India 1.0 + India 2.0 = One Big Indian Market

I’ve been in India for little over a week now. And every time I talk to people doing business in India, there’s a recurring theme with a underlying message. India, with a population of over 1.1 billion people, is not one big homogeneous market. There’s a small high-end segment that’s typically less than 10% of the potential market. Beyond that, it’s a highly fragmented market segmented by various attributes, among other things culture and language (about 20 official languages and hundreds of dialects).

Some stats that I have gathered from talking to people. These numbers are approximate, so take it with a grain of salt. If they’re inaccurate by a wide margin, drop me a note or leave a comment.

• A little under 10% Indians are comfortable English.
• The PC penetration is about 2-3%, so there are only about 25-30M installed PCs in India. About half, a little over 15M, have internet connection.
• Less than 15% of Indians own a credit card. Indians, currently, spend just 1% of their total purchases through credit cards.
• About 300M mobile phone users in India, of which only about 10% have GPRS enabled (mobile web enabled) phones. Of the approx 30M web-enabled mobile phone users, only about 10-15M actually browse the web from their mobile devices.
• Of the 300M mobile subscribers, only 10% are post-paid and have a monthly recurring subscription. The bulk 90% are pre-paid, they pay for wireless talk minutes upfront and pay as they go.
• However, 35% of revenues for mobile operators comes from the 10% post-paid subscribers, and the remaining 65% from the 90% pre-paid subscribers.
• Typically only 10% of revenues for mobile operators comes from VAS (value added services) that includes SMS. The bulk 90% of revenues comes from basic voice services. The mobile operators are running out of bandwidth to support the 300M mobile users, so a bulk of the soon-to-be-available 3G spectrum will go towards supporting voice for existing and new mobile users.

People I have talked to, frequently refer to this divide in the Indian market as the Tier 1 India and Tier 2 & 3 India. Someone I talked to recently, referred to it as India 1.0 and India 2.0. India 1.0 and 2.0 just sounds better from the company’s perspective -

• India 1.0 is the company’s India entry strategy, targeting the high-end market that probably already has brand awareness and willingness to pay. These users are a natural fit with the company’s existing brand and product, and hence relatively easy to acquire. But that’s just a fraction (10% or less) of the addressable market.
• India 2.0 is the company’s growth/expansion strategy in India, going after a market that’s hard to crack. The India 2.0 strategy targets the fragmented 90% Indian market, and this requires product and market innovation and willingness to adapt.

Entrepreneur.com has a good article on big-name brands sharing their experiences of going after the Indian market:

“Our learnings were clear: ‘Ask not what percentage of an existing market your brand can achieve. Ask how large a market your brand can create by putting resources behind creating a category,’”

The Changing News Business Model

Interesting move by the Seattle Post-Intelligencer in abandoning the print edition and switching to an online-only publication. The news business has a fixed overhead, there are a number of full-time reporters. So even though the marginal cost in online distribution is zero to extremely low, there’s a very high fixed cost in creating new content. Therefore, what’s interesting in P-I’s announcement is not just the change in the medium of publishing and distribution, but also the structural changes to the news desk and strategic changes in news coverage.

The P-I’s new model hinges on slashing its work force, scaling back its news coverage. The P-I will revamp the familiar model of a big-city daily as a catch-all of local and national news and features. Instead, it will cover local events and publish blogs and columns from staff, readers and prominent local citizens.

Since the online news business model is predominantly ad supported, driving traffic to the site is primary. Broadly speaking, there is 2 kinds of traffic to a news site online.

1. Front-door traffic – readers coming directly to your site. The front-door traffic is typically high for a site with loyal readers that value the content and the brand.
2. Side-door traffic – readers being referred to your site. They could be referred by friends (email, IM), your network (Facebook, Twitter), news portals and aggregators, blogs linking to your story, RSS readers and web search. Depending on the news site, the sidedoor traffic could be anywhere from 30% to 70%.

There is so much content available on the web, it’s impossible for one news source to be the catch-all for every news topic. The P-I is not a national publication, so it is hard for it to be the authority on national news.

