In India, tablets offer a promising opportunity for start-ups and venture capital
Much like the desktop internet revolution in the West was fuelled by hungry start-ups, Venture Capital firms believe that the tablet ecosystem in India will be powered by start-ups and their innovative products and services.
India watched much of the Internet boom in the early 90s from the sidelines but has since shown an insatiable appetite for mobile telephony and services. Tablet computers are a natural evolution of this process and VCs believe the Indian market is ripe for the tablet invasion.
The tablet ecosystem in India is in its infancy but already there are signs that there is a demand for on-the-go services in country that is in a hurry.
The opportunity is huge. There are issues like connectivity and payments to contend with. The 3G networks are still patchy and despite India’s uptake of e-commerce, the dominant mode of online transaction remains cash on delivery.
And, in addition to the hesitancy to divulge credit and debit details, the banks’ multiple authentication process for online transaction make it cumbersome for consumers. But the players are not waiting for problems to be resolved to develop the ecosystem.
Start ups are forging ahead to get the early move advantage and build a community of users. “Today we are seeing only a few select companies who base their business on the tablets. Nevertheless, we expect Indian companies to develop disruptive business models that utilize the characteristics of the device and deliver products and services to solve problems unique to India,” says Sudhir Sethi is Founder, Chairman & Managing Director of IDG Ventures India.
Adoption of tablets by verticals like education, retail, gaming and healthcare are expected to be a potential enabler for the developing ecosystem. Already a few international airlines enable passengers to check-in on tablets while they wait for the baggage drop-off at the Delhi airport. “The key here is differentiated value and this is what the start-ups will need to deliver,” added Nishant Verman, Associate Canaan Partners.
iProf = an integrated tablet ecosystem
One such company, iProf, is being funded by IDG Ventures India, Norwest Venture Partners (NVP) and Kaplan Ventures.
iProf is a digitized personal education tablet for entrance test preparation. It utilizes tablets and ‘istudy zone’ outreach learning centers to impart high-quality distance learning and test prep training (IIT, Medical, CAT, GRE, GMAT etc.) to Tier II and III towns in India.
“The tablet is merely an enabler,” explains Sanjay Purohit Chief Executive Officer iProf, “which delivers quality content and test prep instructors initially restricted to major Indian metros.”
Using the system, a student can download the company’s proprietary content bundled in their application at any of these ‘istudy zones’ onto their iProf tablets or most android tablets. The app on is available on the Android market and also has an offline component that allows students to study at home.
The iProf tablet, imported from China, costs Rs 6900 (approx. $139). “While the sale of our tablets is in few thousands, we derive the majority of our revenues from subscriptions,” said Purohit.
Intel Capital promotes tablet manufacturing
Technology services around verticals is the focus in India for most of the venture capitalists as opposed to manufacturing, which is a capital intensive business. Intel Capital opts for a slightly different approach.
Sudheer Kuppam, Managing Director, Asia Pacific, Intel Capital believes it is necessary to promote the entire ecosystem. “If the manufacturing ecosystem is not ready, price points will be way too high, which makes the product unaffordable. So we need to address this in addition to the usage model, else there will not be any demand for the product,” he said.
The businesses, the Intel capital fund has recently evaluated are OEMs and ODMs focused on the Intel Atom processor. That said, the fund is not opposed to looking into technology services.
Investment in developers reaching critical mass
Given India’s legacy, innovation in software comes as no surprise. Intel Capital, Sequoia Capital and Footprint Venture all have funded July systems, a leading mobile application platform provider to businesses worldwide.
Touching upon this biggest trend in the mobile space, Rajesh T. S Reddy, CEO, July Systems said, “We are seeing our customers launch services around tablets and seen it trickle over the past couple of years to a massive explosion.”
Accordingly the company charted out an aggressive tablet strategy 18 months ago wherein they enabled support for tablets in their platform. Consequently with the spectrum of different tablets available today—in all different shapes, sizes and operating systems, including Windows 8—this platform support allows businesses to create and offer services on them.
At the same time, mobile companies are steadily exploring tablets as part of their strategy. Companies like Bangalore-based Sourcebits, a third-party mobile and tablet applications developer, Apalya Technologies, a Mobile Video/TV company, and Vserv Digital Services, a mobile advertising network for application developers, are rapidly shifting from smartphone app development to tablet apps.
The near term challenge? Monetization
There are advertising opportunities in the developing app ecosystem around tablets, but the mobile advertising market is far from mature. In the near term, mainstream advertisers are refraining from putting inventory aside for tablets.
Even so, India is a vibrant domestic market ready for products and services. But in order to capitalise on the opportunity, start ups will need to carefully think through the business model, execution strategy and scalability.
Mohan Kumar, Executive Director, NVP India cites iProf as an example and explains that a hosted business model with a proven business (like education) use case will help gauge a company on the viability of its business model.
The start up ecosystem is thriving and venture capital firms are looking to provide funding. “Given the dominance of mobile, we will see new and innovative products, services and business model coming out of India in the years ahead”, added Verman.