Sunday, August 21, 2011

Have Breakfast… or…Be Breakfast!*

Who sells the largest number of cameras in India?

Your guess is likely to be Sony, Canon or Nikon. The answer is: None of the
above. The winner is Nokia, whose main line of business in India is not
cameras but cellphones.

The reason is that cameras bundled with cellphones are outselling standalone
cameras. Now, what prevents the cellphone from replacing the camera
outright? Nothing at all.

Try this. Who runs the biggest music business in India? The answer is
Airtel. By selling caller tunes (that play for 30 seconds) Airtel earns more
than music companies do by selling albums.

Airtel is not in the music business. It is the mobile service provider with
the largest subscriber base in India. That sort of a competitor is difficult
to detect and even more difficult to beat. By the time you have identified
him, he has already gone past you. But if you imagine that Nokia and Bharti
(Airtel's parent) are breathing easy, you couldn't be further from the

Nokia has reportedly acknowledged that it missed the smart-phone bus. It
admits that Apple's iPhone and Google's Android can make life difficult for
it in the future. But you never thought Google was a mobile company, did
you? If these illustrations mean anything, it is that there is a bigger game
unfolding. It is not so much about mobile or music or camera or emails.

The "Mahabharat" (the great Indian epic battle) in this context is: "What is
tomorrow's personal digital device?" And, a related question: "Who is my

In 2008, who was the toughest competitor to British Airways for
international flights in India? Singapore Airlines? Indian Airlines? Maybe,
but there is a more interesting answer: The videoconferencing services of
Hewlett-Packard and Cisco.

Senior information technology executives in India and abroad were compelled
by their headquarters to use videoconferencing to keep travel costs in
check. Of course, there could be a rebound in travel. But to think that the
airlines will be back to their previous business post-recession is something
I would not bet on. In the short term, yes. In the long term, it is a
resounding no.

Remember, if there is one place where Newton's law of gravity is applicable
besides physics it is in electronic hardware, where prices consistently
fall. Between 1977 and 1991, prices of the now-dead VCR crashed to one third
of their original levels in India. PC prices also dropped. If this trend
repeats itself, then videoconferencing prices will also crash. Imagine the
fate of airlines then.

India has two passions. Films and cricket. The two markets were distinctly
different. So were the icons. The cricket gods were Sachin and Sehwag. The
film gods were the Khans (Aamir Khan, Shah Rukh Khan etc). That was when
cricket was fundamentally test cricket or at best 50-over cricket.

Then came the Indian Premier League and the two markets collapsed into one.
IPL brought cricket down to 20 overs, reducing the game to the length of a
three-hour movie. Cricket became a competitor to film. Desperate multiplex
owners requisitioned the rights for screening IPL matches at movie halls to
hang on to the audience. If the IPL were to become the mainstay of cricket,
films would have to sequence their releases so as to not clash with IPL
matches. As far as the audience is concerned, both are a three-hour
"tamasha" (entertainment). Cricket season might push films out of the

Look at the products that vanished from India in the last 20 years. When did
you last see a black and white movie? When did you last use a fountain pen?
When did you last type on a typewriter? The answer for all the above is "I
don't remember!"

One final illustration. Some 20 years ago, what were Indians using to wake
them up in the morning? An alarm clock, that monster of mechanical springs.
It had to be physically wound up every day. It made so much noise that it
woke you -- and the rest of the colony. What do we use today? Cellphones. An
entire category of clocks practically disappeared without warning.

The boss of an IT company once said something interesting about the animal
called competition. He said "Have breakfast …or…. be breakfast"! That sums
it up rather neatly.

—Dr. Y. L. R. Moorthi is a professor at the Indian Institute of Management
Bangalore. He is an M.Tech from Indian Institute of Technology, Madras and a
post graduate in management from IIM

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