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The Wireless Rush Wireless-software is the destination of choice for a rash of Indian start-ups. But few have what it takes to last in a largely out-of-India market. By Ashutosh Sinha
''include the development of core software stacks (including Bluetooth), as well as porting of existing embedded software to multiple target platforms''. Three is a good number, so here goes. The Hyderabad-based Infocomm Solutions expects its turnover to grow from Rs 6 crore in 2000-01 to Rs 20 crore in 2000-02. A staggering 75 per cent of that Rs 14 crore incremental revenue is expected to come from 'Bluetooth training and consulting'. If you're experiencing dotcom déjà vu right now, patient reader, give in to the feeling. Turn on, tune in, and (wait for them to) drop out. It's A Virtual Stampede
Wireless technologies is the newest domain-of-choice of the ungulate-minded. This correspondent found 287 companies of varying pedigree (Editor's note: and this man normally doesn't look too hard) in the first 10 days of his Odyssey. The list is heterogeneous: seasoned software companies like Hughes Software Systems and Sasken, tech hotshops that have received more than a fair share of publicity like Unimobile, Ionic Microsystems, and Impulsesoft, and obscure start-ups with names like Mobyz and Tanla Solutions jostle for space with software-brands like Infosys, HCL Technologies, and Wipro. Wireless-fever isn't a plague unknown to mankind. The Scandinavian countries-the penetration of mobile phones in some of them is as high as 70 per cent-were the first to be infected, and it was as bad as tulipmania. That was in 1999; by the time the fever broke, the market was cluttered with almost 700 companies, mostly funded by mobile phone manufacturers and service providers, and offering a range of wireless solutions.
Today, less than 75 of those companies are around. Companies in India have been more prudent with their investments, but that hasn't stopped entrepreneurs. ''Wireless is a nascent market and some standards haven't been frozen,'' says Vijay Shekhar Sharma, the Chief Operating Officer of One97 Communications. ''After the dotcom downturn, some people thought it was hot.'' Sharma himself did: his company offers location-based solutions for service providers. ''The proliferation of companies is a result of the hype that has been created about wireless; few of them offer any value to the end-customer,'' concedes Milind Agnihotri, CEO, Isolv, a Pune-based wireless solutions provider. That the Indian market can't support all these companies is evident. Telcos and mobile phone equipment manufacturers are realising that consumer adoption cycles for WAP (Wireless Access Protocol), and Bluetooth will likely be far longer than originally estimated. And Indian companies are far removed from the most happening wireless market of them all, Europe, making it extremely difficult for them to be part of consortia that define standards in the wireless domain. ''Maybe Indian companies should focus on the emerging standards related work that is being subcontracted,'' offers Arjun Sethi, an Associate Consultant at Kearney. They could, but only if they stop flaunting their skills in WAP, Bluetooth, WI-FI and other open standards long enough to realise where the opportunities lie. Bowing to the cold logic of numbers, there should be more companies battling it out in the software-for-wireless market. Estimates put the ratio of wireless devices-this includes handhelds, mobile phones, laptops, even wrist watches-to personal computers at 1:2. By 2005, this ratio will be 1:1. That's over 800-900 million wireless devices that will need software.
Cellular service providers (or any other wireless service provider, for that matter) are classic examples of a smart network in which most applications are resident, connected to dumb devices (the handsets themselves), which have little intelligence. Delhi's dominant cellular company Bharti, for instance, offers about 140 applications, each one of which requires software. The operating system domain is the exclusive demesne of the biggies: there are already signs that Microsoft's Stinger and Symbian's (Symbian is owned jointly by Nokia, Ericsson, Motorola, Psion, Panasonic, and a few other companies) eponymous offering will slug it out to be the OS of choice for cellular phones, a repeat of the scuffle in PDA-land between Palm's operating system and the Redmond Giant's Windows CE. There is also a lucrative niche (a large one) in focusing not on the operating system, but on specific software, like browsers for wireless devices. Today, the market for wireless-browsers is dominated by Openwave (formed by the merger of phone.com and software.com in November, 2000). The company's software is used by the likes of Swisscom, Telstra, and 24 other service providers. Then there are equipment manufacturers themselves, like Nokia, Motorola, and Ericsson, which have ventured into software, independently, or collectively, or both. Indian companies do not have what it takes to compete in both markets. They have come into the market early, but not early enough; they lack the relationships with service providers and equipment manufacturers required to succeed; and they have little say in defining standards in a domain where these are still emerging. Thus, their role may be restricted to building software-parts that companies like Microsoft, Palm, and Nokia outsource. And that, as most analysts will tell you, isn't the best way to go about building a competitive advantage. The systems integration segment of the business, too, seems out of reach for the local wiscies (wireless software companies, get it?). Doing a Sapient and advising companies on all aspects of their wireless strategy isn't as easy as it sounds on paper. The presence of a not-insignificant (but it isn't thriving either) domestic telecom market may not help; most Indian cellular companies prefer multinational vendors. Airtel, for instance, bought its cabs2000 billing software from Sema. That leaves smart applications, some focused on rich verticals like banking, telecom, and financial services, and technologies with loads of SA, and this is the market where most Indian companies operate.
