Retail in India is in. Till a few years ago few anticipated that India would turn out to be one of the biggest retail markets in the world. Born on an appetite of conspicuous consumption being the evil one combined with a little seasoning of socialism and the Indian way of life, few anticipated India would in 2007 turn out to be the top country in Global Retail Development Index (GRDI). From Reliance to Tatas from the entrepreneurial telecom giant Bhartis to the just about any brand in the world, India is the destination and retail in India is hot like never before.
Technology behind the scenes
As retail expands and perhaps gets complicated behind the scenes in order to deliver that immaculate experience to the pampered consumer of today it's technology that providing the spine to retail. And it's here that tech giants like IBM amongst others are working on solutions created specially for the Indian retail market and are bullish in a way never seen before. According to IBM "IBM Retail Store Solutions (RSS) is one of IBM's fastest growing emerging-opportunity businesses". That investments in retail and investments in technology being used for retail solutions are growing can be gauged by the fact on one end giants like Reliance Retail, Spencers, Hypercity and DLF are going ahead with plans worth an investment of US$ 10 billion to set up retail outlets, on the other hand it's companies like IBM and other technology providers which are seeing a direct benefit from providing retail solutions to such companies. Consider the case of IBM. It's high velocity growth in this sector has continued in terms of a high double-digit revenue growth for seven consecutive quarters with revenue growing more than 25%.
It's products like SurePOS at one end of the retail chain to middle ware technologies like Light-Path Management besides other management tools that's providing the tech companies the surge in revenues. Consider the case of IBM's SurePOS 700 system, perhaps one of the industry leaders, IBM has shipped more than 3.5 million these point-of-sale units. Of these over 2.2 million are installed in more than 100,000 stores in over 100 countries. Noteworthy is from the consumer end retail hasn't yet touched the top gear. From Reliance to Bhartis to DLF, the bulk of the implementation is still in process and perhaps 2008 will see that. The kind of growth technology providers in retail will then witness will probably be a dream come true for service providers.
Retailing 2008 - A technology experience
From POS (point of sale) to inventory to accounting it's all about high end technology that's working behind the scenes to provide a seamless experience to the consumer. Consider as an example you walk into a shopping mall and pick up the things you want. Let's say you pick up a toothpaste, some oregano flavored chips and some French wine. The sensors placed in the mall detect your interests and through a pre-programmed algorithm display exclusive advertisements based on your preferences on the HDTV of related products in front of you. As you watch the HDTV your cellphone gets a time based voucher of a discount of 20% at a restaurant in the same mall. As you are ready to talk out a RFID reader auto tallies your purchase. You just walk upto counter and give the clerk your card to swipe who auto tallies your purchase and also gives your club points.
Sounds nice doesn't it? Well 2008 will perhaps see atleast something like above in a lot of malls in India.
Nomad Retailing
If technology or talk about POS, middleware etc sounds boring I couldn't agree with you more. Two weeks ago I came across a very interesting 'nomadic' solution. Size isn't always that matters. Sometimes the round the corner book shop or the burger van has better, more delicious and perhaps juicer goodies than the big retail chain. This round the corner burger van had a (point of sale) IBM POS fitted with a system that synced the data via the internet to the central sever. Imagine the benefits a solution like this for somelike like an AH Wheeler book stores which has an all "over the railway stations" presence in India.
The Last Word
Interesting point of sale installations, cell coupons, RFID readers and what else? Perhaps technology in retail could be much bigger than we anticipate. The reason is simple the money that's flowing in it is simply overwhelming and this could invite a lot of interesting innovations. Consider that Indian retail is the 5th largest retail destination and is estimated to grow from US$ 330 billion to $47 billion by 2010. Even if organized retail, which is just 4% (estimated to grow to 20%) the money in the market is simply too high. Technology is the spine of retail and we maybe seeing many more innovations happening around this in time to come. Meanwhile my fingers are crossed and I am still waiting for my cell to beep that discount voucher.
Puneet Mehrotra writes on technology issues. www.thebusinessedition.com
Monday, December 17, 2007
Reliance Communications acquires Yipes Holdings of US for $300 million.
