India's Internet users will increase fivefold by 2015, and more than three-quarters of them will choose mobile access.
Almost 1,500 years ago, Indian mathematicians, including Aryabhata, Brahmagupta, and Pingala, transformed mathematics by conceiving the rules of the binary numeral system. While those rules today lie at the heart of the code powering the Internet, India has relatively few Internet users: just 7 percent of its population is connected to the Web, compared with 32 percent in China and 77 percent in the United States.
It's no secret that infrastructure development in India is a real challenge.
McKinsey research on the country's 11th five-year economic plan2 suggests that while the government has spent what it intended to, infrastructure (such as electricity connections and road building) is significantly behind schedule. More troubling
is the reason: beyond the frequently mentioned issue of land ownership, delays in building "hard" infrastructure often stem from a lack of "soft" infrastructure, such as educated, skilled workers with project-management capabilities. These delays should encourage the leap to mobile-Internet access, perhaps delivered by the private sector. Mobile operators are aggressively
rolling out networks across the country, including an impending 3G network, following recent auctions in which companies spent almost $30 billion acquiring telecommunications spectrum.
The government also is making large investments to overcome other hurdles. In particular, it is sponsoring efforts to give citizens unique identification numbers that will, for instance, allow identities to be authenticated with mobile devices. That will facilitate wireless banking and other services, such as e-health care. In addition, the ability to identify all citizens means that
subsidies and incentives can be delivered to them efficiently. The National Rural Employment Guarantee Authority, for example, is supposed to distribute $8.5 billion to citizens in 2011. In the past, significant portions of such funds have failed to reach the recipients. The digital opportunity may substantially eliminate this problem, and citizens spurred by the prospect of
finally getting what's due to them should make the leap to mobile-Internet services such as e-commerce. Additionally, our research on e-payments has uncovered significant opportunities to drive down costs.
Embracing the digital opportunity
The most formidable hurdle to the realization of India's digital promise is finding a sustainable way to deliver attractive returns for content companies at affordable prices for consumers. India differs from other Asian mobile-Internet leaders, such as Japan and even China, where access charges generate enough revenue for operators to finance the ongoing creation of value-added services. India's telecom industry structure and poorer population are putting pressure on access revenue, and it's unclear whether telecommunications companies will be able to extract sufficient profits from their mobile value-added services and
entertainment or from their nascent local-advertising-driven networks to warrant continued large investments. To overcome this issue, private and public companies, as well as India's government, must address two priorities.
Mobile content and services
The first step toward generating more profits from content and services is the creation of offerings that are compelling and easy to access and use, much like iPhone applications. That will require companies to raise their game in editing, visual merchandising, and marketing. More local-language content also is required, and it should be presented in new ways: voice and single-touch mobile-Internet access are essential, particularly to overcome illiteracy and a lack of familiarity with the Internet.
Making money from content
specific contexts, such as shopping coupons received by mobile devices as consumers pass certain stores.
All participants—public and private—have a role in unleashing the digital revolution's true potential. Governments can promote access, undertake thoughtful regulation and oversight, and deliver public services such as information, health care, subsidies, and incentives. Banks and financial-services companies can enhance their online presence to build real-time, personalized relationships with customers. Insurance companies can address their high-cost, multilayered business systems and examine
opportunities—for example, using the Internet to deliver product information and training more effectively. Advertising agencies can adopt new approaches to developing concepts, pricing, and measurements of effectiveness. And marketers can better address the way consumers now make purchasing decisions, finding new analytical approaches to the allocation of spending and the management of "buzz" and word of mouth.
Binary mathematics lies behind the technology that underpins the Internet. After more than 1,500 years, India could again lead the world in a technological revolution. The consumer demand exists. The opportunity is real. Is India up to the challenge?
source : www.mckinseyquarterly.com