Hike becomes the top-down strategy and Total becomes the bottom-up: Kavin Mittal
New Delhi: With an aim to bring more Indians online, Kavin Mittal, founder and CEO of instant messaging service Hike, on Wednesday unveiled Total, a version of Android that will allow smartphone users to access messaging services, news, horoscope, rail information and phone recharges without a data connection.
This works through Universal Transfer Protocol, a technology developed in-house, by essentially ‘supercharging’ USSD protocol (unstructured supplementary service data) to make the bytes smaller.
With Intex and Karbonn as device partners, and Airtel, Aircel and Bharat Sanchar Nigam Ltd as network carrier partners, the bundled phones starting at Rs3,000 aim to get users comfortable with internet using sachet data packs which would start at Re1 .
Total is targeting customers with smartphones but without a data connection. The end goal, Mittal said, is to get customers on data and get them moving up the value chain. In an interview, Mittal said the proposition is a win-win-win for everyone as it means more active users for Hike, more data customers for telcos and handset sales for device manufacturers. The devices are to hit the shelves starting 1 March. Edited excerpts:
This seems a very different offering from Hike?
This is not an app. This is like taking an operating system and modifying it. So, this is a second product that we are building now inside the company. To get a billion people online, an app is not enough. That (Hike) is for the top of the pyramid, those who have come on to the data. The next step is what does the app sit on. It sits on the OS. You have the device and you have the telco. So we just brought the entire experience together and stitched it to make it simple. Because the problem is the value chain is divided into 4—smartphone guys, OS guys, telcos, app guys like us. We are all thinking about us, who is thinking about the user. Someone has to manage that whole path for the customer so we saw a massive opportunity where no one is doing it the way we want to do it.
Hike app becomes the top down strategy and Total becomes the bottom up.
Who does USSD globally? No one does. This is our second product and don’t be surprised if you see us launching a third product a year from now. Our goal is collectively through different means, can we bring India online.
You said nobody is doing USSD globally. You can go and acquire a customer since you are giving them data for a rupee but is the technology sustainable in the long run? Do you see yourself doing this five years from now?
Yeah, we do. Because the billion people, my guess is, you can divide into 10 pieces. Every 100 million there is some different issue. So we will use Total as a way to get to those people and (then) potentially (bring) different products that we may not have thought of today. But the simple idea is data growth is slowing. Not everybody who has a smartphone has data. There are 100 million smartphones being sold every year and a lot of them are not on data.
This is the first version of Total. We will have more versions and the end goal is to get customers on data. The one rupee packs are not for lifetime. The idea is to give the user a sense of data. Maybe in 6-9 months from now, Total users are browsing YouTube and listening to music all on data.
This is also the target audience that Jio is looking at through its feature phone?
Sure. We are not the only ones trying to do this. Google is coming with AndroidGo. And Total will work on AndroidGo. When Intex and Karbonn ship AndroidGo devices, Total will be on it. We believe one person cannot do this. Very complicated. There is Hike, there is Airtel, Aircel, BSNL. Intex, Karbonn...
We all have to work together to bring each part of the cost of our ecosystem down so that we can overall lower the cost of access. And you will have companies like Jio, who want to go at it alone. Do it. How is the feature phone doing? Tell me. Apart from burning up, right? And feature phone is a closed ecosystem. It is old technology. What we have done is we have built this on Android. So we have taken old technology and re-purposed it in the smartphone ecosystem.
And again there is a large part of the market that can’t yet penny up a 150 bucks upfront. You know recharge behaviour. People do it in sachets. And the sachets are very expensive.
Wouldn’t paying Rs3000 for a phone be a worry for the target audience?
Yeah, so those are the cheapest smartphones you have in the market. However, like I said technology gets cheaper, better, faster. In 6-9 months, when AndroidGo comes in, those devices may be even cheaper because with AndroiGo, Google’s guidelines are constrained on how much RAM you can have on a device. So we are starting here. In the next 9-12 months, the prices have to drop.
Typically, customers jump on to free or cheap services like in the case of a new telecom operator but when prices are increased, they throw the SIM away. Is that a worry?
Time will tell. We can’t answer that sitting in this office. Because there will be people who have different kinds of disposable income. In every single state or city you have a bunch of people who are still not online because of many challenges. But there are people in smaller areas who are happy to spend money on data because they have it.
You have enough money in your bank now?
Yeah most of the money we raised is still sitting. The $175 million (raised in the latest round of funding). We don’t burn much. We don’t have logistics.
Now that we have launched this, we are always talking to our existing shareholders and new shareholders about raising funds. All the time. That is something you have to do. It is not a matter of if, but when we will raise the next round, maybe 2018 or 2019 we don’t know, we will figure it out.
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