Cloud India Overview Snippet
- 1. Executive Summary: Cloud Computing Landscape in India For complete report, send your requests to info@zinnov.com This report is solely for the use of Zinnov clients, Zinnov prospects and Zinnov personnel. No part of it may be circulated, quoted, or reproduced for distribution outside the client organization without prior written approval from Zinnov
- 2. India IT & Cloud Market Landscape: Snapshot 1 Software Market in India, FY2010-FY2015E Key Players in SaaS Market India The Indian Cloud On-Premise, USD billion SaaS, USD million • Citrix Computing & Cloud • Google Services Market holds a • Microsoft potential of USD 1 • Netsuite Billion by 2012 • Oracle • Ramco • Rightnow 5.7 • Salesforce.com • TCS 3.5 2.7 • Webex • Zoho FY2010 FY2013E FY2015E FY2010 FY2013E FY2015E Hardware Market in India, FY2010-FY2015E Key Players in PaaS/ IaaS Market India Hardware* Sales, USD billion PaaS, USD million IaaS, USD million • Amazon Web Services 14 13.0 • Cynapse 11.2 • Google App Engine 12 • Force.com 10 9.0 • IBM 8 • Netmagic Solutions • Orangescape 6 • Rackspace 4 • Reliance Data Center 2 • VMWare • Windows Azure 0 • Wolf Frameworks FY2010 FY2013E FY2015E FY2010 FY2013E FY2015E FY2010 FY2013E FY2015E • Zenith Infotech Note: *Hardware Includes Desktops, Notebooks, Printers, Servers, Storage & Security, Networking Equipments & Other Peripherals Zinnov Source: NASSCOM Strategic Review, 2009-10 & 2010-11; IDC, Zinnov Analysis Confidential
- 3. SaaS: Landscape Snapshot The domestic market for SaaS is estimated to be about USD 50 million and is currently 2 dominated by Collaborative Applications and CRM workloads Workload-wise Distribution of SaaS Market in India, 2009 Indian SaaS Market: Customer & User Segmentation, 2009 Total Market: USD 50 - 56 million 100% 77% Customers 80% 69% Users 60% 40% 18% 19% 20% 11% 1% 2% 4% 0% Micro SMB CMM Enterprise Share of Competitors in the Indian SaaS market, 2009 Drivers & Constraints to SaaS Adoption in Indian Market XXX XXX x Data Security Concerns Improving IT & 30% Reliability Issue Communication 29% Lack of Customization Infrastructure XXX Resistance to Change Increasing need for cost XXX optimization 5% Lack of Brand recognition 2% Pricing & Support XXX for new players XXX XXX Innovation 16% Lack of market reach 5% 2% Development of Support XXX Lack of training & tech 4% XXX Ecosystem XXX support 3% Increasingly leveraging 4% Broadband Penetration Information masked for confidentiality reasons. reseller channel Please contact Zinnov for more information Note: Confidence Level for Market Size is 85 – 90 percent, * Collab. Applications – Collaborative Applications include web conferencing, productivity suites etc. Zinnov Source: Zinnov analysis Confidential
- 4. India contributes only a small fraction of global revenues for Google, but offers one of the 3 fastest growing markets Headcount • Google India is the largest outside of the US headquarters for Google (10.1%) Google India 2000 • 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 HQ • Google engineers can rise to the level of a vice president based on technical accomplishments without 19,835 even owning a management degree For other case studies and insights, please Google India Revenues contact Zinnov for complete report • 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 Google SMB Focus • 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 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 • Average Indian users spend about 30% of their online time on Marketing Google sites – 3 times the world average • 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 Google India Share Bank, DELL, Airtel, TradeIndia. Category Google Products of Time Spent • Exploring marketing partnerships with Tally, Utilities services providers and India Post. Search Google Sites 88.4% They have also looked to leverage DHL as a possible partner. Sales Social • Currently just one product marketing manager supported by a 50 Member tele-sales Orkut 68.2% Networking team from partner site. Tele-sales team does account training, activation and proactive Maps Google Maps 63.9% 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 Photos Picasa Network 16.2% same to their customers along with websites they develop. Channel partners are given Blogs Blogger 47.6% 5% commission for this. Payment options Multimedia YouTube 82.8% • Google currently provides INR billing with internet banking, credit card and cheque Email Gmail 46.8% payments Zinnov Source: Zinnov Interviews Confidential
- 5. Over the years Google India has driven several localized initiatives targeted specifically for the 4 Indian user 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 Entertainment 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 Key India Google is planning to launch a “mini” version of the Nexus One phone in India that may not have all Investments the features but it would certainly be less-expensive than the US model Local Language Google India’s R&D chief, Prasad Ram, claims that no more than 7% Indians are proficient in English. Google looks at the Opportunity Indian language market as a huge opportunity and offers search in 9 local languages Google India’s biggest revenue contributor have been in search advertising in verticals like airlines, travel and banks. New Growth However, education and auto has started to show signs of growth for Google. Google expects to grow in verticals such Verticals as FMCG, education and Government in 2010 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 SMB Focus small towns Partnered with firms such as TradeIndia.com to offer Rs. 2,500 worth Google Ad campaign free for subscribers Zinnov Source: Zinnov Interviews with Google Ex-Employees, Partners, Industry Analysts Confidential