Anil Dhirubhai Ambani Group company Reliance Communications has completed the acquisition of Yipes Holdings of the US for around $300 million (Rs1,200 crore). The acquisition, announced in July this year, would give Reliance Communications access to a $10 billion global enterprise data market, the company said in a statement. The transaction has received all necessary approvals from the US Federal Communications Commission (FCC), the statement added.
Yipes has strategic network presence in the top 14 US metros, which account for 40 per cent of the total US datacom market and also has nearly 1,000 enterprise customers.
RCom plans to expand Yipes presence to 40 new markets globally, including the Middle East, Asia and India. By synergising Flag and Yipes, Reliance is poised to become the global leader in ethernet market, which is expected to reach $25 billion by 2010, Rcom said.
Reliance Communications (formerly Reliance Infocomm), along with Reliance Telecom and Flag Telecom, is part of Reliance Communications Ventures. Anil Ambani controls 66.75 per cent of the company, which accounts for more than 1.36 billion shares of the company. The Anil Dhirubhai Ambani Group is into power, financial services and telecom initiatives of the Reliance ADA Group. The group recently received spectrum for GSM operations in 16 additional circles besides the eight where it already operates.
Yipes has strategic network presence in the top 14 US metros, which account for 40 per cent of the total US datacom market and also has nearly 1,000 enterprise customers.
RCom plans to expand Yipes presence to 40 new markets globally, including the Middle East, Asia and India. By synergising Flag and Yipes, Reliance is poised to become the global leader in ethernet market, which is expected to reach $25 billion by 2010, Rcom said.
Reliance Communications (formerly Reliance Infocomm), along with Reliance Telecom and Flag Telecom, is part of Reliance Communications Ventures. Anil Ambani controls 66.75 per cent of the company, which accounts for more than 1.36 billion shares of the company. The Anil Dhirubhai Ambani Group is into power, financial services and telecom initiatives of the Reliance ADA Group. The group recently received spectrum for GSM operations in 16 additional circles besides the eight where it already operates.
...‘phoren’ ties bringing both recognition and revenue
When Geodesic Information Systems’ application for the iPhone was reviewed by technology magazines as one of the best among several global mobile value added service (MVAS) application providers, it was indicative of the fact that Indian companies had a new area of competence to showcase to the world.
Atul Chitnis, Senior Vice-President (Product Technology and Strategy), Geodesic, had told eWorld then that developing such an application and competing globally would put the spotlight on Geodesic’s capabilities in this area. Today, Geodesic and many other MVAS application developers recognise the overseas markets as potential revenue generators.
Reliance Mobile World is in the process of tying up with a Singapore-based mobile operator to make available its mobile applications to customers in Singapore and Thailand. According to a spokesperson, the applications can be accessed on any CDMA/GSM mobile connection. Reliance’s home-grown range includes ring tones, caller tunes, games, cricket-based applications, movies and music, news and finance.
A key reason why developers are looking at other markets is the current revenue sharing agreement they have with telecom operators. MVAS application developers share 0-30 per cent of total revenues generated by the use of VAS. The rest is taken by the telecom operator. This not only makes it difficult for developers to sustain their business but also de-motivates them from working on new solutions, say developers. Besides, they feel the Indian mobile subscriber is not aware of how to access and download new, more high-end applications .
“Despite much write-up in the media about the mobile subscriber growth story, the emergence of mobile commerce and advertising, the fact remains that VAS revenues are still largely driven by ring tones and short messaging service (SMS),” says a highly placed official with a leading telecom operator. This is where international markets find favour with MVAS developers.
“Internationally, operators recognise the value of content and are willing to pay for it because their subscriber base has more or less stabilised. However, in India, we find that mobile operators are spending all their money on acquiring new customers and not retaining and enhancing the experience for existing subscribers,” says Salil Bhargava, Chief Executive Officer,
Jump Games, a company that makes gaming applications for the mobile and online space.
Jump Games offers licensed content such as Fido Dido and Virgin comics on the mobile and also has its own intellectual property in the form of applications involving racing, puzzles and board games. It has deployed Sudoku and various board games in Australia on the mobile operator Telstar’s network. In Scandinavia, it has developed multi player arcade games, says Bhargava.
The company is currently involved in developing 3D mobile games and multiplayer wireless games for next-generation handsets that will utilise technologies such as location-based services and Bluetooth.
