Mobile App market in India

Thinking from an entrepreneurial angle, it seems to me that there is almost no mobile app market in India today i.e., it is not a startuppable market.

All the successful apps that are making money are transaction-based. For example, ngpay takes a cut from every movie ticket you buy through it. This is only possible for entertainment-oriented apps. The only other successful ones that I see are, of course, communication apps such as Gmail app. I see almost nobody using utility applications on their phones.

Things can improve only if internet-on-mobile was affordable! I think we need 3G for mobile app market to grow in India, but it is delayed yet again (Apparently, the government is not satisfied with the expected 250 billion rupees).

Let’s take a look at few numbers:

• 93.2% of Vodafone India subscribers are prepaid customers, which means it is unlikely they subscribe to monthly fees for internet-on-mobile. Right?
• 96% of Urban Indian mobile users are not accessing the Internet and 48% of Urban India mobile users accessed the Internet on their mobile only 1-3 times a month, on average!

Of course, there is no denying that there is growth year-over-year, but for an entrepreneur, it is not enough yet. Because you can’t build yet-another-social-network nor can you build content unless you have tie-ups with the big movie/music companies. The top websites in India for internet-on-mobile conform to the core needs list that I wrote about earlier, especially entertainment. The free wallpapers from zedge.net seems to be the hottest thing right now. Or as Rajesh Jain keeps stressing (and practises), focus on SMS and Voice for now.

Let’s hope the IAMAI will help things move forward.

Even when we get affordable internet-on-mobile, I wonder if ad-supported free applications will be the only popular ones always.  Where’s the money?

Maybe I completely mistaken or I’m just whiny, because MediaNama paints a much brighter picture, from comics to unlimited music for Rs. 99/month to movie rental and chocolates. Hah! There is a gotcha there — all those announcements are from big guys. Where are the mobile app startups?

I am planning to attend Silicon India’s Mobile Conference this month to gain more perspective on this.

To round things up, here are some rough notes that I jotted down when Karthee Madasamy of Qualcomm Ventures talked about How to make a winning mobile startup at an OCC Meet on Aug 15. It was probably the only time I felt hopeful that a mobile app startup is possible today.

• Understand the status quo. Don’t do the status quo.
• If there are hurdles, that’s your opportunity. Otherwise, others would’ve taken advantage already.
• India 400 million mobile phone users.
• Segment the customer. Otherwise, big companies will be already on it.
• Don’t aim for 1% of ocean. Go for 50% of a small market that you undertand well.
• Don’t do today’s technology. Go for future. Don’t be 10% better, be significantly better.
• Do you have something unique that gives you strengths? Have a honest discussion on the problems and future competitors and your strengths.
• Can you partner with others in the ecosystem, support their weaknesses, and together be more strong.
• Ecosystem problems – operators, heterogenity of platforms and mobile phone capabilities, difficulty in educating customers, no Internet on mobile, etc.
• Only way a startup will succeed is by discovering a latent demand or latent technology.
• If operators are critical to the ecosystem, obviously they will charge more money! Why is that a problem because they are giving value back.  Get the first million customers yourself and the operators will put red carpet for you. Startups’ strength is to turn the tables!
• Find a mechanism of educating customer about value of the product and that will obviate the need for operators.
• If only 40 million mobile Internet users, you only need half a million users to break through the barriers! People will come after you.
• Assume cost of building product or app is zero. Only building half a million customers is something.
• 120 million capable phones today. India is a fast market. Imagine 2 years later.
• Startups should change the game to their advantage. At the same time, it is NOT a zero-sum game. Make a win-win partnership. Both people should profit.
• Don’t complain about market research. Ultimately, you HAVE to understand the market better than anybody. Be resourceful. Also, accuracy is not important, the direction of the market growth is more important.
• Don’t go to VCs without 20,000-30,000 users.
• Can you scale up to 20 million dollars revenue? Then you’ll get your pay-off.
• Startups need to think how to beat the big guys.
• Make a state-of-the-art technology or business model and ask people to pay premium for it.
• First step for product management is segmentation.
• Make it clear to yourself about how you’re reaching your target customers. Don’t do it in a haphazard manner.
• Read about Ron Coase economist why companies exist.
• Read about Teece theory on who captures value in technology.