- 6. Zoho has been focusing on providing free subscriptions with a limited number of users, to reach 5 a critical mass of user base Solution India SaaS Market Revenues Share Product : Zoho CRM, Zoho Meeting, Zoho Project CRM USD XX Mn XX% Management, Zoho Business Suite (email and office Zoho Business Suite USD X Mn suites) For other case studies and insights, please contact Zinnov for complete report Sales Strategy : • Zoho offers free versions of its applications to induce usage Customer & User Base Distribution • 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 Price Points: CRM Incentives : Revenue Share/ margin Min: xxx Max: xxx (Rs/User/Month) Business Suite Min: xxx Max: xxx (Rs/User/Month) Technical Support & Training : SaaS Product Sales Team : xxx • Cost of support is included in the pricing • Training costs are additional; negotiated on a case to case basis Indian Customers (Users) CRM: XX (XX) Indian Customers (Users) Business Suite : XX (XX) Web Channel Delivery Direct SEO Marketing Partners Platforms Zoho has not yet been able to capture a paid user- base in a large quantum Datacenter : Own Weak Strong Payment Modes Online Zinnov Source: Primary interviews with stakeholders; company website, Zinnov analysis Confidential
- 7. Market: Vertical focus for Cloud Opportunity Telecom, IT-BPO and Retail have the highest spending on IT as a percentage of revenues, 6 however… IT Spend as percentage of Revenue Across Verticals IT Purchasing budgets in 2010 vis-à-vis 2009 Telecom 2.2% 2.0% 20% to IT-BPO 1.7% 1.5% 40% and 40% above 38% Retail 1.4% 15% 1.3% 5% Spend Substantially Spend nearly Transport/ Logistics 1.2% 10% 1.3% less the same 32% Spend slightly Healthcare/ Pharma 0.9% less 0.9% BFSI 0.6% 0.7% Survey of 120 CIOs/ IT heads Automotive 0.6% 0.6% FY 2010 Manufacturing 0.8% 0.6% FY 2009 Energy 0.4% 0.4% 0% 1% 2% 3% Zinnov Confidential
- 8. Market: Vertical focus for Cloud Opportunity …Government, Telecom and BFSI are highly mature with their IT adoption and show higher 7 potential towards cloud adoption going forward IT Maturity of various verticals in India FY2009 Potential for Adoption of Emerging Technologies 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 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 Note: Public Sector Enterprises are spread across verticals other than Government Zinnov Source: NASSCOM Strategic Review 2010, Zinnov Analysis Confidential
- 9. India Landscape Macro trends suggest a significant increase in overall IT adoption is impending in India (1/2) 8 PC and Mobile Penetration in India, Millions 1,000 Absence of legacy systems will allow market to PC install base 800 826.9 jump technology curve and results in first mover Mobile subscribers advantage 520.6 Million 600 Subscribers 400 600 • ~15 million mobile subscribers added per month in India, 8 200 million new mobile shipments 42.1 100.1 per month 500 • App store 0 • Access to 3G 2009 2015E • ~25% of all phones sold in India • Low cost smart are smart phones phones 400 Mobile (India) • MVAS related revenues to Internet and 3G Subscribers in India, Millions account for 20% of operator revenue, a 2 fold increase since Wireline (India) 300 2006 in India 400 2009 2015E Mobile (US) 292.3 300 200 Wireline (US) 200 129.5 100 100 58.1 66.4 8.0 1.5 0 0 Active Internet Broadband 3G Subscribers 2001 2003 2005 2007 2009 2010 Users* Subscribers** Note: *Includes all devices; **Bandwidth of 256+ Kbps, includes Broadband Wireless Access; ***Micro, Small, and Medium Enterprises Zinnov Source: 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 Confidential
- 10. India Landscape India witnessed a surge of almost 40 percent in its mobile internet traffic from Q4 2009 to Q1 9 2010, leading to the highest mobile internet traffic in Asia Active Mobile Internet Users Ad Requests** by Country, 1Q 2010, In millions In March 2010, Asia Mobile Subscriber Base contributed to 25% of the 3000 2,838 total mobile internet traffic 2500 globally 471 Million* 1,872 2000 1500 The top 3 countries, India, 1000 655 650 Indonesia and Australia Mobile Phones 404 generated over 74% of traffic 500 298 161 in the region in Q1 2010 Capable of Accessing 185 133 Internet 0 India Indonesia Australia Philippines Vietnam Singapore Hong Kong Malaysia Thailand 27% of Total = 127 Wireless data subscribers in Million India increased from 101 million in QE Dec 2008 to 149 Operating System Share of Smartphones in India million in QE Dec 2009 Used Mobile Internet in Last Surged by the total number one Year 100% of additions in mobile 80% subscribers in India over the ~ 12 Million quarter the mobile internet 60% traffic is soaring 91% 89% 91% 93% 40% 20% Active Users In March 2010, smartphone = ~2 million 0% traffic share of mobile internet Dec-09 Jan-10 Feb-10 Mar-10 traffic in India was 26% Symbian OS iPhone OS Windows Mobile OS Other 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 data Zinnov Source: AdMob, TRAI, I-cube Confidential
