Why Facebook Is Winning The Great Tech War In India

On the next important front of The Great Tech War, 2012.

In Fast Company's recent cover story, The Great Tech War Of 2012, Farhad Manjoo plotted the battle plans for the four U.S. tech titans: Amazon, Apple, Facebook and Google. The four companies have dominated somewhat separate parts of the U.S. tech space in the past, but are speedily converging on each others’ turf. Their ongoing skirmishes are daily evidence of this overlap, which will lead up to an all-out tech war in 2012. As Manjoo explains, each stands a chance at a big win.

The four have, of course, been active in international markets, as well. But there the story looks a little different. In India, for example, with a product that’s free and unhindered by geographical boundaries, Facebook is emerging as the clear winner. Here's why. 

Facebook

Unlike Apple’s products or Amazon’s service, access to Facebook's product comes without economic or geographical barriers—anyone with Internet access can sign up for an account. A recent report saw India’s Facebook users jump 85% from last year—up to 34 million in June of this year. Orkut, the Google-backed social network, had India as one of its few strongholds. Until Facebook overtook Orkut in August 2010. 

And Facebook is getting serious about its Indian users. To push its growing reach in India even further, Facebook recently teamed up with Taiwanese chip maker MediaTek to create tech that would run Facebook on the many low-end or entry level phones that dominate the Indian market. After all, more than twice as many people access Facebook from their mobile devices compared to from their desktop, Facebook’s vice president for mobile partnership and corporate development Vaughn Smith told the Economic Times.

Meanwhile, India’s Internet connected population is growing too. It’s expected to hit 121 million next month, and adding 5-7 million users every month.

But there’s one part of Facebook’s rise that will be slow to reach the subcontinent. A crucial aspect of Facebook’s future hangs on its media-hungry Open Graph. Some of Open Graph’s features, especially the video streaming and music streaming players (think Netflix, Hulu, Spotify) are yet to reveal their content licensing plans for the subcontinent. When they do that, Zuckerberg and the gang will only widen the lead over their rivals.

Google

Google’s been steadily building a connection with the subcontinent, but those efforts are set to ripen into rewards some years from now. Google’s announced various programs to further Internet access—it’s tackling that on home turf in the form of its ultra-high-speed fiber network experiments in Kansas City, KA and Kansas City, MO. In 2009, Google launched the Internet Bus project in India. In two years, the shiny white mobile cybercafe has traveled through 11 states, 120 towns and 44,500 kilometers, giving about 5.6 million people access to the Internet, Google estimates. Of those, 1.5 million went online for the first time. Google hopes to reach the two thirds of India who now live outside the big cities—the same two-thirds that the government is building broadband access for, the Economist explained earlier this year. Through this collaboration, Google wants to learn about what Indians in villages will need to stay connected, better equipped to eventually tailor products for this emerging market. 

Google is also helping and learning in other ways. It recently announced a program to help small business owners in India get on the web. Only 5% of small and medium business have a website, Google estimates. Partnering up with a web hosting service, the "India Get Your Business Online" program offers a free tutorial, Rs. 2500 (about $50) of free Google Ads, and a web hosting domain for free for the first 500,000 Indian businesses that sign up.

As for the success of its mobile OS, Google showed how serious about its Indian Android market when it announced its partnership with Telenor, to allow app purchases to be added to users' phone bills. The Chromebook won’t reach India until 2012, but in the meanwhile, it’s the Android OS that dominates the smartphone space that’s conspicuously missing competition from the iOS, its sparring partner in the U.S.

Apple

Low prices have never been Apple's strong point. If the company really was fighting for dominance in India, the cost of its products would be its undoing in India’s unforgivingly price-sensitive market. But it’s hard to take Apple seriously when all evidence indicates it's looking to win elsewhere.

Exhibit A: iPhones cost more in India than they do anywhere else in the world. And, the lack of an international warranty on the iPhone deters Indians from buying their phones in the U.S. or Singapore, where it is cheaper. When the pricing was announced for the iPhone 4S which will launch in India next week (Rs. 44,500, or about $850) Indians acidly criticized the move on social networks. And with good reason. As one blogger seethed: At those prices? You could trade in two iPhones for a Tata Nano car.

It's not just economics that stands in Apple's way. Some argue that India lacks the infrastructure to really allow Apple’s flagship to shine. Networks in the country aren’t fast enough to support the kind of multitasking and browsing that the iPhone excels at. Even without the price hike compared to other countries, Apple’s phones are priced much higher than lower-end models from competitors RIM and Nokia, which still dominates the Indian mobile market. Not Samsung on Android, as is now the case in the U.S. 

With the iPad, it's back to pricing. The tablet tiffs in the country really take place around the $100 mark, with the likes of Lenovo and local manufacturers Reliance Telecom and Magnum, makers of the Mirchi tablet line, fighting the tablet battle for the top spot. This range dropped even lower, with Reliance announcing a Rs 3000 tablet ($60) soon after the Aakash, India's revolutionary $35 tablet, was announced. The Aakash itself looks poised to do well when it launches—its sellers DataWind say they’ve received 300,000 pre-orders for the first version of the device, and its makers are lining up a second version. 

To see an Apple serious about international conquest, watch their march into China. Apple has opened 5 glowing Apple stores, and has begun accepting app purchases in Yuan. 

Amazon

Amazon recently announced that it's planning to make a Rs. 500 crore (about $10 million) investment in India over the next three years, and will beef up its Hyderabad offices with 3,300 extra staffers. All this is in preparation of launching in India in the first quarter of 2012. While this indicates that it is serious about expanding, it’s still got a ways to go in terms of reaching out to the Indian online shopper.

The problem for Amazon on the web store front is that India already has great local options for shopping online. Take the online store Flipkart, started by two alums of Amazon in 2007, which sees 24,000 orders a day and is expects to sales to grow by ten times this year. “We are a verb, people Flipkart now,” Chitbhanu Nagri, Flipkart vice president told The Hindu.

Until it launches in the country, standard shipping from Amazon to India can take up to 30 days, and Amazon charges extra to ship your shopping the extra international mile. Meanwhile, Flipkart delivers at no extra cost, and accepts payment by cash or credit on arrival. Given how quickly Indian e-commerce is growing, it would be an easy win for Amazon if it teamed up or bought a leading e-commerce brand, as Groupon did with SoSasta.com. 

In the U.S., Amazon is quickly selling content via its fledgling line of tablets, right behind Facebook to create apps that stream music and movies. But like Facebook, it’ll need to licensing agreements from the content providers to stream to India. Not impossible of course, but it seems unlikely to happen anytime soon.

For now, India is on Facebook’s side in The Great Tech War.

[Image: Flickr user rajkumar1220]

Nidhi Subbaraman writes about technology and life. Follow on Twitter, Google+.

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2 Comments

  • atimoshenko

    I think before talking of a war, the conditions for "victory" should be better defined. Is it usage share? Profits? Something else?

  • easy dude

    Dear Nidhi - you are all over facebook in this article and end it by saying follow me on Twitter and Google+? what gives?