cloud computing landscape in india
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Executive Summary: Cloud Computing Landscape in India
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India IT & Cloud Market Landscape: Snapshot 1
Note: *Hardware Includes Desktops, Notebooks, Printers, Servers, Storage & Security, Networking Equipments & Other PeripheralsSource: NASSCOM Strategic Review, 2009-10 & 2010-11; IDC, Zinnov Analysis
On-Premise, USD billion
2.73.5
5.7
FY2010 FY2013E FY2015E FY2010 FY2013E FY2015E
Software Market in India, FY2010-FY2015E
SaaS, USD million
Hardware* Sales, USD billion
9.0
11.213.0
0
2
4
6
8
10
12
14
FY2010 FY2013E FY2015E FY2010 FY2013E FY2015E
PaaS, USD million
Hardware Market in India, FY2010-FY2015E
IaaS, USD million
FY2010 FY2013E FY2015E
Key Players in SaaS Market India
• Citrix• Google• Microsoft• Netsuite• Oracle• Ramco• Rightnow• Salesforce.com• TCS• Webex• Zoho
• Amazon Web Services• Cynapse• Google App Engine• Force.com• IBM• Netmagic Solutions• Orangescape• Rackspace• Reliance Data Center• VMWare• Windows Azure• Wolf Frameworks• Zenith Infotech
The Indian Cloud Computing & Cloud
Services Market holds a potential of USD 1
Billion by 2012
Key Players in PaaS/ IaaS Market India
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The domestic market for SaaS is estimated to be about USD 50 million and is currently dominated by Collaborative Applications and CRM workloads
2
Workload-wise Distribution of SaaS Market in India, 2009
Drivers & Constraints to SaaS Adoption in Indian Market
Total Market: USD 50 - 56 million
Note: Confidence Level for Market Size is 85 – 90 percent, * Collab. Applications – Collaborative Applications include web conferencing, productivity suites etc.Source: Zinnov analysis
SaaS: Landscape Snapshot
XXX29%
XXX5%
XXX16%
XXX4%
XXX2%
XXX3%
XXX4%
XXX5%
XXX2%
XXX30%
Share of Competitors in the Indian SaaS market, 2009
Indian SaaS Market: Customer & User Segmentation, 2009
1%
77%
18%
4%2%
69%
19%11%
0%
20%
40%
60%
80%
100%
Micro SMB CMM Enterprise
Customers
Users
x Data Security Concerns Reliability Issue Lack of Customization Resistance to Change Lack of Brand recognition
for new players Lack of market reach Lack of training & tech
support Broadband Penetration
Improving IT & Communication Infrastructure
Increasing need for cost optimization
Pricing & Support Innovation
Development of Support Ecosystem
Increasingly leveraging reseller channelInformation masked for confidentiality reasons.
Please contact Zinnov for more information
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India contributes only a small fraction of global revenues for Google, but offers one of the fastest growing markets
• Google India is the largest outside of the US headquarters for Google (10.1%)
• Hiring standards in India are same as that of the US and engineers in Bangalore have the freedom to move to other Google R&D centers worldwide
• Google engineers can rise to the level of a vice president based on technical accomplishments without even owning a management degree
Google India
Google HQ
2000
19,835
Headcount
Category Google ProductsGoogle India Share
of Time Spent
Search Google Sites 88.4%
Social Networking
Orkut 68.2%
Maps Google Maps 63.9%
Photos Picasa Network 16.2%
Blogs Blogger 47.6%
Multimedia YouTube 82.8%
Email Gmail 46.8%
• 4/5 top leading web properties in India are controlled by Google (Orkut, Google search page, YouTube and Gmail)
• The 5th seat is captured by Rediff in India
• Average Indian users spend about 30% of their online time on Google sites – 3 times the world average
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Source: Zinnov Interviews
Product
• Lead product for Google in the SB segment is Google ad words. Not focusing on pushing apps and believe that driven ad words adoption is the key to long term success
Marketing
• Google marketing the offering by providing Rs.2500/- worth of free ad words vouchers for SB customers. Being distributed through multiple marketing channels like HSBC Bank, DELL, Airtel, TradeIndia.
• Exploring marketing partnerships with Tally, Utilities services providers and India Post. They have also looked to leverage DHL as a possible partner.
Sales
• Currently just one product marketing manager supported by a 50 Member tele-sales team from partner site. Tele-sales team does account training, activation and proactive support. Reactive support is driven by Google Hyderabad office
• Google has been trying to leverage the VAP channel to bundle ad words and sell the same to their customers along with websites they develop. Channel partners are given 5% commission for this.