Thanks to portals, aggregators and social networks, every story on the web is then just a click away. So if a majority of your readers come through the sidedoor, then it is critical that your stories be “link-worthy”. If it doesn’t get much link-love, readers won’t be able to easily find the story. But even if you’re the news site of authority on a certain topic, its hard to have every story be the ‘best of ‘ and get others to link to it.

The P-I will resemble a local Huffington Post more than a traditional newspaper, with a news staff of about 20 people rather than the 165 it had, and a site with mostly commentary, advice and links to other news sites, along with some original reporting.

This is the new catch-all model. Identifying a niche and focusing resources on it, and rather than create every bit of content from scratch link to other good stories out there. Become the aggregator and curator of good content in addition to producing original content, and increase your organic readership and front-door traffic.

The Techmeme leader board is a snapshot of various tech news sources competing for link backs on the Techmeme front page. The leader board is a mix of big publications with hundreds of reporters, and some popular tech blogs with only a handful of writers. When it comes to competing for side-door traffic, it’s a level playing field.The most interesting and link-worthy stories make it to the top.

References: WSJ.com and NYTimes.com

WSJ PhotoWall – Year 2008 In Pictures Powered By CoolIris

WSJ.com published its 2008 year-end photos, and in addition to the regular slideshows, there’s a cool implementation using the CoolIris embed wall – the WSJ PhotoWall.

CoolIris brings clickless browsing or pageless navigation to photos and videos, and that’s what makes the PhotoWall fun to play with. Anytime a user is required to click to navigate, there’s a drop off after the first couple clicks. CoolIris eliminates the click and helps surface the long tail. Now only if Apple could take the CoolIris iPhone app and use it to power the app store, they wouldn’t have to worry about the sales performances of apps in the long tail.

Check out the WSJ PhotoWall and let me know what you think?

Following The Mumbai Mayhem On Twitter, And The Role of Twitter In Breaking News

Since the news of the Mumbai attacks first broke yesterday afternoon, I have been switching between live video streams on Indian news channels CNN-IBN and NDTV. I have also been closely following the #mumbai room on Twitter, new tweets are coming in at a furious pace. There’s an ongoing idealogical debate on whether Twitter is a real source of news, especially with the backdrop of the unfortunate terrorist attacks in Mumbai. The tweets are a mix of people expressing their opinion, relaying conversations with friends and family in Mumbai, repeating what they’re seeing on TV, and lot of retweeting. So even though the signal-to-noise ratio on Twitter is pretty low, and hard to tell facts from rumors and speculation, Twitter is still a key source of real-time update aggregation to stay on top of all the news.

While a majority of big media organizations have already developed or acquired a citizen journalism platform, #mumbai room on Twitter was where all the action was yesterday and given Twitter’s adoption that’s not going to change anytime soon. So to all big media companies betting big on Citizen Journalism – it’s hard to change consumer behavior, so hoping users will come directly to you and provide news and assets is hoping for a bit much. Full credit to CNN TV in covering the Mumbai terror events -  without waiting for assets to flow into iReport.com, it was apparent that CNN staffers were actively monitoring the twitter streams yesterday and in fact invited some active twitter users to speak on TV from Mumbai.

I was speaking with a WSJ blogger last week, right after the Motrin incident on Twitter, about the relevance and significance of Twitter. In his daily quest for breaking news, he said he’s now closely monitoring Twitter – following several people on Twitter and keeping a close eye on trending topics. The stream of data on Twitter is just that (raw data), and it’s upto the mainstream media given their resources and creditworthiness to mine this data and filter the signal from noise.

Insurance Against Ticketless Travel In Mumbai Trains

Kiran Karnik, former President of Nasscom, was the closing keynote speaker at the Indian Business Conference 2008. Karnik said, Innovation will the key to India’s future. And good innovation doesn’t just mean product innovation (new products coming out of India), but could also include process innovation. For e.g.

For anyone that has traveled in a crowded (understatement) local train in Mumbai, where there’s hardly any breathing space, what are the chances that a TC (ticket checker) walking into the train and checking for tickets. Not to mention, the serpentine queues at the ticket window in case you’re not a regular monthly pass holder. So an Indian entrepreneur came up with the ingenious idea of providing insurance for getting caught traveling without ticket. You pay 500 rupees to get insurance, and if you do get caught traveling without a ticket, you pay the 250 rupees fine to the TC and then turn in your receipt for a full refund.

