Arvind Jha speaks on how App Store Economy is taking shape

NASSCOM EMERGEOUT Special

Arvind Jha, Movico CEO, and member of the organizing committee of the fifth edition of NASSCOM EMERGEOUT Conclave, Delhi, August 25, 2010, tells Venkatesh Krishnamoorthy, chief evangelist, YourStory, why the mobile app space is interesting and how the conclave is going to present to the audience on the economy building around it. He also has initiated a session on possible funding for startups born out of his own experience of VCs not favoring his idea with potential.

He succinctly explains the broad contours of the conclave’s app store theme in this chat.

Read on...

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The App store economy

The economy driven by Apple iStore seems to have extended beyond Apple to Nokia, BlackBerry, Android, RIM, etc. Even Vodafone and Airtel have app stores. Third party players are also involved. This trend is similar to retail where large, single brand stores are giving way to stores having multiple brands. This economy is interesting. Software developers had challenges in selling and marketing their products. They were very good at building the products. The gap was in understanding customer needs. You have to be market savvy like Apple to sell your product. If you find a sweet spot, you need not spend a lot of time on distribution. Lot of Indian apps are getting published now. Many people are providing services to build apps. As 3G evolves and as these third party app stores take stage, Indian app developers can build, sell, and market their own apps. In the US, app pricing is like a coffee or a sandwitch price. So the user is not focused on the price of the app. It is not priced $299 or $399 or something but $1.99 or so. So this encourages more people to try the app and use it if they like it. In this consumption pattern, your thinking on apps is entirely different. This is similar to desktop apps in that it is more of value. There is a new movement taking place. So it would be interesting to talk about it. Participants in the conclave would brainstorm on what is needed in this space, if I start a business what should I do, and how will I go about doing it like selling, licensing, etc. My role is focused on the app store piece in the conclave.

Session on funding for startups

I have actually helped put together a session on funding for startups. In the last three or four years, the VC funds of the Silicon Valley have set up offices in India. There is expectation along with excitement that this move will set up a considerable amount of VC activity for startups. Somehow this has not happened. The session has a big role to play why they got cautious in the last two years.

Indian VCs not for early-stage investments

Many VCs are not favorable towards investing in early stage, risk investments. Their profile is more towards late stage entry. Many U.S. funds have a risk strategy. Most of the Indian funds have not adopted that kind of a strategy. They are very cautious. This has created frustration among entrepreneurial community that VCs are not supporting early-stage investments.There are multiple reasons. My personal view is that most Indian VC firms are run by professionals rather than entrepreneurs. A professional is more cautious than an entrepreneur. He has to be accountable. In the US, the VC community is populated by entrepreneurs who were risk takers themselves. If his million dollar portfolio is spread across five investments, apparently $800,000 investment is going to go down the drain and the $200,000 investment might result in $2 million returns. But the professional wants 80% success track record. On the other hand, in India, startups have undefined ideas. The market is not looking up in the last two years and the caution is understandable. Notwithstanding this caution, there is frustration.

Government schemes

There is a scheme I am aware of from the Ministry of Small and Micro Enterprises (MSME). This allows for government-backed collateral-free lending. One of the interests for me in the funding session is to see if SIDBI, ICICI, or Citibank can help startups. Citibank has a scheme where they provide funding against a collateral of some kind of an equity. Can entrepreneurs look at debt funding as an option? Can we start a trend where 10 companies start raising funds this way? The MSME fund is a Rs. 1 crore fund. Can we start looking at government initiatives like this to help the entrepreneurial activity in India?

3G, Mobile, Internet, funding--the conclave’s focus

How do we help the EMERGE community? By focusing on opportunities. We think opportunities are aplenty in 3G mobile space. We sort of want to put pressure on the VC community by stating that debt funding also can get going.

Internet is another option. In India, the penetration and bandwidth are becoming pretty interesting. Lot of companies are showing us the way not only from a commerical or B2B sense but also from a e-government perspective apart from focusing on niche areas like rural banking. That’s my association with EMERGEOUT Conclave at Delhi so far.

Mobile app space

As far as apps are concerned, the cherry picking is happening in the smart phone category. There would be percolation down to other categories as well.

Why is app store economy growing? Look at three indicators. 1. No. of apps getting submitted on a weekly basis across all app stores including large corporates putting up skins for their products. 2. Consumption pattern -- the kind of people who are using this product. 3. The revenue that is made out of mobile apps. This gives an idea about market space. If you look at two quarters, the trend line is very strong. This looks pretty much like a new economy.Individual groups or enterprises in app space now?

This is pretty much a novelty now. Both are likely to exist. It is more like time pass, fun, games for now. Over time, we could see well-established publishers, aggregators, and development of supply chain base -- development, selling, and marketing -- happening. Structuring will happen over time.

Consumption of apps

The customer base is across age groups. Smart phones are used by corporate professionals mostly. Different cross-sections are people are using apps all over. You will be surprised to see people who are 40+ using the apps as they have more spare time!

Emerging economy around apps

Someone from a consulting company would present on the contours of this economy at the conclave. We will involve people from the three provider segments -- technology or device provider (iPhone, Nokia, BlackBerry), service provider (Airtel, Vodafone), independent app stores -- and a couple of publishers who publish apps. Through this participants will get an idea about what they can do in this space.

About Arvind Jha

Arvind Jha has over 21 years of software product development and business experience in senior management roles with leading Indian and US software companies. Over the years Arvind has built, managed and led significant engineering teams, has spearheaded business and technical development of multimedia brand products, and has been involved in all aspects of remote engineering from component delivery to full product engineering and solutions implementation.

Before launching Movico Technologies, Arvind was the President of Monsoon Multimedia where he was involved in developing a technology for streaming television/video wirelessly and via the internet – which won the “Product Innovation Award” from NASSCOM in 2007.

Before Monsoon, Arvind was with Adobe India where he was instrumental in building the Adobe India R&D campus from under 10 engineers to over 400 in just 7 years. At Adobe, Arvind led the team that developed PageMaker 7.0 which is widely recognized as the first global product engineered out of an India campus – starting the trend of building full products in Indian development centers, not just at Adobe, but in other companies as well.

In his pre-Adobe days, Arvind worked as Principal Software Engineering at Polaroid India Private Ltd., leading the team responsible for delivering key software components for digital cameras, printers and imaging applications.

Arvind received a B. Tech (Honors) in Computer Science from the Indian Institute of Technology (IIT) Kharagpur, and is a national rank-holding scholar at the school level.