Mobile internet boom bypassing Indian tech firms

Indian technology firms seem to be unable to capitalise on the mobile revolution in the country, failing to repeat the success of the software sector in the global IT services industry.

Observers say lack of standards in telecom equipment and poor domestic mobile internet infrastructure are acting as barriers for local companies against cashing in on the emerging mobile internet opportunity.

Every month India adds about 8 million new mobile telephone subscribers, making the country the fastest in terms of subscriber growth in the world.

In the June quarter of 2009 about 9.3 million urban Indians were using mobile phones to access the internet, a growth of 6% from the quarter ended May 2009.

“Mobile internet is synonymous with 3G. Equipment makers on 3G such as Motorola, Ericsson, Huawei and NSN have proprietary technologies which are not standards based, unlike the IT sector. Thus, you would see a telco which buys their equipment engages them again for procuring various services.

It is difficult for an external service provider to develop applications, etc on those technologies. The costs would be huge and thus it is not a place to get into,” Alok Shende, founder of the Mumbai-based Ascentius Consulting, said.

In the IT sector, software follows application programming interface (API) to enable interaction with other software. This enables external service providers to devise applications based on the API.

“The API driven IT sector has given rise to the Indian IT services sector,” said Shende. 

Others, such as Rajesh Jain, founder of Netcore Technologies, question the slow pace at which India is moving to adopt 3G.

“Forget mobile internet, tell me how many desktop internet companies do we have in the country? Our infrastructure is a big handicap. The Western firms are familiar with internet and 3G for a long time now. They have an early-mover advantage.”

But all is not lost. A huge e-commerce opportunity lies in the mobile internet segment.

In its research report on mobile internet dated December 15, 2009, Morgan Stanley Research said that in 2008 global desktop internet revenue (advertising plus e-commerce) of top 50 internet companies was around $91 billion while it was $37 billion for mobile internet.

The report said that while about 40% of desktop internet revenues came from advertising, 73% of mobile internet revenues came from e-commerce.

“Emerging markets have a material potential for mobile internet user growth. Low penetration of fixed-line telephone plus already vibrant mobile VAS means that for many users and small and medium enterprises, the internet will only be mobile,” it said.