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India Tomorrow? Day After?

India Today has a cover story on Wired Generation – dont know whether its humor or satire of India’s most respect editorial team to have claimed “most of India’s 200 million middle class homes now have computers”! And this is a managing editor… not once but twice in the same article!

Now just wait and watch entrepreneurs use this “fact” in their pitches :)

  • http://www.gizmobazaar.com sidharth

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  • Sharath

    Point is why sould any Indian middle class have access to a computer – to check emails and chat..and that to in English. And true Satyam iway and Reliance websomething are good enough.

    Frankly where are the applications and services for Indians to use, its a fact that most of us can only interpret english and not really feel secure about exchanging documents or even agreeing to online terms and conditions. And not many(any!) companies offer services that people really want.

    Firstly we need to develop services that indians businesses, banks and individuals need. Contact me if you are interested

    admin@tughlaq.com

  • http://tropicalmanager.blogspot.com Deepak Shenoy

    In big cities the trend of cyber cafes seems to indeed be on the decline as compared to a few years ago: http://timesofindia.indiatimes.com/articleshow/297520.cms. But this is not quite so, from my experience, in places near colleges like Mt Carmels – if the cafes are losing business it’s because of the competition. With computers becoming so cheap and broadband being inexpensive, new cafes can offer lower rates and better stuff like flat panel monitors etc. at the same prices.

    The article still says:
    ” While this is the case in the metropolitan cities, in smaller towns the business is flourishing”.

    Here’s some more figures: http://www.iamai.in/section.php3?secid=15&press_id=1357&mon=11

    It seems like about 4 million people (collated from the percentages and divided appropriately) access the net from home. In delhi and blore, 42% overall still use Cyber Cafes, and the collated figure for cyber cafes overall is 4.8 million. That’s quite up there with my original assessment of 2 million Internet connected PCs at home (2 people per “home”)

    What’s dissapointing is the percentage of internet commerce users in the last graph: added up, the figure comes to less than 400,000 people. That’s the market. And the rupees spent is dismal at the moment: http://www.iamai.in/IAMAI_ECommerce.html – but you know what, this is a huge growth opportunity. 15 years, and we will be right there. I don’t mind the wait, really; but VCs will, I think. What the heck, time to bootstrap.

  • http://www.canaan.com Alok Mittal

    ok Ram, since you have told me not to tell you all the important stuff, let me make some up :)

    As a VC, you get to see a breadth of whats happening, in my case, globally. It also gives great exposure to hundreds of entrepreneurs, and fairly detailed view of companies and entrepreneurs one is engaged with. As an entrepreneur, one is , correctly, very focussed on one problem.

    Actually, VCs can land up calling shots, but they never want to do it with high quality entrepreneurs. Remember that if VCs are calling shots, something is already going wrong.

  • ram

    Alok,

    Sorry for going a bit out of context but i have this question which you are in a position to answer.

    Why do entrepreneurs become VCs ?

    And please don’t tell me “its about giving back to community and stuff”.

    Is it because as an entrepreneur one gets to see that it is the VCs who call the shots and finally walk away with the money (in most of the cases) or are you going to say that VCs are also entrepreneurs and stuff ?

  • Rohit

    Rediff run a story on the decline of cybercafes sometime back
    From one of the owners of cybercafes below quote.

    “Now, everybody has broadband connection at home. They do the chatting and surfing at home. With Wi-Fi, even the floating crowd got reduced. Those who come to cafes are mainly the floating crowd, and not those who live here. I don’t know what the future of Net cafes is,” Kothari sighs.

    Till recently, he used to get families who wanted to talk to and see – through microphones and web cam — their sons and daughters abroad.

    “Now, many of these families have all these gadgets at home. So, the number of such customers also has come down.”

    http://specials.rediff.com/news/2005/nov/25cybersld4.htm

  • Savita

    Funny, I notice this discussion. Just saw the cover page of India today while walking in the mall. Almost was going to buy the mag, but now looking at the discussion, it was a good idea I didn’t buy it.

    Serious journalism in India is still ways behind.

    Now the question of 200m households is quite a bogus figure, because the definition of middle class itself is quite complicated in India. anyone earning atleast 10k a month could be considered middle class, because they are above the poor & below poverty line who earn much less than that. Those who earn more than 50k would be upper middleclass, and so on.

    Also, my own observation has been that I am seeing some decrease in the number of cybercafes. I don’t have figures, but just from 2001 to 2005, its not that easy to find cybercafes as it used to be.

  • http://tropicalmanager.blogspot.com Deepak Shenoy

    Cybercafes and dead? Urban penetration of PCs is still less than 15% from my experience. Heck, in Bangalore, with an urban population of 7 million, there are less than 300,000 home PCs.

    Cyber cafes are the choice for a huge number of people, which is why the Satyam Infoways and the Reliance Webworlds are doing so much business. In fact there are “remote” courses (basically those that involve long distance learning) that enforce testing Reliance Webworlds (including the IIMs!)

    Also, the next big thing in cities (and even small towns) nowadays is to use cyber cafes for stock trading. And this is so popular that broker have set up their own terminals for the day traders, becoming vertical versions of cyber cafes. The money is in the brokerage, not in the lending of a computer for a few hours.

