Social networking sites such as Facebook, LinkedIn, Google Plus and instant messaging applications such as US-based WhatsApp, China’s WeChat and even Japan’s LINE, leave no stone unturned when it comes to claiming India as one of their most important markets.
Such is not the case with microblogging site Twitter, which is attempting to raise $1 billion on the strength of 140 characters. In Twitter Inc.’s 164-page filing with the US Securities Exchange Commission (SEC), India is only mentioned thrice, one of the mentions being in the section of risk factors.
Twitter must have its reasons.
In its filing, it says that in certain emerging markets, such as India, many users access its products and services “through feature phones with limited functionality, rather than through smartphones, our website or desktop applications. This limits our ability to deliver certain features to those users and may limit the ability of advertisers to deliver compelling advertisements to users in these markets which may result in reduced ad engagements which would adversely affect our business and operating results.”
Twitter adds that if its revenue from its international operations, and particularly from operations in the countries and regions on which it has focused its spending, does not exceed the expense of establishing and maintaining these operations, its business and operating results will suffer.
The microblogging site expects user growth rate in certain international markets, such as Argentina, France, Japan, Russia, Saudi Arabia and South Africa, higher than its user growth rate in the US.
Of course, it expects to face challenges in entering some markets, such as China, where access to Twitter is blocked, as well as certain other countries that have intermittently restricted access to Twitter.
Users outside the US, according to its filing, constituted 77% of its average monthly active users in the three months ended 30 June. However, its international revenue, as determined based on the billing location of its advertisers, was only 25% of its consolidated revenue in the same period.
However, it appears that Twitter has not read the Indian smartphone market growth story right.
Vendors shipped a total of 9.3 million smartphones in the second quarter of 2013 compared with 3.5 million units a year ago. It was the 5-6.99 inch screen size smartphones, or phablets, that grew 17 times from a year ago. Moreover, the phablet share rose to 30% of the smartphone market in the June quarter.
By 2016, smartphones will account for more than two-thirds of mobile phone shipments, according to research firm IHS. The most basic phones will account for just 4% of the market by then, with feature phones representing 28% of shipments.
According to a 4 March IDC research note, more smartphones are forecast to be shipped globally than feature phones in 2013, the first such occurrence in the mobile phone market on an annual basis. Vendors, the note added, will ship 918.6 million smartphones this year, or 50.1% of the total mobile phone shipments worldwide.
Moreover, India is set to become the third-largest market for smartphones in four years, according to IDC, with phone makers launching more affordable 3G handsets and looking to tap buyers in small cities and towns.
Meanwhile, Facebook that had a $16 billion IPO, has over 80 million monthly active users in India while professional social networking site, LinkedIn has 21 million users in the country.
Japan-based LINE Corp. plans to make its free call and instant messaging app, LINE, available in Hindi and Tamil and hopes this localization strategy will help it cross the 20 million users mark by the end of calendar 2013. LINE was launched in the country in July, and the number of users in India has already touched “10 million”.
US-based WhatsApp is the clear market leader with more than 250 million active users, still higher than Twitter’s 220 million users worldwide. WeChat from China-based Tencent Holdings Ltd isn’t too far behind WhatsApp with 195 million users on 15 May, according to the company’s quarterly results.
Nimbuzz, which was founded in the Netherlands but now claims to be fully developed out of India, has around 150 million users, a company official said.
On 13 August, the Press Trust of India (PTI) reported that Facebook said in July that more than 100 million people access its website every month through its app for feature phones, aiding that the firm in expanding in developing markets like India.
“Today, millions of people in developing markets like India, Indonesia and the Philippines are relying on this technology to connect with Facebook, without having to purchase a smartphone,” PTI quoted Facebook.
With 75% users accessing Twitter on their phones, the microblogging site can ill-afford to ignore India with over 800 million phones as a growth market.