GAUTAM MUKHERJEE
It’s not just because Reliance Jio, the $15 billion investment off the Reliance cash balances, just launched, has made an aggressive pitch towards instant market leadership. Jio is offering free ‘voice’, while charging for data usage, the real revenue McCoy, but in small chunks, for little money, so it doesn’t pinch.
In the end, Jio won’t take in less in aggregate, but will do so with better lures. Will it appropriate Prime Minister Narendra Modi’s Digital India vision unto itself? Well, the backbone of it, could well be the smartphone, unless someone comes up with a better widget.
Money, they say, never sleeps, but neither does the eCommercial marketplace. It is awake for the insomniac, and never takes a day off. Jio could well be the blockbuster service provider, given the potential of the Indian telecommunications market. It already boasts over a billion cellphones in use, many of which are voice only.
It’s clever stuff, this battle for the concept definition itself, but is cellular telecom the lion’s share of it? Jio will need 80 million subscribers paying at least Rs 180 per month in usage fees for it to break even. However, the 60-year-old Mukesh Ambani says he’s not going to lose money on Jio for sure.
Others are grudging the flood of interconnectivity they have to provide the new Jio riders, but, as the man says, for how long? It’s illegal to refuse. The notion that the smartphone will rule the bandwidth is fuelled and reinforced by the Mobile App, the medium through which a lot of digital traffic/eCommerce is growing, rather than via the older laptop/tablet formats.
Even if mobile telecom isn’t synonymous with Digital India, the Internet certainly is; and 3G, 4G and 5G speeds, plus fibre-optic cabling, will continue to batter down the dimensions of both time and distance.
Money, they say, never sleeps, but neither does the eCommercial marketplace. It is awake for the insomniac, and never takes a day off. Jio could well be the blockbuster service provider, given the potential of the Indian telecommunications market. It already boasts over a billion cellphones in use, many of which are voice only.
Older people tend to be technology averse, but India is 65 per cent between the ages of 15 and 35, and this ‘demographic dividend’ will pay out for at least three decades more.
The smartphones today range from the rapidly bundling features and upgrading inexpensive variety, to the more aspirational, not so cheap ones. People are consuming entertainment, data, advertising, news, views, music, photos, videos, all on their devices. They are receiving tax returns, banking information, governance, subsidies, payments, surveillance, quite often on the move.
And people are forever upgrading to more, for less. Even the defence of the realm depends on it. Corruption is being curbed via the direct interface between senders and receivers. It cuts out the rent-seeking middlemen.
eCommerce already dominates air/train/travel and hotel/car bookings, offering tighter rates and fares. The entire travel agency business has morphed into eTravel. It now accounts for 70 per cent of the entire caboodle of eCommerce.
eTailing, on the other hand, in India was at $6 billion in 2014, out of the $16.4 billion of the online business. This, with 16 per cent of India’s population, largely under 35, online in 2013, according to Forrester Research, quoted By PWC.
Out of this same 16 per cent, only 14 per cent of it, or 28 million people, were online buyers — for books, accessories, electronics, apparel-constituting 80 per cent of what they bought.
But now, apart from the holdall Amazons and Ali Babas joining the desi Flipkarts and Snapdeals, there are property portals like Magicbricks, and multiplying online shops and showrooms for almost everything.
So what is the size and shape of India’s digital future including the much vaunted smart cities? The kitty was projected to grow to $22 billion by 2015, and five to seven-fold in number of online buyers by 2020. This means at least 200 million online consumers by then.
If revenue grows at present rates where CAGRs’ are sometimes in the 30 per cent plus area, the monetary value could become $105 billion, or much more by 2020. If 200 million people were to become online purchasers, perhaps 500 million, rural and urban, would be just browsing online.
Significantly, our online buying penetration is already, in absolute terms, bigger than most countries, barring China, where 50 per cent of its much bigger population, is buying online, if not exclusively, today.
The question is why? It is just faster and more cost-effective, even if it hasn’t realised its full potential yet. The tentacular Indian post offices are going to join in too, as the COD last mile, and as payment banks. But can the online model, pimped out and pumped up on outrageous valuations, VC funds, and cash-losing discount-selling, survive; let alone grow, manifold, in just four years? Yes, because the delivery is potentially fantastic, and just about everything is clambering aboard!
The American Mall, the quintessential late 20th century place to ‘hang-out’, is dying. The same thing has been happening in metro India, though people in smaller towns, coming to the experience later, still like the razzle dazzle, the bright lights, the air-conditioned swank. But tier two and three towns are also huge internet users, for hooking up, as much as for selling, or buying.
Premium stand-alone markets in all our metro cities, with the steep rents, are morphing into upmarket restaurant-land. The retail footfalls however, are falling. The office space market too is becoming a special interest zone- IT, banking/insurance back offices, larger brokerages, consumer sales/ marketing for white goods, vehicles, servicing establishments -need them.
Other high tech 24x 7 establishments, straddling time zones, use them for the concentrated infrastructure. But many other small businesses no longer do, pointing to their cars, smart phones, laptops, memory sticks, and homes, instead.
Manufacturing, except for yesterday’s labour intensive variety, is also tending towards using fewer people, more machines/robots. Though robotics is a revolution yet to happen substantially in India, the objective of greater manufacturing employment may well mean more skilling and high-tech robotic factories in future, rather than early industrial revolution manual assembly lines.
Institutions – hospitals, schools, museums, universities, government offices, still need large places to congregate. But even here, a lot of what was physical has now gone virtual/digital. This is inevitable progress, and therefore, a wave to ride, because there is no ducking it. And watch out, this brave new world ups the ante every quarter.
(The writer is a senior commentator)