 2009

Marketing & NGN: Contextualizing to Emerging market needs

Mohan Krishnan,IMRB International

FORUM ON NEXT GENERATION STANDARDIZATION

(Colombo, Sri Lanka, 7-10 April 2009)


2

Agenda

What is Anywhere?Emerging market situation: Case of IndiaImplications for NGN rollout and marketing


3

Who are we?

One of the oldest Market Research company in South Asia – IMRB, LMRB & part of £7.5 Bill WPP Group Plc.,Partnering in India & Middle East with Yankee Group, official industry Analyst for ITU


4

What Is Anywhere?

Our vision for how ubiquitous

connectivity transforms consumers,

enterprises and the world we

live in.

http://www.yankeegroup.com/home.do


5

Anywhere Is a Revolution

Battles underway and ahead will transform the

world we live in.

It will bring the largest technology

change in our lifetimes.


6

Anywhere Will Surpass the Internet’s Impact

Internet:1995 to 2005

Place Work and home

Device PC

Connectivity Narrowband

People affected1 billion(2005)

Internet:1995 to 2005

Anywhere:2005 to 2015

Place Work and homeAnytime and

anywhere

Device PC Any device

Connectivity Narrowband NGN Broadband

People affected1 billion(2005)

2 billion(2012)


7

The Anywhere revolution includes major battles underway


8

The Anywhere network must serve multiple masters


9

Anywhere is causing a new kind of customer to emerge


10

The Five anywhere consumer segments

Actualized Anywheres are the most Anywhere in their behaviorsOutlet Jockeys are Anywhere on the go, but not at homeDigital Shut-ins are somewhere at homeTechnophytes are later adopters, driven by price cutsAnalogs are uninterested in technology but will grudgingly be pulled along—eventually


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Consumers’ Anywhere behaviours are in transition

Connectivity behaviors are undergoing change in all regions as new services emergeThese are more powerful differentiators than conventional demographic segmentation methodsProviders of services must understand the varying needs and attitudes of consumers in their market, and tune offers differently


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Anywhere is transforming workplace too


13

The Three Stages of Anywhere


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Where Will Anywhere Happen?

16 countries reach the Anywhere tipping point by 2012


Emerging Market lessons

“India” – a case in point


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India : One of the few growth markets this year

India likely to overtake Italy, France and Germany’s GDP by 2015

Indian economy would be performing better than Brazil and Russia in this front.

Percentage Distribution By Age

33

29

29.4

27

20

21

20.51

26

28.29

29.3

32

16

15.51

15.66

17

5.3

5.67

6.417

5

0% 20% 40% 60% 80% 100%

2001

2005

2010

2020

Years

Percentage

Below 14 yrs 15 to 24 25 to 44 45 to 65 65 & above

30% of India’s population will be between 25-44 years of age in 2020

The young and earning age offers huge potential


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Th

e d

irecti

on

of

ch

an

ge

Th

e d

irecti

on

of

ch

an

ge

THETHE CLIMBERSCLIMBERS74 mln 74 mln

HHsHHs429 mln 429 mln peoplepeople

THE VERY THE VERY RICHRICH

2.6 mln HHs2.6 mln HHs15 mln 15 mln peoplepeople THE CONSUMING THE CONSUMING

CLASSCLASS46 mln HHs46 mln HHs265 mln people265 mln people

THE THE ASPIRANTSASPIRANTS33 mln HHs33 mln HHs

192 mln people192 mln people

THE THE DESTITUTEDESTITUTE

24 mln HHs24 mln HHs140 mln people140 mln people

A huge baseA huge base

Source : Indian Market Demographics, NCAER Source : Indian Market Demographics, NCAER

2001-022001-02

82 mln 82 mln HHsHHs472 mln 472 mln peoplepeople

5.2 mln 5.2 mln HHsHHs30 mln 30 mln peoplepeople




2006-072006-07

Growing top 3 segments


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The Internet Usage Hierarchy

36

50

72

85

205

250

0 50 100 150 200 250

Active User

Ever used Internet

PC Literates

English Knowing

Literate Population

Urban Population

In MillionsIn Millions

SourceSource: I-Cube 2008, IMRB International: I-Cube 2008, IMRB International

A Sept 2008 study by IMRB estimated Internet user in rural India at 5 million (out of 750 million)


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Internet user market

21.1

29

36

11.27.5

4.32.2

50

8.7

59

15.8

30.8

42.2

52.9

62

72

11.9

16.4

32.2

42

4.9

2000 2001 2003 2004 2006 2007 2008 2000 2001 2003 2004 2006 2007 2008 2000 2001 2003 2004 2006 2007 2008

In MillionsIn Millions

Knows ComputersKnows Computers Internet Ever UserInternet Ever User Active Internet UserActive Internet User

• A Internet Ever User defined as one who has ever accessed Internet

• This population is already higher than the population of countries like UK, Canada, South Africa, Spain, etc.