    But the masses have still not adopted home computing. The masses do not include people who sip coffees at barista or pay Rs. 250 for a movie ticket or eat at restaurants where each dish costs more than Rs. 200. And the masses are more than 90% of our population.

  • http://www.canaan.com Alok Mittal

    Here’s what I believe is the latest report on where people access the net from. Cybercafes has been going down slowly, but is still the preferred mode.

  • ritu

    Isn’t cybercafes dead? who is using cyberafes these days copared to when in 2000.
    If you consider urban penetration of PCs, it will be close to 75%, If you look around who doesn’t have PC at home.

  • http://tropicalmanager.blogspot.com Deepak Shenoy

    There’s a difference between the number of domestic households owning a computer, number that access the Internet, and the number of computer owning households.

    Firstly, the number of PCs sold in India was around 4.3 million in 2006 (IDC, http://www.idcindia.com/Press/17feb2006.htm). I would estimate the total base at around 30 million (we were 5 million in 2001) and corporates + cyber cafes to have about 85% of that. About 4 to 4.5 million PCs are in houses, and I think even that is an overstatement. I have three PCs at home. Chances are that the real number of PC owning households is around 3 million.

    PCs that have a net connection: I think that figure, on a per household basis,is less than 2 million.

    Number that access the net – if you consider the huge number of cyber cafe visitors in comparison to PC owners, I’d say 35-50million people was a fair figure. Note that time based visitors to cyber cafes means there’s very little internet commerce capability, limited to airline tickets or such. Netbanking and Online credit card sales penetration is still fairly low.

    There’s a feel good factor, yes. Growth is heady for the top bracket. Penetration is not low because of lack of money; it’s the void in reach and infrastructure. By 2015 India will, at the rate it’s growing, reach around 150 million PCs with about 10 million in households. Still not anywhere close, I think, to the figures touted.

  • http://www.pdstext.com Cram

    Yeah Alok, that’s what I was pointing out. 200 m households would mean at least 80 per cent of the entire Indian population!

    Unlike Net usage, mobile penetration figures seem to be more accurate. 100 million!!! Everyone seems to be in agreement on that number. And unlike Net usage, cell usage is almost always at least once a day.

  • http://www.canaan.com Alok Mittal

    Cram, there is a difference between 200m strong middle class (40-50m households) and “200m households” which is what the India Today story says. Over a period of time, the numbers on “middle class” has been lowered, as more and more brands have failed to discover that class.

    Shish, there is no single number as far as I am concerned. The most authentic survey of Indian income and consumption pattern is done by NCAER, and the latest report can be found here. So, for example, penetration of color TVs is expected to go from 21% to 31% households in next 4-5 years. The same report classifies households with income of 2-10 lakhs (at 2001-02 prices) as Middle Class. They report that number of such households is 16.4 million and will go to 28.4 million in next 4 years.

    The most accepted number around internet penetration is 30-40 million total users, and around 25 million active (access once a week) users, as per the NRS. While last year we heard numbers from 20-50 million from different people, most of the industry seems to believe these numbers now.

    Finally, want to emphasize that the issues is not about getting this wrong by 20% or 30%. Even if your current numbers are correct, there is always an uncertainty on future numbers. The issues crop up if the numbers are off by an order of magnitude. And it happens frequently from what I have seen.

  • http://www.it.iitb.ac.in/~shish/ Shish

    Alok: What are the numbers – of middle class, homes with computers, people who have access to the Internet, people who can do Internet payments, and mobile phones in India – generally acceptable to VCs? What is the definition of “middle class” VCs typically do not mind? What are the sources of these numbers? How are these numbers generally estimated?

  • Alex

    The Indian media is such a joke.

  • http://www.pdstext.com Cram

    Hi Alok

    It’s widely perceived that India has a 200-m strong middle class (I”ve heard these claims being made from the time of Rajiv Gandhi’s demise!). This would give a rough figure of 50 m households.

    I am at a loss on definition of middle class. Is it purchasing power or is it lifestyle-based (where you live, how you live, what you do with your money, what you do for a living, etc)?

    Now that the Internet and mobile phones are no longer the preserve of the elite, I don’t think the parameters of class really matter to the success of mass market consumer Internet companies.

  • http://www.canaan.com Alok Mittal

    Suman, I dont think most of 200m indian households even have a microprocessor at home (I assume you imply a cell phone), given there are 100 million or so cellphones, and in affluent families its a norm to have more than one per family. I think the first error the article makes is in calling all 200m households “middle class”!

  • http://ileher.com Madhur Khandelwal

    On the other hand entrepreneurs cannot use the fact that room for growth is only upwards :)

  • http://www.venturewoods.org/?author=52 Abhishek

    Now just wait and watch entrepreneurs use this “fact” in their pitche

    :) )

  • http://www.chakpak.com chakpak

    There is definitely a lot of hype around computers/internet in india. computer/Internet may not as much traction as mobile phones. Internet in india can potentially lag, by a long margin.

  • http://zerocaffe.in suman

    Well let me see if i can justify it with smart ass(envied by every one) wit.

    Computer = devices with micro processors

    Therefore the statement is true.

  • http://identitycrisis.wordpress.com Nilesh Trivedi

    Ah, but my pitch talks about how a large number of Indian middle class homes have telephone but still don’t have access to computers. ;-)

    cheers
    nilesh