Google?s buyout of Motorola Mobility in a $12.5 billion deal last week had investors and analysts across the globe gushing over its implications on the mobile handset space. While India?s smartphone market, one of the fastest growing in the world, could present the company with a big future opportunity, a mobile driven explosion in internet access, may make India the largest market for much of Google?s products portfolio in the next two to three years.
As competitors gain market share in the US search engine space, the Indian user base for Google products is still growing phenomenally. Gmail has the largest number of users here, and within a month of launch, India has become the second largest base for Google?s new social networking platform Google+, according to data from digital media intelligence company ComScore.
Says Rajan Anandan, managing director, Google India and vice president?sales and operations, ?Last year India reached the 100 million internet users mark, making it the third largest internet market in the world. If we look at the numbers, there is tremendous potential here.?
It is estimated that by 2014, India will have 300 million internet users, surpassing USA. It will be second only to China, which has been a consistent pain point for Google due to regulatory issues. With this in view, the company is searching hard for ways to stay on top in India, pushing its resources to do everything from developing India specific products to educating this increasing army of users.
Says Vinay Goel, country head, products, Google India, ?Clearly, if you become the largest market outside of China, in all likelihood, every application, every product that you build, Indians will be the top users.
We would have to think in a way and build products in a way that suits the needs for these users.?
One of the key pointers in developing products for the Indian market is the rate of growth in mobile handsets. Mobile as a platform, for the internet overall, and for Google?s products, is growing at a much faster pace compared to desktops and other devices. Close to 40 million mobile data users currently use the internet on both desktop and mobile devices. Over the last two to three months, mobile data access has picked up, and it is expected that a year from now, factors such as 3G, cheaper smartphones and broadband, will translate into people accessing the internet for the first time through their mobile phones, and not through desktops.
?Today, mobile advertising is bigger than social media advertising. The next 200-300 million users are all going to be ?mobile first? users. At present, there are 150 million data capable phones in India, but only 50 million are activated. So, the opportunity is huge as there are 100 million users walking around without their mobile internet being activated. We are working on getting local strategies by partnering with telcos,? says Anandan.
This shift in platform usage has led to a reversal in Google?s R&D mantra, from ?desktop first? to ?mobile first?. Some of the products that have recently come out of Google?s India labs, such as the SMS Channel, which is essentially a ?Twitter on SMS?, demonstrate this principle. The product enables a person to subscribe to a feed created by an individual or organisation for free, through which they can receive daily updates on their topic of interest.
?We have tens of thousands of channels, that send SMSs on a daily basis, for free. There are public groups for information, newspapers have set up channels, individuals, schools, NGOs; people have set up to channels to reach out to farmers,? says Goel. As a result of mobile internet access, the company also expects cloud based products, such as the Chrome operating system, which help cutting down hardware requirements, to find a tremendous market in India.
Some of their other products, such as a translation tool that automatically converts English language websites into India language sites, and search in several vernacular languages, are also being targeted at generating more local content, which will be key, as internet penetration reaches the non-English speaking masses.
?What we really need is more websites in local language. We need more people building websites that are in local language. Whether it is magazines, newspapers, government sites, and that is not happening. That part of the ecosystem is not developed. We are trying to get this to reach a critical mass, through translation technologies, input technologies, where we can give you an onscreen keyboard for different languages, and a bunch of other things,? says Goel.
But more than its consumer business, analysts believe that how it drives enterprise solutions, which not necessarily Google?s forte yet, will be the major plot in its India story. Apalak Ghosh, analyst, emerging technologies, CyberMedia Research, says, ?When it comes to enterprise products, companies like Microsoft, SAP, Oracle, would come to mind; Google might not be ?the? company from that point of view. But they are very keen on building the story around enterprise software. This is where the focus is. They have a host of offerings, most of which is typically on cloud. Knowing what Google can do, they?re not likely to miss out on the opportunity.?
The fact that it has been hiring thousands of engineers in its Hyderabad centre for its enterprise business, is a fair indicator of Google?s interest in the space. It had launched its cloud services business 3 months ago, and hired its first sales team 15 months back, and according to Anandan, it is already its fastest growing business in the region. ?Given the nature of our cloud offering, we have 2,00,000 enterprises in India who are using Google Apps. It is my fastest growing business,? he says.
While small and medium businesses form a large chunk of these 2,00,000 enterprises, Google also counts mid-market, as well as large companies like Punj Lloyd, and government agencies like the State Bank of India amongst its partners here. ?We have different strategies for large enterprises, mid market companies and small businesses. In large enterprises, we are building a sales force. In mid market business, we are taking a channel partner approach. So we have a dozens of channel partners and soon we will have 100s of them. On the SMB side, we have partnerships with one telco (Tata Communications), which we will expand,? Anandan says.
Google?s most recent foray, which is into the mobile handset space, may not have an immediate implication on India. However, statistics point to realities that would make it hard for any smartphone maker to resist the expanding Indian opportunity.
According to a research note from CyberMedia, smartphone sales in India is likely to grow 100% to 12 million handsets in 2011. The share of smartphones in the total mobile handset market, is likely to increase from 3.6% (out of 167 million handsets) in 2010, to 5.7% (of an estimated 210 million) in 2011. Android, the operating system which Google acquired in 2005, has captured 33% market share, and is likely to surpass the current market leader, Nokia?s Symbian, by the end of this year.
?This acquisition would have significant implications from an India market standpoint. Enterprise mobility is on the rise, and India is one of the fastest growing tablet markets in the world. Google can unleash the potential of this market with Android & Moto combination (Xoom),? says Praveen Bhadada, director, Zinnov Management Consulting. He adds: ?Also, with better hardware integration capabilities of Android, other Android hardware devices could witness better penetration in the market.?
Google?s India team did not want to comment on how the Google-Motorola alliance would translate into its India operations. While from the products perspective, India?s significance is well defined, its capacity as an advertising revenue generator for Google is hard to gauge, as the company does not provide country specific financials. However, Google officials say that Indian companies have started to see its advertising products from a brand building perspective, and not just a sales perspective, which is driving online advertising overall. It?s live YouTube broadcast of the ICC Cricket World Cup earlier this year, for instance, brought some traditional mainstream media advertisers to the internet for the first time.
?What we found during the YouTube World Cup broadcast this year, is that a lot of the FMCG companies, that have never really advertised online, or on Google, suddenly became very interested. the internet is evolving into a brand building tool, and not just about ?click on my website and buy?, the share of online advertising is growing, and it is growing the fastest,? says Google?s Goel.