Strategic Thought Transformation - The IIPM Think Tank
Strategic Thought Transformation - The IIPM Think Tank
Strategic Thought Transformation - The IIPM Think Tank
Create successful ePaper yourself
Turn your PDF publications into a flip-book with our unique Google optimized e-Paper software.
S T R A T E G I C I N S I G H T<br />
should have a large population, rising per<br />
capita income and relatively low penetration.<br />
Both India and China fulfill these requirements,<br />
by population size and growth<br />
rate. In 2004, China was the world’s most<br />
populous nation with 1.3 billion inhabitants.<br />
India was second with 1.1 billion<br />
people, followed by the United States<br />
(293 million), Indonesia (218 million)<br />
and Brazil (179 million). While China’s<br />
economic growth rate was 10.1 percent,<br />
India’s amounted to 6.9 percent. 2<br />
<strong>The</strong> mobile growth trajectories of these<br />
two great nations, however, differ. At the<br />
end of 2005, there were 2.1 billion mobile<br />
subscribers worldwide. <strong>The</strong> number of<br />
mobile subscribers in China was estimated<br />
at 400 million; in the US, at 195 million;<br />
in India, at 60 million. <strong>The</strong> penetration<br />
figures were 31 percent, 66 percent and<br />
6 percent, respectively (Figure 1). <strong>The</strong><br />
US mobile market is rapidly maturing,<br />
whereas, in China and India, the volumes<br />
are growing explosively, by 5 million new<br />
subscribers on a monthly basis. In China,<br />
the growth rates will begin to stabilize in<br />
the next two to three years. In India, the<br />
mobile revolution has barely begun.<br />
India’s Mobile Marketplace<br />
Though the road has not always been easy,<br />
Indian telecom sector is often perceived<br />
as the ‘poster-boy’ of the New Economic<br />
Policy (NEP). Market-oriented reforms<br />
have provided a powerful boost in the<br />
telecom sector, not least<br />
because of the influence<br />
of India’s booming technology<br />
sector whose success<br />
depends on a sophisticated<br />
communications<br />
infrastructure.<br />
In China, the mobile<br />
revolution was triggered<br />
by the great reforms of<br />
Deng Xiao Ping in the<br />
early 1980s. In India, the<br />
seeds of the transformation<br />
derive from Rajiv<br />
Gandhi’s reforms in the<br />
1980s. <strong>The</strong> new era was<br />
initiated by the great reforms<br />
of the Narasimha<br />
Rao Congress government<br />
in the early 1990s. Through these years, the<br />
macroeconomic policies of Dr. Manmohan<br />
Singh supported the change.<br />
In China, the mobile industry took off<br />
in the early 1990s; in India, in the early<br />
2000s. <strong>The</strong> first decade was sluggish in<br />
both nations, and the growth really took<br />
off in the second decade. Macroeconomic<br />
stabilization was necessary, but not sufficient<br />
for competition. Exponential growth<br />
in teledensity became possible only with<br />
adequate and persistent microeconomic<br />
reforms - deregulation, liberalization and<br />
privatization.<br />
In the contemporary Indian mobile value<br />
system, the current key players comprise<br />
mobile operators, equipment manufacturers<br />
(handsets, infrastructure), as well as<br />
component suppliers (Figure 2). <strong>The</strong> longterm<br />
future of the industry depends on the<br />
success of value-added services, and the<br />
convergence of mobile communications,<br />
media and entertainment, as well as information<br />
technology.<br />
Mobile Equipment<br />
Manufacturers:<br />
From Imports to Localized<br />
Production and R&D<br />
Equipment manufacturers arrived in India<br />
in the mid-1990s, when the industry made<br />
a slow start. Initially, great expectations<br />
were followed by great disillusionment,<br />
due to government policies, high licensing<br />
fees and absence of regulatory clarity. With<br />
sluggish growth, mobile phones reached<br />
the 1 million milestones only in 1998.<br />
Things changed a year later, when the<br />
government’s ‘New Telecommunications<br />
Policy’ (NTP99) allowed unrestricted private<br />
entry into almost all mobile service<br />
66<br />
STRATEGIC INNOVATORS<br />
An <strong>IIPM</strong> Intelligence Unit Publication