Payment options
• Google currently provides INR billing with internet banking, credit card and chequepayments
Google SMB Focus
Google India Revenues
• Google India makes approx. USD XX million, less than 1% of the global revenues . But the revenues have been tripled over the last 2 years
• Majority of Google India revenues come from online advertising, whose market in India is about INR 1,250 Crore (5% of the total ad-spend in India) and 80% of that market is drawn by Google
• The country is a top priority market at the board level, no significant revenue impact but the India business is regularly reviewed by the board
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Over the years Google India has driven several localized initiatives targeted specifically for the Indian user
Entertainment
Through YouTube, Google has also ventured into the entertainment business. The IPL on YouTube was a
key moment. Not only was it a global board level decision, but also elevated the level of dialogue. It went
to 200 countries and is already the most viewed live event Google has done
The premium sponsors for the live online streaming of IPL matches are Royal Challengers, HSBC Bank and
Hewlett-Packard. Airtel, Coca-Cola and Samsung are also participating. Google has also struck up lucrative
deals with UTV, Rajshri Productions etc. for the YouTube
Local Language Opportunity
Google India’s R&D chief, Prasad Ram, claims that no more than 7% Indians are proficient in English. Google looks at the
Indian language market as a huge opportunity and offers search in 9 local languages
New Growth Verticals
Google India’s biggest revenue contributor have been in search advertising in verticals like airlines, travel and banks.
However, education and auto has started to show signs of growth for Google. Google expects to grow in verticals such
as FMCG, education and Government in 2010
Key India Investments
Google is planning to launch a “mini” version of the Nexus One phone in India that may not have all
the features but it would certainly be less-expensive than the US model
SMB Focus
Internet penetration is increasing in small and medium enterprises that do not advertise in general.
However, the internet is a natural cost-effective way of connecting and partnering with these SMEs in
small towns
Partnered with firms such as TradeIndia.com to offer Rs. 2,500 worth Google Ad campaign free for
subscribers
4
Source: Zinnov Interviews with Google Ex-Employees, Partners, Industry Analysts
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Product : Zoho CRM, Zoho Meeting, Zoho Project Management, Zoho Business Suite (email and office
suites)
Customer & User Base Distribution
Payment Modes Online
Price Points: CRM (Rs/User/Month)
Min: xxx Max: xxx
Business Suite (Rs/User/Month)
Min: xxx Max: xxx
SaaS Product Sales Team : xxx
Indian Customers (Users) CRM:Indian Customers (Users)
Business Suite :
XX (XX)
XX (XX)
Direct SEOWeb
MarketingChannel Partners
DeliveryPlatforms
Weak StrongDatacenter : Own
India SaaS
Revenues
Market
Share
ZohoUSD XX Mn
USD X MnXX%
Sales Strategy : • Zoho offers free versions of its applications to induce usage• Zoho has also run innovative advertising campaigns using auto
rickshaws as mobile billboards, having Zoho posters on them, showcasing the different features available
Channel Partners :• 4 active channel partners; Pegasys, Bennett, KVP Business Solutions
and SNR Technologies
Channel Partner Sales Strategy :• Current focus on Zoho CRM
Incentives : Revenue Share/ margin
Technical Support & Training :• Cost of support is included in the pricing• Training costs are additional; negotiated on a case to case basis
Zoho has not yet been able to capture a paid user-base in a large quantum
Solution
CRMBusiness Suite
Zoho has been focusing on providing free subscriptions with a limited number of users, to reach a critical mass of user base
5
Source: Primary interviews with stakeholders; company website, Zinnov analysis
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Telecom, IT-BPO and Retail have the highest spending on IT as a percentage of revenues, however…
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0.4%
0.6%
0.6%
0.7%
0.9%
1.3%
1.3%
1.5%
2.0%
0.4%
0.8%
0.6%
0.6%
0.9%
1.2%
1.4%
1.7%
2.2%
0% 1% 2% 3%
Energy
Manufacturing
Automotive
BFSI
Healthcare/ Pharma
Transport/ Logistics
Retail
IT-BPO
Telecom
FY 2010
FY 2009
IT Spend as percentage of Revenue Across Verticals
15%
38%
32%
10%
5%
40% and above
20% to 40%
Spend nearly the same
Spend slightly less
Spend Substantially
less
IT Purchasing budgets in 2010 vis-à-vis 2009
Survey of 120 CIOs/ IT heads
Market: Vertical focus for Cloud Opportunity
Zinnov Confidential
…Government, Telecom and BFSI are highly mature with their IT adoption and show higher potential towards cloud adoption going forward
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Note: Public Sector Enterprises are spread across verticals other than GovernmentSource: NASSCOM Strategic Review 2010, Zinnov Analysis
IT Maturity of various verticals in India FY2009 Potential for Adoption of Emerging Technologies
Based on the IT Maturity, Vertical-wise IT spend and Adoption Potential Government, Telecom, BFSI and Manufacturing emerge as the top verticals for further analysis
Cloud/ SOA/ Virtualization
Telecom: New pricing changes, number portability, per second billing, new entrants and expansion of circle by existing players
Government: Estimated spend of $ 9 billion on Government to consumer (G2C) projects (state/ central level) including hardware infrastructure and public services (Department of posts, railways etc.)
