Xiaomi has surpassed Samsung/Lenovo to become the #1 smartphone brand in China in 3Q14, within four years of launch. Despite selling high-end hardware at a mid-range price point, our detailed pricing / cost analysis suggests an e-Commerce model of Xiaomi’s scale could have an operation margin of nearly 7-8%. If true, this would make the “Xiaomi model” one of the most profitable among global Android brands.
We think Xiaomi’s high volume per model (and thus BOM cost advantage) can be applied to other markets. But it may have to overcome challenges in Intellectual Property Rights, global branding and data security, while the availability of Google Mobile Services also lifts the Read the rest of this entry »
Reliance Jio Infocomm is all set for a Big Launch in India in the next few months. Globally, there are no examples of a new entrant in a new technology who has ventured out successfully. Several new entrants have entered the US and Canadian markets over the past five years, but currently their combined market share is in the mid-single digits.
What Lessons we learn from Global Telcos Who Ventured to Challenge Incumbents ?
3 in the UK and Italy have gathered just 9%-10% share of service revenues and 10%-12% share in subscriber market share. They have positioned themselves as the ‘value proposition’ in the UK and have pushed dongles quite hard with moderate success. Yoigo who launched in 2008 has also struggled in Spain. Iliad entered France in 2012 with 3G and 4G technology. It offered cheap value proposition with large bundles. Market share of SIMs is 11% (but just 5% of service revenues).
Zain KSA in Saudi Arabia was Read the rest of this entry »
In its Jun-14 earnings call, Info Edge management suggested that real estate advertising market / opportunity is much larger than even jobs (a business that is 5x 99acres’ size for Info Edge). Hence, the growth opportunity is quite sizable in the real estate market for Info Edge.
99acres delivered 48% Y/Y growth in FY14 despite the tough macro environment. The online real-estate business is highly underpenetrated and there is significant headroom for growth. Also, management suggested that there is an incremental
shift from print real-estate advertisements to online portals, a trend Read the rest of this entry »
Reliance Jio Infocomm the PAN India 4G LTE License holder has indicated that it will also use the recently won 1800Mhz Spectrum to Deploy. Reliance Jio plans to launch both the FD and TD version of LTE together. We don’t see a very robust and affordable ecosystem/handset supporting the model at this juncture. Note that Jio will be among the few operators globally to attempt both versions of LTE simultaneously on one instrument.
Jio’s spectrum suffers from poor coverage. Jio has 20MHz of spectrum in the poor 2.3GHz band but merely 5MHz of spectrum in better 1,800 MHz. While 5MHz could be enough in the initial rollout, RIL will need to depend upon the 2.3GHz spectrum for capacity. This would mean that Jio will need to deploy a significantly higher number of towers for full-fledged rollout. We estimate Reliance Jio will need 150,000 BTs over the next two to three years.
Another challenge that Jio faces is voice. It is early days for Voice on LTE (VoLTE). Currently, Jio does not have spectrum in the 3G spectrum/HSPA bands, which could have allowed the company to provide Read the rest of this entry »
Indian Internet Local Business Search Giant, JustDial has unveiled Search Plus a more effective platform versus other traditional mediums as it allows a more effective lead generation. The value to vendors is quality leads. The company is focussed on building up the technology, signing up vendors, creating awareness, getting traffic and then starting to monetise. Search Plus will have four parts: a) Ordering – food, grocery, wine, b) Scheduling – doctors, courier, spa, c) Ticketing – bus, train, movie, and d) Buying – e-commerce beginning with branded goods. Going forward, Search Plus services will also be available on the voice platform.
Advantages and USP of Just Dial Search Plus
Local stores can be very competitive on pricing and moreover, in Read the rest of this entry »
e-Commerce companies thrive on Inorganic Growth. Strategic acquisition and partnership is a key to MakeMyTrip’s growth strategy. However, the key focus area for acquisition is for its H&P segment (India / abroad) or to strengthen its technology platform. It has undertaken a number of acquisitions in the past through a mix of cash and stock consideration and here is the list of all companies MakeMyTrip has acquired Globally to Grow faster.
Travis Internet Private Limited – Online bus ticketing
Luxury Tours – Acquired 100% stake in Feb 13 (had started acquiring since May 11) – It is a Singapore based travel agency engaged in providing hotel reservations, excursion tours, and other related services
Le Travenues Technology – Acquired a 19.9% stake in Aug 11 – It owns and operates ixigo.com, which is an online travel meta Read the rest of this entry »
Wikipedia defines a digital currency as a form of virtual currency or medium of exchange that is electronically created and stored. Bitcoin, the most prominent digital currency, has additional attributes: 1) advanced cryptographic methods to secure transactions and ownership; 2) pseudonymous transactions; 3) payments that are verified and recorded in a decentralized ledger (blockchain); and 4) is maintained by ‘miners’ who are allocated newly created Bitcoins as incentive.
At present, there are more than 200 digital currencies (30 with market capitalization above $1 million and 12 above $5 million) with more created each month. Digital currencies differ along multiple dimensions, although Bitcoin is often used as a template. They typically share the characteristic that the pace at which the currency is created is pre-determined, there is an algorithm that governs the creation and distribution of the currencies and there is a market to determine the value of the currency.
Price is determined by supply and demand in the market. The supply of most, but not all, digital currencies is pre-determined. Demand is determined by a combination of expected capital gains and the value in facilitating payments and potentially other financial transactions. Although any individual digital currency can have a fixed supply, the replicability of the Bitcoin and related protocols means that aggregate supply is far more elastic than that of any individual digital currency.
How Close is Digital Currency to Becoming Reality?
Bitcoin has been in operation for five years Read the rest of this entry »
The OTT communications services allow users to bypass the traditional cash cow voice and SMS services offered by telcom operators and communicate directly with other OTT users across the World without any barrier. OTT communications can be simplistically categorized into two major categories: 1) services provided by/ embedded into the handsets by operating systems (such as FaceTime by Apple iOS); and 2) third party communications services (such as WhatsApp). In this backdrop, the Wireless Carriers in India are looking for ways to Block Voice Traffic originating from OTT Apps.
In the past, a consumer paid a telecom operator for voice, short messaging services (SMS), aka texting, and data use with value fully captured by the telecom operator. Now, the relationship has changed. Consumers have the ability to divert their communications needs through an OTT provider which in turn reduces the value collection by the telco. Telecom operators still recognize value from their traditional services, but their ability to charge as much as they want has been compromised given the advent of competing products, which from a consumer standpoint could be far cheaper and convenient to use as compared to the traditional telco model.
Growth of OTT services has been rapid given the easy adoption of these services. OTT applications provided by OS providers are Read the rest of this entry »