The Essence Of Survival When the shakeout happens, and the companies themselves believe it is imminent, the vendors of plain-vanilla technology solutions will be the first to go. That definition encompasses tens of companies building WAP gateways, WAP browsers, Bluetooth protocol stacks, even basic Bluetooth chips. Third Generation (3g) mobile networks and high-speed access technologies like GPRs (General Packet Radio Switching) may make both WAP and Bluetooth widely-accepted, and used standards, but the basic products and solutions built around them will be rendered commodities. ''Companies that continue to focus on these solutions will now disappear,'' says Varun Arora, Senior Director of the Singapore-based Edgematrix, a Unified Messaging Services (UMS) company. And those that somehow manage to hang on will see their margins shrivel. In 1998, the list price of a V5.2 stack (a critical part of any mobile telephony network) was between $250,000 and $300,000. Today it is around $80,000, and some companies sell it for as low as $50,000. The Indian software companies best positioned to ride the wireless boom are those targeting industries like banking, financial services, healthcare, telecom, mobile entertainment, retail, logistics, and location-based services. Says Agnihotri of iSolv: ''Success will be a function of innovating around the standards.'' Even a great stand-alone technology-rich utility won't help. Unimobile is realising that the hard way: in 2000, the company terminated its free unified messaging service to customers; now, its focus is on the enterprise segment. Most Indian companies, though, have preferred to take the easy way out: their focus is restricted to areas that require above-average technical expertise and just that. That could be why every company worth its code is vending Bluetooth stacks and WAP gateways. Companies offering wireless solutions built around specific functions or industries, however, will find themselves on safe ground. Riverrun Software, a company based in Noida, near Delhi is one such: it offers wireless field-solutions like linking a company's frontline sales people to the back-end typically located in the corporate headquarters. Domain-expertise and the willingness to invest in research matter says Vinod Sood, the Head of Engineering at Hughes Software Systems. ''If you are investing in research, you are a few steps ahead of the competition. That will give you a good time-to-market advantage.'' And an understanding of the industry in which the customer operates will help companies move up from being merely component-suppliers to systems-developers. Given that the majority of the wiscies operates in the wireless applications and technologies space, a company with a portfolio of offerings will have an edge over its competitors. Openwave CEO Don Listwin, for instance, has often articulated the need to line up a suite of offerings to hedge against the risks inherent in being just a mobile-browser company. The easiest route to building a Leveresque portfolio is acquisitions. There have not been many in the Indian context thus far, but Sethi believes there's enough logic for M&As: ''You are in a growth sector, the players are fragmented, and the best thing to do is to build critical mass so that you don't look like a mom-and-pop store.'' Indeed some companies like Sapient, which has reportedly been discussing deals with Indian companies, and Ways India, which actually acquired a company, McDonell Associates in the US, aren't averse to acquisitions that will enhance their competitive position. The number of companies that feel this way
is certain to grow as the realisation that competing in the wireless
software market isn't the song it appeared to be strikes home. Just
because it is wireless doesn't mean there are no strings attached. |
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Bluetooth,
the much-hyped wireless device-to-device standard created by a consortium
of mobile telephony companies-not to be confused with Bluebeard, the
much-married character created by French writer, Charles Perrault-may be
named after the 10th century Danish King Harald Blatand, but a clutch of
Indian companies, small and big, would have us believe that it is as
Indian as Butter Chicken and Malabar Adai. "We are the toppers in the
R&D area of Bluetooth technology and develop applications for every
(sic) wireless client (in the world),'' brags Kiran Varanasi with
schoolboyish enthusiasm. Varanasi is the CEO of a Hyderabad-based company
called Wilsys Technologies which, according to its spokesperson Harihar
Thota, ''doesn't have any overseas clients yet''. ''Our services,''
declares the website of the Arthur D. Little-incubated MobiApps, a
Bangalore-based wireless applications company,
