Analyzing my 2007 predictions

Written by: Vivek Garg

On Dec 31st, 2007

Its time to take a look at my 10 predictions for 2007 before I can welcome 2008. Here is what I think how things shaped against my predictions. I will put (*) in front of the prediction number where a single (*) means not worth talking about in 2007 to (*****) meaning the prediction is now ubiquitous.

*****1. Broadband growth in India will continue to disappoint by not showing an exponential growth. As against the target of 3 million broadband connections till 2005 end, only 0.18 million were achieved. At end-October, the total number of broadband connections stood at 1.92 million. The target till 2007-end is 9 million and 143 million by end of 2010.

I think I could not have been more correct on this.  Read the TRAI 2007 telecom report for full scope of how disappointing 143 million figure now looks like. This figure has been revised to 20 million by 2010 but even that is doubtful given that we will have 3.2 million broadband connections in India by end of 2007, with a penetration rate of 1.6%. In a study, eMarketer projects that India will have only 10.5 million broadband connections by 2011. Broadband here is defined as >=200kbps. Content Sutra says that We added only 750,000 broadband connections between October 2006 and September 2007.

Even Subho Ray, President of the IAMAI sounds worried, saying that 40 percent year-on-year growth (of ever Internet users) is not satisfactory: “If the broadband targets are not met in the Year of the Broadband there is a possibility of missing out on creating a virtuous cycle of better connectivity, better content and more users.”

***2. WiMax will not be able to solve the last mile challenge; instead we will see a realistic alternative in cellular. Surge in Wi-Fi enabled devices will increase the number of ways people get online.

I think I did average on this one. At the end of 2007 and I don’t see WiMax as a clear winner but I agree that lot of progress has been made on fixed WiMax this year. I think that eventually everyone would need connectivity in some form (am sure no one doubts that). Question is what will be the most common medium. Along with WiMax, cellular alternatives such as WCDMA, EV-DO are gaining momentum. This slide shows why 3G is better suited for India(slide #10 here). Internet users almost doubled this year in India and majority of this increase came from mobile. I am still looking for a study that shows how many of these are using IP based networks vs cellular network.

from this post in BS

Wimax is poised to be the next big thing in the world of wireless communication. 3G proponents would, however, differ with this statement. Nevertheless, with heavy investments in the advanced forms of communication, companies such as VSNL, Bharat Sanchar Nigam Ltd (BSNL) and Mahanagar Telecom Nigam Ltd (MTNL), Bharti Airtel and even smaller firms like Microsense, jumped on the wireless bandwagon and have started offering fixed WiMAX networks as pilots.

Code Division Multiple Access (CDMA) operators like Reliance Communications, too, are offering CDMA Evolution-Data Optimised (EV-DO) or its nextGen 2.5-2.75G wireless networks for hi-speed data and voice access. Even equipment manufacturers like Nortel, Alcatel, Nokia and Motorola are mulling the launch of these services.

India Broadband Wireless and WiMAX Market Analysis and Forecasts’ by UK-based business information provider, Report Buyer, estimates there will be up to 21 million WiMAX subscribers in India by 2014.

*3. Airline tax cuts will boost travel industry further in 2007. Better taxation model will lower the net cost of flying around in India. This will increase the volume for travel portals. Too many players will lead to lower margins on each transaction.

Volumes of air travel did increase and will continue to do so, but not due to lower taxation. In fact due to increased crude prices, ATF cost increased leading to increase in fare. This has adversely affected domestic airlines.

as per this, In fiscal 2007, airlines carried 35 million domestic passengers, up 39.50% from the previous year. The Center for Asia Pacific Aviation, a leading consulting and research firm, projects domestic traffic will grow at 25% to 30% a year until 2010 and is expected to cross 60 million by that time frame.

*4. Introductions of DVR in Indian markets with onset of Set Top boxes and DTH – people will no longer have to sit through painful ads to watch their favorite soaps. Set-top boxes will increase the market share of VOD. Find a detail post on various movie distribution channels here .

We did not really see DVR set top box offering like TIVO specifically, we did see lot of movement in DTH with Zee (Dish TV), Bharti airtel, Reliance (blue magic), Tata sky & Sun TV. In 2007, we also saw lot of progress in IPTV with MTNL, BSNL  offerings & Reliance signing up with Microsoft to offer IPTV. Eventually with IPTV & higher broadband, we will have automatic DVR type capabilities.

***5. Online maps and local data will become commonplace. People will start using street maps and peer reviews of local destinations. It will lead consumers to online directions and use of map for their travel. This will benefit local search players like mapmyindia, burrp, onyomo. Google has recently started offering street level maps in India. At least a few of the big players like yahoo/msn/google/rediff/indiatimes will start offering local search in India.

I think this is on evolutionary path with big players like Google/yahoo/Microsoft are now taking a serious look at India and heating up competition with early movers. See our take on local search.

*6. ATMs everywhere will become a platform for ad placement, movie tickets and quick data shopping. This will cause increased computer literacy of Indian populace. Indian Railways is already extending the use of Internet to assist passenger’s book e-tickets over the ATM.

nothing significant happened here that I know.

****7. Mobile payment and mobile ticketing will hit mainstream. This will lead the ecommerce players to take mobile interface more seriously.

2007 is the year when mobile and mobile VAS were on steroids. Like everything that got benefited by increased subscriber numbers (except the ARPU) we saw lot of improvements in mobile payments and all SMS related services. Obopay, Itz Cash, MChek, Paymate, Jigrahak and such are now raising money and launching mobile wallets, international and P2P money transfer. Here is the scoop.

*****8. We will find Indians spending more time playing games (mobile, PC and console). Zapak.com will find itself well positioned. We will see players entering the gaming arena.

Another one that I think looks very trivial in hind sight and right on the mark. Here is a good summary that I found in BS.

The Indian gaming industry emerged in a big way during 2007, right from reduction in prices, introduction of better gaming solutions to more innovative means to lure the gamers. “The market was driven mainly by large players in the industry,” explains Rajesh Jain of KPMG.

Microsoft reached out to the gamers by introducing Xbox 360 Elite, an upgraded version of its famous Xbox 360, which was launched in September last year. Its rival in the market, Sony also launched its PlayStation3 in India with the latest blu-ray formatted optical disc drive. Prices however, were slashed soon after, to penetrate further into the market.

The launch of dedicated gaming spaces along with introduction of easy-pay schemes, like pre-paid cards, also came into the forefront during the year. Zapak, which already has 10 gameplexes (dedicated cyber cafes that promote online gaming), will more than double the number in 2008. Sify will use its gamedormes to further the gaming cause.

*9. At least some online DVD rental companies and travel portals will realize the importance of offline presence and will tie up with local retailers and local travel agents for convenience of non-Internet savvy population.

DVD rental business was busy doing M&A during 2007. Madhouse got acquired by SeventyMM. Anil Ambani’s R-ADAG and Nimbus looking at this space with R-ADAG talking about buying SeventyMM.

**10. iLeher will continue building a community of young professionals trying to make sense of the complex web of events relating to Indian Internet industry. Read our about page if you are interested in being a part of this community.

Oh, I wish I had nailed this one. Hoping to do so next year. I want to thank all of you for being a part of iLeher community. Let the new year begin. I want to wish you a very interesting 2008 ahead.

 

Leave a comment if you agree/disagree or simply want to wish everyone in the community a fantastic 2008.

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