3 lessons for telecom firms

The first day of the two-day Gartner Summit 2005 had three important lessons for local telecommunication operators: target the bottom end of the pyramid, be prepared for sweeping changes in consumer demand and graduate from generic verticals to specialised verticals.

And going by the response of participants at the annual summit in Mumbai on Tuesday, the points were well taken.

Lesson 1: Gartner principal analyst Sandy Shen set the tone by suggesting that Indian operators should target the 'low segments.'

The penetration of telephones in rural India was just below two per cent, compared to 20 per cent in China.

Telecom operators should concentrate on expanding rural connectivity to ensure more coverage and a steady flow of the average revenue per user, she said.

The number of subscribers in India is 60 million compared with 330 million in China, while the rural connectivity in China is 25 per cent, while that in India is just 1.7 per cent.

India adds 2.5 million subscribers monthly, while that of China is around 5 million. Referring to the connectivity in urban areas in China, Shen said it topped at around 70-80 per cent in cities like Shanghai and Beijing.

Lesson 2: The fast pace of consumerism, virtualisation and connectivity will be the harbingers of change across the information technology (IT) industry worldwide, which would require a shift from product-based offerings to services-based offerings.

A move from a personal computer-based server to multi-platform devices will be witnessed, according to Gartner.

The shift from product-based offerings to service-based offerings have already begun and this would be the key for success in the IT industry for the next five years, even as server virtualisation and pervasive connectivity would also play a part, Gartner vice-president and Research Fellow Andy Kyte said in his keynote address.

"People are not interested in buying just a computer. They need a multi-platform device that can offer a multitude of services," he said.

On hardware becoming obsolete, Kyte stated that the "love for the hardware is over" and added that the mainframe hardware is going to disappear in the coming years.

"Researchers across the world are working on different architectural concepts and the hardware units will also disappear in a decade or so," Kyte said.

Lesson 3: Indian IT companies should graduate to industry-specific BPO verticals like financial services, manufacturing and government from present generic verticals.