According to eMarketer, India will become the second largest smartphone market by 2016. It will surpass the United States and will have more than 200 million smartphone users. The top 5 smartphone vendors include Samsung, Micromax, Lava, Karbonn and Motorola, all of these essentially riding the price bandwagon. As the battle for greater market share further intensifies with consumers having very little to choose from similar priced phones, the company that maximizes a robust content delivery strategy will have an opportunity to increase “consumer stickiness” and in turn post sale revenues, will emerge as the winner.
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The challenge: the absence of a post-sale revenue model
As the Indian market gets flooded with a plethora of smartphones, the biggest challenge that mobile manufacturers face is customer retention. It has been observed that smartphone users in India change their phones within 12 to 24 months. This indicates that mobile vendors are unable to develop an ecosystem of post-sale offerings that will keep the consumers engaged into a long term relationship. Let’s take the example of DTH service to further illustrate this point.
All DTH services (Tata Sky, Dish TV, Airtel Digital, and Reliance etc.) work on a package/plan basis. Customers are first charged for a basic set of channels. From there on, customers can choose and add channels to their basic package, purchase movies and games as per their preferences and then pay as they go. Thus, a robust content-driven strategy enables DTH service providers to have a great post-sale pricing model in place, beneficial for the consumer as well as the service providers.
However, what is a common place in the DTH industry is non-existent in the mobile industry. None of the ODMs, OEMs and brands have a strong post-sale revenue model in place. Consumer phones are still not equipped with dynamic platforms that would allow them to go beyond the conventional features and services and access more value added consumer offerings.
Creating a content ecosystem: the way ahead
Continuing with the earlier cited example of DTH services, mobile device manufacturers must focus strongly on creating a comprehensive content ecosystem that spans across the entire content spectrum comprising of video, audio, games and even cloud learning.
According to a 2014 report published by comScore and Millenial Media, 56% of the online content is now consumed through smartphones (44%) and tablets (12%). With the numbers only set to increase, mobile device manufacturers must seriously start focusing on setting up a content-driven revenue model.
Think of a scenario wherein ODMs and OEMs offer audio/video streaming services for the consumers. For a mobile manufacturing company that let’s say sells 15,00,000 devices per month, even a 10% attach rate driven by the video or audio stream service would mean that the company is looking at retaining a minimum of 1,50,000 (approx).
We can already see this model coming up in the TV industry with the emergence of content apps like Hotstar. Almost all premium channels are now gathering under the umbrella of Hotstar wherein viewers can watch all their favourite TV shows, movies and sports events under one roof. Similar services by mobile manufacturers would see consumers get a big incentive to continue with a particular brand/vendor as they have ready access to their favourite content right on their device.
This can be extended to other premium content modules as well. Mobile gaming is one of the biggest marketplace with almost 50 million games being downloaded every month from the Google/Apple app stores. Most of these games are free with in-app purchases. Currently, games in India are wholly under the monopoly of gaming companies that develop and release them on the app stores. However, a partnership between mobile manufacturers and gaming companies would enable ODMs and OEMs to further monetize the gaming segment by increasing their share in the in-app purchase revenues.
Also, this can be a significant reason for consumers to continue with the same device manufacturer or brand, even if they want to switch their handsets. Gaming enthusiasts would prefer to opt for new handsets that would allow them to continue playing from where they left, a huge opportunity that no device manufacturer has tapped till date.
Powering digital education
As India wakes up to the power of digital education, device manufacturers need to prepare for delivering specific educational content and services. Devices must be equipped with educational tools that allow students and teachers to access learning materials and resources, check assignments and performance reports and connect with fellow students and teachers in a seamless manner. Mobile devices must offer tools that allow a more personalised experience for the students while teachers should be able to interact, communicate and collaborate with multiple students from a single interface.
LTE in India: the game changer
Till date, one of the biggest reasons for ODMs and OEMs to shy away from opting for more robust mobile platforms and content models is because of the low data connectivity and speeds. Mobile data connectivity, even with 3G, is still not on par, and does not allow mobile vendors to push for extensive content-based value added services.
However, all this is set to change. With Airtel set to introduce LTE in India by the end of 2015, the mobile industry would undergo a whirlwind change. Thus, this means that for ODMs and OEMs it is time to invest in an ecosystem of differentiated products and services that focuses on a concrete post-sale revenue model.
ODMs and OEMs must look to equip devices with a more fluid and secure operating systems that support a range of customizable features and user-targeted apps. Mobile vendors must look to deliver a more personalised experience to the user, not just in terms of UI, but also with respect to the content delivery. While the stock Android platform gave limited flexibility to device manufacturers, the emergence of custom ROMs is set to change things drastically. Custom ROMs like Cyanogen, Oxygen and KratOS have emerged as a great alternative for device manufacturers to truly take the consumer mobile experience to the next level. Platforms like KratOS offer a secure environment that can drive a range of features and functions ranging from videos, audio, cloud services, secure mobile walletsand seamless third-party app integration.
So while the consumers are now ready to go to the next level of mobile experience, it is vital that mobile device manufacturers take the cue and act. Needless to say, the early movers would gain the advantage while for the late starters it could well be a case of too little too late.
(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory.)