The Indian Mobile Market has been making quite a few heads turn in recent months with innovation at all ends of the spectrum. There are VAS providers looking to provide consumers with unique content, there have been companies looking to create a VAS ecosystem (Reliance Mobile Particularly) - similar to the one created by DoCoMo with i - mode. The Future of mobile at the higher ends of the spectrum looks pretty interesting to say the least. 

At the lower end of the spectrum there is the less glamorous Voice & Text Market. Currently mobile penetration lies at roughly 20% of all individuals in the country - this number is bound to grow. So far India has about 290 – 300 Million Mobile Phone subscribers. While the number is definitely large, it has by no means reached its true potential, We are a nation of 1 Billion Plus where at least 750 Million people can have Mobile phones.

SPICE Mobile recently announced that they would be launching handsets for as low a price as Rs. 800. “I am looking at a big market, from Iraq to Indonesia.” - Spice Chairman Dr. B. K. Modi has said. 

This is a significant shift in the mindset of an Indian company because it realizes that apart from its own market - there lies an entire World out there, populations similar to those in our country - who need similar services. The thing with technology is - when stripped down to the essentials it’s quite culture agnostic. So its not like a packet of chips where flavors need to be modified and production processes slightly altered, packaging, possibly colours of packages changed when one moves countries. With technology, for extremely basic technology particularly, the User Interface can be pretty standard around the World especially since there is limited utility and not too much complexity - and a lot of it can be symbol oriented. Further, minor changes in software are not that cost effective.

Spice Mobile has also been in the news recently because it has launched TV on Mobiles. This service i think is now available in Karnataka and Chandigarh. They give subscribers about 12 Channels for Rs. 150 a month.

The government has also announced a similar initiative recently. 

 The union labor minister, Oscar Fernandes, had made an announcement to launch low-priced phones having digital technologies. The announcement was targeted mainly at farmers – the hope is that farmers will be able to use mobile phones for productivity gains.

Mr. Fernandes also mentioned that the state plus privately owned communication companies have to step forward to introduce cell phones, which would cost just Rs.500.

While Mr. Fernandes’  announcement is exciting as well, i some how think it has a few political connotations. I also think that the phone will be highly subsidized. While i am all for the rest of our population having mobile phones, i have my reservations with respect to subsidies. What subsidies will effectively do is give the government an unfair advantage on price. This will drive other competitive businesses like SPICE out of business because they will simply not be able to compete on price. Another repercussion of such a move would be that there would be few ‘real’ efficiency gains. I say this because subsidies will only move monies from one end of the market to the other. Thus a phone that may actually cost Rs. 1000 to make may sell for Rs, 500 at the expense of others and a Rs. 800 phone, that is an example of an efficiency gain may be wiped out of the market. This will stem further innovation in the market. 

I don’t really buy the Governments announcement either way.  

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