Banking: Implementing and maintaining core banking solutions (esp. by public sector banks, mobile/ net banking, reduce transaction cost, compliance
Insurance: Claims management, policy administration, underwriting and sales/ CRM, premium payments/ renewals
Retail: Supply chain automation/ management, warehouse management, inventory audit/ loss prevention, online retailing, BI and networking
Healthcare/ Pharma: Servers and Data center for hospital upgrades, HIS, Electronic records, image archiving, data storage/ mining, telemedicine, remote diagnostics, etc
Market: Vertical focus for Cloud Opportunity
Zinnov Confidential
Macro trends suggest a significant increase in overall IT adoption is impending in India (1/2) 8
42.1 100.1
520.6
826.9
0
200
400
600
800
1,000
2009 2015E
PC install base
Mobile subscribers
PC and Mobile Penetration in India, Millions
58.1
8.0 1.5
292.3
66.4
129.5
0
100
200
300
400
Active Internet Users*
Broadband Subscribers**
3G Subscribers
2009 2015E
Internet and 3G Subscribers in India, Millions
Absence of legacy systems will allow market to jump technology curve and results in first mover
advantage
0
100
200
300
400
500
600
2001 2003 2005 2007 2009 2010
Mobile (India)
Wireline (India)
Mobile (US)
Wireline (US)
Million Subscribers
• App store• Access to 3G• Low cost smart
phones
• ~15 million mobile subscribers added per month in India, 8 million new mobile shipments per month
• ~25% of all phones sold in India are smart phones
• MVAS related revenues to account for 20% of operator revenue, a 2 fold increase since 2006 in India
India Landscape
Note: *Includes all devices; **Bandwidth of 256+ Kbps, includes Broadband Wireless Access; ***Micro, Small, and Medium EnterprisesSource: Telecom Regulatory Authority of India (TRAI); Union Budget FY2010-11Transcript; IDC; FICCI BDA Report “3G and BWA”; Gartner; Data monitor; NASSCOM Strategic Review, 2009-10 & 2010-11; Zinnov Analysis
Zinnov Confidential
India witnessed a surge of almost 40 percent in its mobile internet traffic from Q4 2009 to Q1 2010, leading to the highest mobile internet traffic in Asia
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Ad Requests** by Country, 1Q 2010, In millions
2,838
1,872
655 650404 298
185 161 1330
500
1000
1500
2000
2500
3000
India Indonesia Australia Philippines Vietnam Singapore Hong Kong Malaysia Thailand
India Landscape
Note: *As of Sep 09; **AdMob serves ads for more than 18,000 mobile Web sites and applications around the world and provides metrics based on this dataSource: AdMob, TRAI, I-cube
The top 3 countries, India, Indonesia and Australia
generated over 74% of traffic in the region in Q1 2010
Surged by the total number of additions in mobile
subscribers in India over the quarter the mobile internet
traffic is soaring
Operating System Share of Smartphones in India
91% 89% 91% 93%
0%
20%
40%
60%
80%
100%
Dec-09 Jan-10 Feb-10 Mar-10
Symbian OS iPhone OS Windows Mobile OS Other
In March 2010, Asia contributed to 25% of the
total mobile internet traffic globally
In March 2010, smartphonetraffic share of mobile internet
traffic in India was 26%
Wireless data subscribers in India increased from 101
million in QE Dec 2008 to 149 million in QE Dec 2009
471 Million*
Active Users = ~2 million
Mobile Phones Capable of Accessing
Internet
27% of Total = 127 Million
Mobile Subscriber Base
Used Mobile Internet in Last
one Year
~ 12 Million
Active Mobile Internet Users
Zinnov Confidential
In order to leverage on the huge telecom subscriber base and to compensate for the low rates of basic call tariffs, telecom players in India are increasing focused on the applications space
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• Bharti Airtel launched their own app store, Airtel App Central earlier this year
• Airtel App Central provides 1250 applications across 25 different categories including games, business, social networking etc as well as India-specific religious applications
• The cost of the applications is either added to the subscriber’s bill or deducted from the available talk-time, with the applications costs starting as low as INR 5
• Reliance Communications has a total subscriber base of 100 million across its GSM & CDMA networks
• It has entered into a deal with GetJar to provide access of 65,000+ free applications to all its 100 million subscribers via its VAS platform R-World
• GetJar offers applications that work with almost all handsets and OS’ including Symbian, Blackberry, Windows Mobile, Java & Android
• Vodafone has launched its application store for Indian customers with 800 applications available currently, of which 25 percent are free
• The paid applications have been reasonably priced between INR 5 and INR 30
• Sourcebits is one of the most successful Indian companies in the space, having developed over a 100 applications for the iPhone, iPad, Android, Blackberry etc and nets USD 3 million* per annum
• iRemedi is also a major player in the market having sold more than 200 AmarChitra Katha comics for the iPhone and the iPad
• Robosoft Technologies, a software company, sells its game apps as well as utility & productivity apps for iPhone, Android and Nokia phones. The company which sells apps under the brand name Global Delight hopes to make USD 9 million from the apps alone.
