Let me run the time machine in reverse direction to second half of 2000s i.e. 2006-2008, when the so called Short Messaging Service known as SMS was still the most preferred type of communication amongst all classes. Be it enquiring from a friend whether a professor has started his melodious lullaby or not, or asking someone to call you back (as you have run out of prepaid balance) or some teenagers during college days for being in touch with their opposite; SMS was everywhere.
Airtel, Vodafone, Idea, Docomo all were in party mood. While buying sim cards, customers’ prima focus would be on enquiring about SMS packs available with a carrier; which would eventually determine the sim card which would get sold. Operators’ advertisements (be it print or social) were more of a pitch to sell SMS packs rather than sim cards; which they thought would eventually be sold on the backdrop of lucrative SMS schemes.
Not anymore. It’s OTT time (and they are certainly playing over the top!!). Communication apps have hit the market. They have replaced the SMS service at a speed faster than with which a person replaces empty refill of his pen. It has changed the way people see world around them; acted as an ignition engine to fuel the expectations of the customers. They have played smart by utilizing two of the most pertinent global trends to their advantage:
- Increase in internet accessibility and usage
- Proliferation of smart devices
WhatsApp, the first major application to enter this space is leading this revolution. They have got it all: file sharing, media sharing, voice, message, group chats. They have been able to make a dent into the market as most of these apps are provided free of cost for a period of minimum 1 year. Using this app for an year, gives customers a taste of its most powerful features and by the time this honeymoon period ends it easily attains the status of “Alladin Ka Chirag” for them. This is where these apps charge subscription costs for continuation of service. A good revenue generation model indeed! All one needs is a smart device, an internet connection (of course you would have it, else what is the use of a smart device!) and install the application (free of cost) and get going. No running to the nearest shopkeeper to get your SMS packs renewed.
If they have brought AT&Ts and Vodafones of the world from heavenly grounds to earth (significantly decreasing ARPU they manage from each subscriber); they have even been giving sleepless nights to Mark Zuckerberg and Larry Page. Yes, of late there has been a marked decrease in internet time spend on social network. Netizens are spending more time on mobile messaging apps than Facebook and Google Plus. Three major reasons are responsible for this.
- They offer an instant messaging chat like experience which is absent in Facebook apps for smart devices (which many a times have significant amount of lag time in messages receipt)
- Most of these instant mobile messaging apps prefer to keep a distance from advertising; dealing with which has become a major bottleneck for subscribers of today
- Almost all of these messaging apps integrate seamlessly with the phonebooks of subscribers, so there is no hassle to add friends
- A similar revolution was observed when Skype changed the way common man used PC for long distance calling just that this time it’s on mobile.
Penetration levels can be judged from the fact that even a 6th class kid uses a WhatsApp message to convey play timings to his friend. WhatsApp boasts of 200 Mn active users of service every month. Japan based Line broke 45 Mn users in less than a year of its launch. Even in a country like India where internet connectivity can go awry in some remote areas, these apps have been able to catch on like wildfire. In fact they have become the de-facto standard of communication. They have left no stone unturned to capture market by its neck and even gone on to develop variants of these apps for different platforms like Android, Windows, Blackberry and many more.
Every cloud has a silver lining though. On one hand, where these communication apps have come hard on the telecom operators’ traditional business models, on the other hand carriers in Asia, Korea and Japan are also recognizing this as an opportunity to upsell the smartphones as well as data plans to subscribers. Its’ no rocket science which has been applied by these startups. As Steve Jobs rightly quoted:
“You’ve got to start with the customer experience and work back toward the technology – not the other way around.”
They have been able to champion that.
[The article has been written by Varun Pandhi. He is an MBA from SITM, Pune.]
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