Bhargava says that in overseas markets, value added services contribute about 23 per cent to the average revenue per user (ARPU), while in India it is less than 8 per cent. Little wonder the Indian gaming market is estimated at about Rs 80 crore, while the global market is valued at $6 billion (about Rs 24,000 crore) with the US, Japan and Korea taking up major portions of this pie.
Stricter testing norms
Revenue sharing with operators abroad is greater — between 30-50 per cent. “But operators there are more strict when it comes to aspects such as testing,” says Arvind Rao, Chief Executive Officer and Co-Founder, On-Mobile. A technical testing usually has to be followed by a comprehensive market testing because operators insist on highly localised services. “This results in more time to deploy a solution overseas (four-six months) than in India (one-two months),” he says. On-Mobile works with operators such as NTT DoCoMo and has deployed most of its Indian applications there such as ring tones and caller back tones. Additionally, it has developed and launched 3G applications such as video streaming and location-based services. These applications cost more than the regular VAS.
“Testing takes more time in the US, but it is worth it,” says R. Vidyanand, Business Head, India, Mobio Networks, a US-based MVAS provider that recently entered India. He recollects his experience with an Indian blackberry application that he downloaded but is still unable to run or use. “I pay Rs 25 a week as subscription fee without using it (application). And the only way to unsubscribe the application is to log on to it and run it,” he says, emphasising why testing and localisation of applications is important.
Mobio had developed some cricket-based applications for the Cricket World Cup in April this year. Though response to the same was satisfactory, Vidyanand feels telecom operators need to give developers more space to experiment with applications and perhaps fund some of the application development work. He is confident that revenue sharing between operators and MVAS developers in India would improve in future. “New entrants to the telecom industry will have to rely heavily on VAS to stand out amidst the clutter from existing operators. Given this, they will have to open terms and conditions for application providers, including revenue sharing,” he says.
Mauj Telecom, part of People Infocomm group, has been testing overseas waters by introducing standalone applications. The company developed a co-branded game for MTV’s Ad Sales and Sponsorship division Viacom Brand Solutions International. As part of the MTV European Music Awards ’07 hosted in Munich, Mauj created a music-cum-sports influenced game.
The company created a co-branded Sony Ericsson and MTV game where a rock star is the hero who partakes in various sports events. A normal 100 m sprint event was shown as a red carpet run; instead of a long jump on a track, the character dived into a crowd of fans from the stage and instead of throwing a javelin he threw a microphone into the audience. Mauj would like to continue this model of working on a case-to-case basis because a “mobile application provider’s business is different from an information technology (IT) services business”, says Manoj Dawane, Chief Executive Officer, People Infocomm. “The content prepared by the mobile application provider needs to be locally relevant, while the IT business works mostly around specificationsof a particular project. IT does not necessarily focus on the end recipient of content, unlike mobile VAS providers,” he says.
Rao of On-Mobile adds that the unique selling proposition for IT companies is cost reduction whereas for MVAS providers it is creating new revenues for clients. “We are a product company. If our revenues double we need to increase head count by 5-10 per cent, unlike IT companies who may have to proportionally double headcount”.
archana@thehindu.co.in
Atul Chitnis, Senior Vice-President (Product Technology and Strategy), Geodesic, had told eWorld then that developing such an application and competing globally would put the spotlight on Geodesic’s capabilities in this area. Today, Geodesic and many other MVAS application developers recognise the overseas markets as potential revenue generators.
Reliance Mobile World is in the process of tying up with a Singapore-based mobile operator to make available its mobile applications to customers in Singapore and Thailand. According to a spokesperson, the applications can be accessed on any CDMA/GSM mobile connection. Reliance’s home-grown range includes ring tones, caller tunes, games, cricket-based applications, movies and music, news and finance.
A key reason why developers are looking at other markets is the current revenue sharing agreement they have with telecom operators. MVAS application developers share 0-30 per cent of total revenues generated by the use of VAS. The rest is taken by the telecom operator. This not only makes it difficult for developers to sustain their business but also de-motivates them from working on new solutions, say developers. Besides, they feel the Indian mobile subscriber is not aware of how to access and download new, more high-end applications .