- 11. India Landscape In order to leverage on the huge telecom subscriber base and to compensate for the low rates 10 of basic call tariffs, telecom players in India are increasing focused on the applications space Telecom Service Providers App Stores Indian App Companies • Bharti Airtel launched their own app store, Airtel App Central earlier this • Sourcebits is one of the most successful year Indian companies in the space, having developed over a 100 applications for the • Airtel App Central provides 1250 applications across 25 different categories iPhone, iPad, Android, Blackberry etc and including games, business, social networking etc as well as India-specific nets USD 3 million* per annum 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 • iRemedi is also a major player in the as low as INR 5 market having sold more than 200 Amar Chitra Katha comics for the iPhone and the iPad • Reliance Communications has a total subscriber base of 100 million across • Robosoft Technologies, a software its GSM & CDMA networks company, sells its game apps as well as utility & productivity apps for iPhone, • It has entered into a deal with GetJar to provide access of 65,000+ free Android and Nokia phones. The company applications to all its 100 million subscribers via its VAS platform R-World which sells apps under the brand name • GetJar offers applications that work with almost all handsets and OS’ Global Delight hopes to make USD 9 including Symbian, Blackberry, Windows Mobile, Java & Android million from the apps alone. • Rocke Talk a free app that allows users to create their own voice, photo, video There are an estimated content and share it, has a subscriber • Vodafone has launched its application store for 50 Indian companies base of 1.5 million users Indian customers with 800 applications employing 1000 available currently, of which 25 percent are free developers engaged in • The paid applications have been reasonably applications • Rapidsoft, Spiel Studio, Interchain priced between INR 5 and INR 30 development across solutions and Nexmoo are some of the platforms other Indian companies Note: *Assuming 1 USD = 50 INR Zinnov Source: Company Websites and News releases, Zinnov Analysis Confidential
- 12. Drivers for Adoption of Cloud Services Flexibility in terms of on-Demand scale up/ down with no upfront capital investment makes the 11 cloud offering highly attractive for the enterprises Drivers for Cloud Solutions in India “ This will help to meet customer expectation very effectively” “ Easy Exit for customers in case of failures” Sukanta K Nayak, AVP, IT, Usha International Vikas Prabhu, CIO, The MobileStore Top 5 CIO’s Investment Priorities for 2009-10* 90% 69% 68% 64% 45% Software- Business Unified Virtualisation Open Source as-a- Intelligence Communications Service and Data- (SaaS) warehousing “It has potential. As the capex dollars are diminished, IT “Its an innovative business technology with significant benefits management is going to look for on-demand models for keeping coming from the absence of the client/server software the costs down” installation or maintenance” Prashant Cherukuri, CIO, Aditya Birla Minacs N. Varadarajan, GM, IT, Madras Cement Source: *IDC India’s “Identifying Opportunities in the Current Economic Scenario” report (March 2009), dqindia.ciol.com, BizTech2.com, expresscomputers.com, networkcomputing.com, Zinnov Zinnov Analysis Confidential
- 13. Constraints to Adoption of Cloud Services Data Security and Lack of customization are reported as the biggest challenge in the adoption of 12 Cloud computing in India "Security is the biggest concern. Barring core applications, other “We faced challenges in terms of training the users to the new productivity applications such as CRM and email can take technology” advantage of this technology,“ Venkat Iyer, director, business technology, Pfizer India Ajay M Patil, the vice president of IT at Bharti AXALife Top 4 Challenges with Cloud Computing* Challenges Reported by CIO’s Need for with Cloud Compliance & Computing Internal Training Governance 25% Concerns on Data 20% 18% Security Costlier in 14% Risk of longer run Apprehensions on Vendor Lock in SLAs and Reliability Data Performance Data Transfer Data Lock-in confidentiality Unpredictability Bottlenecks Poor and auditability Lack of Connectivity Customization Existing Legacy Systems “For large organizations, the Value for Price model is yet to emerge” Upal Chakraborty, CIO, DLF “CIOs need to keep in mind levels of complexities of his business “Security, uptime and SLA will be the important aspects processes as well as customization required, since the SaaS of the deliverables” model may not permit too much customization” J Ramesh, CIO, MIRC Electronics N. Varadarajan, GM, IT, Madras Cements Zinnov Source: *Saltmarch survey of 1100 Indian Business Technology professionals ‘2009, dqindia.ciol.com , BizTech2.com, expresscomputers.com, networkcomputing.com, Zinnov Analysis Confidential
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