Base: All India EstimatesSource: I-Cube 2008

SourceSource: I-Cube 2008, IMRB International: I-Cube 2008, IMRB International


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Application usage has diversified significantly in recent times

Purpose of Internet Access Percentage of Urban Users

E-mail 91%

General information search 76%

Educational information search 49%

Text Chat 46%

Online Gaming 41%

Online jobsites 37%

Music/Video on the Internet 32%

Financial information search 21%

Book railway tickets on the Internet 21%

Online banking 20%

Online NEWS 13%

Internet Telephony/Video Chat/Voice Chat 13%SourceSource: I-Cube 2008, IMRB International: I-Cube 2008, IMRB International


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E-commerce is growing rapidly

MARKET SIZE FOR THE YEAR2006-07

(USD Million)

2007-08(USD Million)

Online Travel Industry 1100 1400

Online Non-Travel Industry 316 442

eTailing 170 221

Online Classifieds 108 164

Paid Content Subscription 4 6

Digital Downloads 34 51

B2C/ C2C E-Commerce Market 1416 1842

SourceSource: I-Cube 2008, IMRB International & IAMAI : I-Cube 2008, IMRB International & IAMAI


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43% 44%52% 46%

39% 36% 37%

22%

30%23%

27%31% 30% 26%

20% 20% 22% 25% 27%

6% 7% 8%2% 1%

19%

30%

4%6%

3% 5%8% 3% 2% 2% 2%

0%

20%

40%

60%

80%

100%

2000 2001 2003 2004 2006 2007 2008

Cyber café Home Office School/College Others

1.4 mn 3.1 mn 4.9 mn 7.5 mn 13.2 mn 15.4 mn17.9 mn

Public access has been the main reason for growth of user base

SourceSource: I-Cube 2008, IMRB International : I-Cube 2008, IMRB International


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However, network deployment lags demand

Access Points Available Internet Usage/connection

% penetration

Desktop/Laptop

~ 54 mn 7.6 mn 14%

Mobile (GRPS/Edge)

400 million (88.27 million

enabled)

6-8 million <2% (8-10% of enabled)

Cyber Cafes 0.166 million 0.166 million 100%

Common Service Centres of Govt.

32,145 25,000-26,000 75-80%

PCOs 6.27 million 200 Negligible Source: IMRB analysis


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And, BB deployment target continues to be missed

3

9

20

5.84.4

3.12.11.30.40.10

5

10

15

20

25

2003 2004 2005 2006 2007 Jun-08 Feb-09

2010

Target number ofBroadband users (in mn)

Achieved number ofBroadband users (in mn)

9.9% MoM

3

9

20

5.84.4

3.12.11.30.40.10

5

10

15

20

25

2003 2004 2005 2006 2007 Jun-08 Feb-09

2010

Target number ofBroadband users (in mn)

Achieved number ofBroadband users (in mn)

9.9% MoM

India Technology share in Broadband penetration

Technology

DSL Cable Ethernet Fiber Radio+Other

Mar 2007 83% 10% 3% 1% 3%

Sep 2007 81% 12% 4% 1% 2%

Sep 2008 86% 9% 2% 1% 2%

Source: TRAI

Source: CII-IMRB-IBM study 2004


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Policy makers in emerging markets will be forced to give priority to BB growth

Congress Manifesto: All villages connected to broadband in next three years. BJP Manifesto: Create 1.2 million IT-enabled jobs in rural areas, drastic reduction in computer prices, broadband connectivity to every village in five years. Promote ‘open standard’ and ‘open source’ software.


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LLU & BB Between 2004 to 2007 the numbers of wireline telephone connections have reduced from 40 mn to 33 mn.

Connections in urban areas have reduced from 26 mn to 22 mn With only 25% of network having ability to deliver BB, we can add best add 3.5 million BB subcribers

This year, BSNL launched an initiative to offer wireline connections bundled along with broadband services in Bangalore. Result: 0.1 mn new connections out with 60% BB subscribers.

38

33

30313233343536373839

Wireline with LLU/broadbandcoupled

Wireline presently withoutLLU/ broadband coupled

Connections (mn)

Rs 120 trillion loss since 2004


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USOF

The USOF has about USD 1.5 billion in undistributed funds (In 2009)

Source: LIRNAsia

Need innovative mechanisms to enable direction of funds to BB


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Shared access through Govt. intervention in rural markets: CSC – Common Service

Centre

National eGovernance Plan (NeGP) envisions a “web-enabled Anytime, Anywhere access” to information and services in rural India

100,000 CSC to be rolled outGovt. saved money in PPP auction given enthusiasm of private players

BB connectivity is a big issue Multiple technologies being deployed which will create problems later

Chicken-egg issue – connectivity & contentHistory of past failure – need to provide a lesson


One key message:


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Emerging Markets Do Not Support Traditional Subscriber-Centric Business Models

AR

PU

or

Eq

uiv

alen

t

Number of Users

Vonage

Verizon Wireless

Vodafone

China Mobile

Yahoo!

GoogleSkypeSling Media

Source: Company Annual Reports and Yankee Group

Value in the Subscriber

Value in the Community

eBayFacebook

YouTube

TIM

H3G

Sprint


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More important to drive value from community – mobile tariff example


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MVAS ecosystem provides some clue to drive utility of NGN

Source: IMRB-IAMAI study, June 2008Rs. 1 cr = 10 Million, 1 USD~ Rs.50


Marketing implications for the Next Gen Networks providers


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Guidelines for Technology vendors & Service providers

Develop your solutions to address price sensitivity in the Indian market.

Incorporate robust professional and managed service capabilities into the market solutions.

Design solutions that can overcome deficiencies in supporting infrastructure, such as electricity and available backhaul solutions.

Anticipate and capitalize on opportunities that will emerge as low-cost network computing devices become available.

Capitalize on opportunities to export capabilities developed in India to other emerging markets.


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Guidelines for Technology vendors & Service providers

Recognize the strong correlation between broadband penetration and economic prosperity.

This necessitates accelerated licensing and a focus on enabling technology.

Seed opportunities to commercialize universal service initiatives in rural areas. Initiatives such as eHealth and distance learning have broad applicability across many emerging markets.

Aim for rural broadband initiatives to bolster existing industries.


Thank You

[email protected]

Documents

Marketing & NGN: Contextualizing to Emerging market needs