“Despite much write-up in the media about the mobile subscriber growth story, the emergence of mobile commerce and advertising, the fact remains that VAS revenues are still largely driven by ring tones and short messaging service (SMS),” says a highly placed official with a leading telecom operator. This is where international markets find favour with MVAS developers.
“Internationally, operators recognise the value of content and are willing to pay for it because their subscriber base has more or less stabilised. However, in India, we find that mobile operators are spending all their money on acquiring new customers and not retaining and enhancing the experience for existing subscribers,” says Salil Bhargava, Chief Executive Officer,
Jump Games, a company that makes gaming applications for the mobile and online space.
Jump Games offers licensed content such as Fido Dido and Virgin comics on the mobile and also has its own intellectual property in the form of applications involving racing, puzzles and board games. It has deployed Sudoku and various board games in Australia on the mobile operator Telstar’s network. In Scandinavia, it has developed multi player arcade games, says Bhargava.
The company is currently involved in developing 3D mobile games and multiplayer wireless games for next-generation handsets that will utilise technologies such as location-based services and Bluetooth.
Bhargava says that in overseas markets, value added services contribute about 23 per cent to the average revenue per user (ARPU), while in India it is less than 8 per cent. Little wonder the Indian gaming market is estimated at about Rs 80 crore, while the global market is valued at $6 billion (about Rs 24,000 crore) with the US, Japan and Korea taking up major portions of this pie.
Stricter testing norms
Revenue sharing with operators abroad is greater — between 30-50 per cent. “But operators there are more strict when it comes to aspects such as testing,” says Arvind Rao, Chief Executive Officer and Co-Founder, On-Mobile. A technical testing usually has to be followed by a comprehensive market testing because operators insist on highly localised services. “This results in more time to deploy a solution overseas (four-six months) than in India (one-two months),” he says. On-Mobile works with operators such as NTT DoCoMo and has deployed most of its Indian applications there such as ring tones and caller back tones. Additionally, it has developed and launched 3G applications such as video streaming and location-based services. These applications cost more than the regular VAS.
“Testing takes more time in the US, but it is worth it,” says R. Vidyanand, Business Head, India, Mobio Networks, a US-based MVAS provider that recently entered India. He recollects his experience with an Indian blackberry application that he downloaded but is still unable to run or use. “I pay Rs 25 a week as subscription fee without using it (application). And the only way to unsubscribe the application is to log on to it and run it,” he says, emphasising why testing and localisation of applications is important.
Mobio had developed some cricket-based applications for the Cricket World Cup in April this year. Though response to the same was satisfactory, Vidyanand feels telecom operators need to give developers more space to experiment with applications and perhaps fund some of the application development work. He is confident that revenue sharing between operators and MVAS developers in India would improve in future. “New entrants to the telecom industry will have to rely heavily on VAS to stand out amidst the clutter from existing operators. Given this, they will have to open terms and conditions for application providers, including revenue sharing,” he says.
Mauj Telecom, part of People Infocomm group, has been testing overseas waters by introducing standalone applications. The company developed a co-branded game for MTV’s Ad Sales and Sponsorship division Viacom Brand Solutions International. As part of the MTV European Music Awards ’07 hosted in Munich, Mauj created a music-cum-sports influenced game.
The company created a co-branded Sony Ericsson and MTV game where a rock star is the hero who partakes in various sports events. A normal 100 m sprint event was shown as a red carpet run; instead of a long jump on a track, the character dived into a crowd of fans from the stage and instead of throwing a javelin he threw a microphone into the audience. Mauj would like to continue this model of working on a case-to-case basis because a “mobile application provider’s business is different from an information technology (IT) services business”, says Manoj Dawane, Chief Executive Officer, People Infocomm. “The content prepared by the mobile application provider needs to be locally relevant, while the IT business works mostly around specificationsof a particular project. IT does not necessarily focus on the end recipient of content, unlike mobile VAS providers,” he says.
Rao of On-Mobile adds that the unique selling proposition for IT companies is cost reduction whereas for MVAS providers it is creating new revenues for clients. “We are a product company. If our revenues double we need to increase head count by 5-10 per cent, unlike IT companies who may have to proportionally double headcount”.
archana@thehindu.co.in
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