Archive for the ‘Enterprise Mobility’ Category

Mobile Phone Subscriber base in India – Increasing or Decreasing?

December 21, 2010

LiveMint – one of the leading business newspaper in India carried an editorial article on December 10, 2010 titled – “Dialling the Wrong Numbers” which concluded or implied that India’s Cell Phone subscriber base may be on decline. Their inference on this seem to have been drawn from the recent press release from Telecom Regulatory Authority of India (TRAI) on Telecom Subscriber Data (PDF link). LiveMint writes and I quote the following paragraph from the article –

According to Visitor Location Register data published by TRAI, only 70% of mobile phone connections were active at the end of September; i.e. out of 688 million subscribers, only 482 million were live on 30 September (2010).

When I read this – I instinctively felt that something was not right with this reporting from LiveMint. A drop of 30% decline in active subscribers (and that too within a month) should have started fire alarm bells ringing in the Mobile Service Providers – especially considering that they are currently getting challenged from the perspective of extracting more $/subscriber. So I took upon myself to decipher the data from the TRAI press release. My suspicions of misleading reporting from LiveMint came to be true.

Per the TRAI press release the news in terms of count of subscriber base seems to be quite contrary. The wireless subscriber base in India  increased by the routine 2.39%. India at the end of November 2010 had 688M wireless subscribers. The number 482M which LiveMint quotes is about Visitor Location Register (VLR) – this number is about tracking the user in a particular coverage area. This however is not about whether the subscriber is permanently active or not. (I have sent an email to the Editors of LiveMint for the clarification. Hopefully they will respond to that)

While we are on this topic – I just feel that the way TRAI calculates the tele-density seems to be very misleading. At the end of September 2010, the wireless tele-density in India seemed to be at 61%. For me this means that for 100 individuals, 61 of them would have access to wireless device. This just seems to be incorrect. Indians have a very unique habit of carrying multiple cell phones and with the advent dual/multiple SIM handsets – the whole definition of tele-density from a wireless perspective does not make any sense to me. (The same LiveMint article linked above mentioned that a report from KPMG indicates that 40% of all new cell phones sold in India would be Dual-SIM card phones. Not too sure if this is a correct number. Did not see a validation of the same anywhere else)

Thoughts and/or comments are welcome.

The Economics of Building and Selling iPhone Apps

October 15, 2010

About a month back I came across this interesting blog post by Tomi T. Ahonen  which talks about what is the economics of building and selling iPhone Apps? In other words is this a profitable business?

iPhone Economics

iPhone Economics

The title of the blog certainly sounds to be quite depressing to the millions of iPhone App Developers who are are looking at the App Store in the same way as the California Gold Rush – Full Analysis of iPhone Economics – it is bad news. And then it gets worse. And it also got a review on NY Times – Is Investing in iPhone App Development ‘Fool’s Errand’?

Personally – while I am not sure what is the data source which the author has used – but my gut feeling based on various other readings is that he might be about right on his analysis.

For your convenience, I am summarizing some of my takeaway/summary from the two articles –

  • Increasing number of App Stores – Similar to iPhone App Store there are possibly about 30 new app store in process of getting launched in the mobile industry. IMO, an impending ‘nightmare’ for the content/app providers (their chances of recovering costs of app development will significantly reduce from the current state); but possibly here is where an opportunity for software service providers like GlobalLogic lie.
  • Downloads are increasing; Revenue is not! – On iPhone AppStore – even though the number of downloads have increased more than 100% year-after-year; the average revenue per app download seems to reducing every six months. (decline of about 4-5% per year)
  • Free is good!Duh, you say! Sure, but look at it from numbers perspective. Per various studies – the average iPhone App cost is around $1.95. Average revenue per app download is around $0.24. Needless to say the traffic of download is more towards free apps. What this means is that downloads is not translating into revenues. (in Sept 2009, Yankee Group surveyed actual iPhone App users and found 18% of their apps they had were paid, 82% were free)
  • Norms around app pricing seems to be setting in – For consumer-oriented apps – the thumb-rule of best bet of pricing an app is between $0.99 – $3.83
  • Expected Revenue/device (not App) – Considering the number of iPhones sold over the last two years and based on total cumulative app revenues – each device generates almost $14 of app revenues per year or nearly $28 over the 2 year period.
  • How much does the average App Developer pocket over two years? – You might have heard of some App Developer hitting a jackpot. But how much does a typical App Developer expect? By rough guesstimates – an ‘average’ typical paid iPhone app for its 2 years of existence on store would have earned about  $1948. Apple typically keeps 30% of the revenues. So from this an average app developer would have earned about $1363 over 2 years ($682/year). (keep in mind though that there is a long tail here)
  • Average Cost of Developing an iPhone App – Two surveys have reported that most apps cost anywhere between $20-$50K to develop. (an update typically cost around $10K) (Mobile web site development costs on WAP or Web is about $3K according to Internet Retailer, on May 1, 2010)
  • When does it break even then? – Considering the above two points – the author says that it would take about 51 yrs to break-even (take this with a pinch of salt)
  • Is iPhone a big market? – Does not seems like. Worldwide there are 80 million iPhone compatible devices today in use. That seems like a big number. Except, that compared to just the installed base of smartphones at the end of 2009, it is 13%
  • iPhone vs Mobile Web Development – This is always a contentious point. Compared to iPhone App Development vs. Mobile Web App Development – development costs for iPhone are 10 times bigger, but the audience reach is 50 times worse

Happy Analyzing…