• Rocke Talk a free app that allows users to create their own voice, photo, video content and share it, has a subscriber base of 1.5 million users
• Rapidsoft, Spiel Studio, Interchainsolutions and Nexmoo are some of the other Indian companies
Telecom Service Providers App Stores Indian App Companies
Note: *Assuming 1 USD = 50 INRSource: Company Websites and News releases, Zinnov Analysis
India Landscape
There are an estimated 50 Indian companies
employing 1000 developers engaged in
applications development across
platforms
Zinnov Confidential
“ Easy Exit for customers in case of failures”
Vikas Prabhu, CIO, The MobileStore
“ This will help to meet customer expectation very effectively”
Sukanta K Nayak, AVP, IT, UshaInternational
“Its an innovative business technology with significant benefits coming from the absence of the client/server software installation or maintenance”
N. Varadarajan, GM, IT, Madras Cement
“It has potential. As the capex dollars are diminished, IT management is going to look for on-demand models for keeping the costs down”
Prashant Cherukuri, CIO, Aditya Birla Minacs
Flexibility in terms of on-Demand scale up/ down with no upfront capital investment makes the cloud offering highly attractive for the enterprises
11
Drivers for Cloud Solutions in India
Top 5 CIO’s Investment Priorities for 2009-10*
90%69% 68% 64%
45%
Software-as-a-
Service (SaaS)
Business Intelligence and Data-
warehousing
Unified Communications
Virtualisation Open Source
Source: *IDC India’s “Identifying Opportunities in the Current Economic Scenario” report (March 2009), dqindia.ciol.com, BizTech2.com, expresscomputers.com, networkcomputing.com, Zinnov Analysis
Drivers for Adoption of Cloud Services
Zinnov Confidential
“CIOs need to keep in mind levels of complexities of his business processes as well as customization required, since the SaaS model may not permit too much customization”
N. Varadarajan, GM, IT, Madras Cements
"Security is the biggest concern. Barring core applications, other productivity applications such as CRM and email can take advantage of this technology,“
Ajay M Patil, the vice president of IT at Bharti AXALife
Data Security and Lack of customization are reported as the biggest challenge in the adoption of Cloud computing in India
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Compliance & Governance
Lack of Customization Existing
Legacy Systems
Need forInternal Training
Costlier inlonger run
PoorConnectivity
Risk of Vendor Lock in
Challenges Reported by CIO’s
with Cloud Computing
Apprehensions on SLAs and Reliability
Concerns on Data Security
“We faced challenges in terms of training the users to the new technology”
Venkat Iyer, director, business technology, Pfizer India
“For large organizations, the Value for Price model is yet to emerge”
Upal Chakraborty, CIO, DLF
“Security, uptime and SLA will be the important aspects of the deliverables”
J Ramesh, CIO, MIRC Electronics
25%20% 18%
14%
Data confidentiality
and auditability
Performance Unpredictability
Data Transfer Bottlenecks
Data Lock-in
Top 4 Challenges with Cloud Computing*
Source: *Saltmarch survey of 1100 Indian Business Technology professionals ‘2009, dqindia.ciol.com , BizTech2.com, expresscomputers.com, networkcomputing.com, Zinnov Analysis
Constraints to Adoption of Cloud Services
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