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Telecom Tuesday : The VAS Market Set For Acceleration

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The launch of iPhone was undoubtedly a path breaking achievement in many ways.With a seamless interface and fast connectivity , iPhone caused a paradigm shift in Internet On The Mobile.More than that, it unleashed the VAS market.Even though VAS market existed before, but Apple made it disruptive by partially open sourcing it and allowing collaborations from independent third party developers.A 30-70% revenue sharing in the favour of developers may not look like a hugely profitably scenario, but it helps Apple rake in close to $75 million in revenues every month.


The Apple App Store has been a tremendous success and like with every path breaking offering, it is being replicated by others.Android market place is heating up too with Google jumping the fray with Nexus One.It might get even more disruptive with the options to even get one’s devices listed based on the refined Open Source versions of the Android OS.

With traditional telecom margins shrinking, it is a no brainer that VAS is going to the game changer.Indian Telcos have realized it and are gunning to get their VAS platforms up and running.

Aircel ties up with Infosys to launch a Mobile App Store

Taking a leaf out of the App Store, Aircel wants to entice its customers to its VAS offering by launching a Mobile App Store.The idea is to offer a heady mix of free and paid useful apps for consumers.The app store will be powered by Flypp – A Mobile Application platform by Infosys.The Indian telecom marketplace is waking up to VAS big time and the growth forecasts look tremendous since,

  • The market is being flooded with fast and efficient Smartphone’s which will help consumers leverage the true power of Mobile Phone
  • With 3G network launch in near future, the market for VAS like Video telephony etc will take a whole new meaning
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Even though, the Aircel App store may not have feature rich apps like the App Store, the focus will be more on SMS based payments applications or subscription based apps which work with basic handsets too.I wouldn’t wonder if other telcos follow suit soon.

What do you think? Can Aircel aim to replicate the success of the App Store. The answer might be a clear no but then it might just open up the VAS market a bit more

RCom launches another VAS initiative, To Deliver Comics To Its Subscribers

RCom has been actively pursuing the VAS space with its interesting offering for its subscribers.It had earlier launched a subscription based model for delivering Novels via mobile phone.Now, it is planning to deliver comics to its GSM subscribers.RCom has partnered with none other then Carton Network to provide comic strips of kid’s favourtie characters Ben 10, Johnny Bravo, Dexter’s Laboratory, Powerpuff Girls and Archie’s.Pricing has been RCom’s forte and they seem to be following it to the T.

The service is priced at a modest 1 Rs per day for a single comic strip which will have a text and visual section

Now this may not be a mass market service but might get substantial traction from children.This might come as a god send for parents trying to keep their kids from getting bored especially while travelling and stuff.

  1. Ankit says

    Attention to details i must say, i was trying to conjure up a possible audience for this and hence came up with this:-)
    I do agree on the Children getting addicted to electronics.However, i meant it as a respite when making those small travels where outdoor activity is shot out and books/novels may not be handy.
    One comic strip a day might be a good idea then.They can read it themselves and get some entertainment.They might get addicted, but mentioning that only one can be read a day will make them wait for it, and u can easily have them behave themselves :-)
    lol..I am not a parent so I will not be able to give the right answer, i was always the greedy kind so my dad used to lure me with goodies and a promise that i will keep getting them only if i perform.

    It does not answer ur question but yes, a critical balance needs to be maintained when it comes to children’s exposure towards video games and stuff.But lets face it, with a environment these days, it is darn diff.Better would be to inculcate have them playing educational games like those on Tata Sky.

  2. Madhav Shivpuri says

    Ankit,
    You mentioned “This might come as a god send for parents trying to keep their kids from getting bored especially while travelling and stuff.” – As a parent, I do not allow my daughter to touch or play with my iphone. Once they get a taste of it they are like a tiger that has tasted blood.

    As parents I think we need to balance their need for entertainment with something that is more productive and useful in the long run than letting them play with electronic toys be it mobile comics or video/mobile games (DS etc.). We need to inculcate the habit to read books, sing rhymes/songs and talk to friends and family, and become generally more social than go bam-bam shooting down characters in a video game. Viewing electronic displays for extended hours hurt the eyes and most likely even the brain in terms of the content consumed.

    I know I am streching your point quite a bit, but the starting point is the same – “providing mobiles/ video games to children for entertainment”. There should be a way for parents to lock-down certain features from mobiles given to children. I want to hear some views on this if it is not too further away from the topic of this post.

  3. Madhav Shivpuri says

    As Aircel has the marketshare it makes sense to capitalize on it with the VAS apps market. Since apps opens the market for opportunities be it for entertainment to children or weather forecast to farmers, whether it is recipes for housewives or calorie counter for Indian foods, apps becomes a great enabler. India with a 1 billion population is a great market to target.

    The telecom company/ the app store provider (Bharti Airtel) or the programming platform provider (Infosys), developer all can share in the revenues. The consumer too benefits from availability of apps.

    This can also be seen a ‘Network moat’ as Pat Dorsey mentions in his books which means when you start using the apps you would probably not change providers despite number portability. The apps that you are now dependent on or become addict to will prevent you from changing the provider thereby the marketshare for the company will not erode and will guarantee that you will continue to contribute to the companies top line. A wonderful reason to buy that telecom stock (Bharti Airtel?) now.

    1. Ankit says

      Exactly Madhav..An app store creates a whole new ecossytem for different providers to deliver value.Not sure if i wrote it wrong, but Aircel is going to be the App Store provider.
      Like the Network Moat, VAS is indeed a good strategy to have the customer hooked.
      Not sure if it is time to buy Airtel/Aircel but i might bet on Infosys.These folks are aggresively getting into IP market and finding buyers for it fast enough too.Infact, they have 219 patents pending for stuff.Even if a % of those are product based, it will open up a whole new revenue stream for them.
      My 2 cents

      1. Madhav Shivpuri says

        Infosys has 219 patents? Interesting stuff. Combined with their above average margins, this must a good reason to get into their stock. Agreed!

        Regarding children- its not easy wean them off the gadgets when they start having fun with it. Make them lookup wikipedia everytime they ask “why?” and then they may give your device back!

  4. Vishal Sanjay says

    With biggies like Apple and Google as competition, Indians are going to have a tough time in this industry. Most of the independent developers in India would prefer to showcase there apps for Iphone and Anderoid as they provide a world wide audience. Both Aircel and Rcom will not be able to provide content as good as Apple or Google. This is the right time to enter this niche, and they should try their best to tap the indian audience.

    1. Vishal Sanjay says

      And sry forgot to mention – Happy Republic Day!!

    2. Ankit says

      Agree that Indian Telcos will not be able to break into the global markets.But, given Indian Telecom boom, they can sure make efforts to capture the increasing VAS market.It will help them create a good ecosystem where a lot of stakeholders can make money and deliver value at the same time.
      Happy Republic Day to u too

      1. Vishal Sanjay says

        Ya I agree most of the smart phones in India are very expensive, and not affordable by the common man, so the Indian telecom companies still have a chance to capture the market, but they’ll have to be very quick and highly innovative.

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