29 Nov 11 INET Bangalore: The Future of the Internet in India

Some weeks back, at the INET conference in Bangalore, we were treated to a variety of “expert” opinions on the future of the Internet in India.

There was the usual tom-tomming about growth, and how with 100+ million users, India is now No. 3 in the global pecking order. Many other similar statistics were trotted out, with the usual sweetener about the still-untapped potential of the 1 billion plus Indian population.

Fortunately, this was balanced by more realistic opinions; highlighting the digital divide between rich and poor, urban and rural, educated and illiterate. Several suggestions and solutions were put forth, typically involving some Government action, such as improved infrastructure or access or whatever.

But what is the real problem?

The first is the dismal (actual) penetration. The recently released IMRB-IAMAI report suggested that the user base crossed 100 million in September 2011. This sounds great, but their definition of “users” includes anybody who has ever used the Internet! That’s quite absurd, to day the least. Digging a little deeper, less than 20 million Indians log in daily. And that’s where one of the problems lie.

Internet in India so far has been confined to a PC world. But we sell only a few million PCs every year (9.3 million in FY11, according to MAIT). That puts even an optimistic estimate of PC population below 40 million. No doubt cyber cafes reach help reach out to a wider pool, but some people might be using more than 1 PC (office and home). But no matter how you slice and dice it, this number is unlikely to reach hundreds of millions any time soon. PC usage requires not just education and English, but is also costly. This is hugely limiting.

Like many others, I believe that Internet penetration in India will be driven by mobile devices and not computers. The numbers speak for themselves. Regardless of doubts on TRAI numbers, actual users (using their phones several times a month, usually on a daily basis) will top 500 million. A small (but fast growing) percentage of these now have “smart phones”. It’s not unreasonable to expect that we will have a couple of hundred million (real) users in a couple of years. After all, access exists, cost is low, so what else do you need?

The answer, is content! The PC user world thinks and works in English, and therefore excludes the majority of Indians. So even as we tom-tom the fact that India now more than 35 million facebook users, the reality is that 70% of our kids cannot use facebook because they’re not comfortable with English.

However, when we move to the next 500 million, or the phone users, many of them will be happier with tweeting or befriending in their local language. This is not a new revelation – all you have to do is look at the circulation of language newspapers versus English dailies, or the relative TRPs of English versus all other channels on TV. We are a multilingual, multicultural society… and we will continue to be one.

Sai (can’t recall his full name) from Google India summed this up brilliantly, when he said something to the effect that “access exists, affordability exists, what is missing is the compelling value of apps that will bring in the next 100 million”. Essentially, these people already have access – but don’t find services or applications that are compelling enough.

Buying travel or books online might constitute compelling value for you, me and other urban PC owners. But is this true for the 500 million cell phone users?

“Compelling” implies value relevant to their daily needs. This implies a greater focus on localization, not just of language, but of application. After all, a farmer in a rural area has different information and social needs than a school kid in a municipal school in Mysore.

So while the lack of compelling “Indian” apps is a constraint, on the flip side it’s a huge opportunity – waiting for a few energetic and smart Indian entrepreneurs. Don’t think of the paltry millions already online – focus on the needs of the next 500 million!

Arun Jethmalani

Arun is one of the founders of ValueNotes. Apart from trying to build a high-quality research business, he has spent the last 27 years researching, analyzing, and dissecting companies and industries. He has worked with clients of all shapes and sizes, from all parts of the world – in providing them insights that make a difference to their business.
Prior to ValueNotes, he was an equity analyst/advisor, and wrote extensively on investing – including a column titled “Value for Money” which ran for 10 years in the Sunday edition of the Economic Times. To this day, he remains an avid “value” investor.
He has also been published in several other publications, and is a regular speaker at events related to technology, investing, competitive intelligence, business process management, Internet, etc. See: Valuenotes Events
He has been instrumental in developing a community of research and intelligence professionals in India, and is the founder and current chairman of the SCIP (India) Chapter. Arun holds a B Tech from IIT, Bombay and an MS from Duke University, NC, USA. LinkedIn Profile

  • Mikki Engen
    Posted at 17:26h, 29 October Reply

    Adaptation or extinction. It’s the only rule of long term survival.

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