You can run the numbers to figure out the value proposition for the traveler and whether this is a profitable venture. But on the surface it sounds like an unethical business practice – the venture is encouraging people to travel without ticket. Well, here’s the twist – if you’ve ever been caught by a TC, you probably also know that there’s a pretty good chance you can bribe your way out of it without having to pay the full penalty. Hence, the Indian Railways doesn’t see a dime. However, this venture insists you pay the fine in order to get a receipt. Therefore, it discourages you from bribing the TC. Less corruption!

This story was originally published on this blog and was later even picked by Freakonomics.

Photo courtesy: WSJ.com. View the complete slideshow here.

India Post: Innovation In An 150-yr Old Organization

I don’t watch TV regularly, but a show called Startup Junkies caught my attention as I was channel surfing. Start-up Junkies takes you behind the scenes of a growing start-up company, Earth Class Mail, as it attempts to raise funding, build a team, develop a prototype and find new customers and partners.

In a nutshell, Earth Class Mail scans your snail mail and brings it online. For a subscription fee, you can now scan and shred your snail mail online. TechCrunch covered the company a while back, the comments to the post are very interesting. The pitch by Ron (skip to 13:50 mins of the video – sorry MojoHD doesn’t provide an embed option), CEO of Earth Class Mail, to India Post was entertaining. It is hard to tell whether the India Post officials really “drank the koolaid” or just being polite.

It’s hard to see any value proposition for India Post and the average Indian, for various reasons – including lack of internet penetration outside the cities (5.3% in all of India). Not to mention, India Post is facing increased competition from private courier services and is getting creative to boost revenues and keep its staff busy. In the past, they’ve even experimented with retailing and services, including delivering milk. I went to the India Post website and they do have an ePost feature. It’s email-to-snail mail or vice versa service, and that makes a lot of sense, again considering the low internet penetration.

If you’re currently living in India, would love to hear stories of encounters with India Post services and your experience using ePost.

Out SEOing The NYTimes.com

If you’re an Search Engine Optimization (SEO) expert, here’s some interesting data for you to play with…

Christine Mohan, my friend and co-worker, emailed me 11/26 morning – “NYT: Indian manhole covers. Front page story today.” Christine knew I had blogged about NYC manhole covers a few months ago, just for fun.  It’s been little under a week since J. Adam Huggins of The New York Times covered the story, and nicely packaged it with a must-watch audio slideshow. And for the entire week since the story appeared in NYT, Google Search has been sending a good chunk of traffic to my blog. I’ve WP-Stats and Google Analytics installed on my blog, and out of curiousity I ran a Google Search test on the entrance keywords. (Note: Google constantly tweaks its search results algorithm, so these findings will certainly change over time).

manholes made in india (#1 NYT, #2 AdosPados)

made in india sewer (#1 AdosPados, #2 NYT)

n.y.c sewer india (#1 AdosPados, #2 NYT)

ny sewer made india (#1 AdosPados, #2 NYT)

nyc sewer made in india (#1 NYT, #2 AdosPados)

Incredible India: Now On YouTube

The Ministry of Tourism has tied up with Google to create a sponsored channel on Youtube, reports DNA India. The user India, first created in Dec 2005, has recently uploaded 18 videos.

Launching the channel here, Tourism Secretary Shilabhadra Banerjee said the online videos will increase the penetration of Incredible India campaign, especially among those who remain glued to the internet and computers.

“In using YouTube for their campaign, the ministry becomes the first in the world for its innovation in promotion,” Rao said.

The Ministry of Tourism had earlier launched a Incredible India website with 18 Incredible microsites. A few years back, posters of Incredible India started appearing on Edison and Metropark stations, townships with sizeable Indian population.

India experienced a 13% YOY increase in tourist arrivals and a 17% increase in foreign exchange earnings. However, the surge in Tourism has its downside as well. It’s a huge distraction to the locals affecting their livelihood and culture and impacting the very tradition that Incredible India is proud of, as Fareed Zakaria reports in this episode of Foreign Exchange (skip to min 18:23).