Wednesday, February 06, 2013

TELECOM: APP STORES

Telecom players in India are flocking to the ‘app store’ band wagon. But it’s an idea much before its time, as masses don’t even know the ‘app’ from the ‘store’ says b&e’s Surbhi Chawla

Is it the latest outcome of the competitive dynamics in the sector? RCOM denies the same, and states that the reason for them to come out with an application store or RWorld 2.0 (as they refer it) is driven by 4 C’s – customer experiences based on smartphones, content localisation & SNS generated content, contextual search for content across all Voice, SMS & Data and lastly, clear and simple pricing. Though much of the details in regards to this particular endeavor are not available as of now, one is sure to hear from RCOM and the others (including Airtel) in the times to come. Already there is news that Vodafone is also planning to have its global application store available shortly, and the ones who have already taken giant leaps in this segment would be looking at newer means to create a buzz around their offering. But is this entire strategic exercise worth it at all? It’s noteworthy that even internationally, the likes of Verizon, AT&T, et al have launched application stores, but they have not been able to reap dividends for them. Traditionally those are the handset vendors such Apple and Research in Motion (of BlackBerry fame) who have managed successful tactical application of stores models. So why are Indian operators vying to make their mark in this sphere?

The reason behind this is quite simple. Call rates have been hitting rock bottom because of per second billings and most operators are finding it hard to defend their revenue share. The sector has been hammered badly in the first two quarters of 2009-10. Still, the optimism is back with the industry posting a 4% increase in the revenues making the total tally stand at Rs.397.56 billion for the quarter that ended on December 31, 2009. But the wireless segment could only manage a 0.7% increase (at Rs 265.64 billion) in revenues. Hence it would not be wrong to deduce that the overall outlook for the sector has not undergone a sea change as the worst is far from over for them. Telecom service operators also realize the same and to increase their revenues and more importantly their bottom lines, their strategy has been to aggressively push their Value Added services (VAS). The implicit assumption is that customers aren’t as conscious about pricing of VAS as they are with respect to call rates. 


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).

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