Penny wise, Pound foolish

In the recent past, I have seen different ads for Cab services such as Ola and Taxi For Sure, all focusing on their new services. Although the general tone of the ads is funny and they convey the message, they forget that the current services are mobile centric and thus limited to a smaller audience.

The number of smartphones in India is still a meagre percentage of the overall phone presence (162 million phones ) but it faces certain issues. Fragmentation , due to different brands and Operating Systems , along with poor connectivity are major flaws in the current ecosystem. Although PayTM is providing an alternative banking system, there is still a long way to go before the larger masses can use systems like Pay TM.

We see a paucity of startups and services targeting the lower middle class. Although we have a dozen cab service providers who cater to the needs of the top 10 %, we see no alternatives for folks who are dependent on public transport and share autos/cabs. The need of the hour is for service providers to look at splitting their services into two buckets – one to cater to the masses and the other to cater to the 10 %. This is both a form of social entrepreneurship and a method to tap the bottom of the pyramid.

While Ola and Taxi For Sure have launched an auto service, the auto service can only be availed through their mobile application. The problem lies in poor smartphone penetration among the lower middle class and the necessity for service providers to come up with alternatives such as providing a special mobile number or an SMS service which could be configured. In such a way, Ola/ TFS could act as a re-router /facilitator for more players while solving the issues of poor 2G/3G connectivity as well.

This problem is not limited to travel services alone. While mobile banking costs only 2 % of the net cost for Financial institutions, we still see limited mobile banking. So the issue lies two fold-  limited penetration of smartphones which is being solved thanks to aggressive marketing from Xiaomi and other players and limited applications for lower middle class people which is independent of high end smartphones.How service providers and startups approach this conundrum, is what could be the next Google/ Zoho .


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