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December 24, 1997


The Missing Pages

India's paging industry is in a shambles. Crucial parts of
the strategy were just not there. Find out what went amiss.

Seven hundred thousand pagers have been sold in India. Of these 35 per cent, or 200,000, are inactive, claims an industry report prepared by Motorola. Surely all is not well with the industry.

The pager business is going through a tough time mainly because some operators, in their eagerness to build a minimum subscriber base, overlooked
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'concept selling', the only way to long-term survival.

This has made service providers sit up and take stock of the situation. Operators have realised that in a recession purely cutting hardware prices or simply giving away pagers cannot pick up further volumes.

On the contrary, they feel such practices have lowered the image of the product and have given room for inactive pagers. Some service operators are now redrawing strategies to include value addition and concept selling.

In Bangalore, when Mobilink entered as the third operator, the market appeared too small to be shared by three. Yet instead of bothering to expand the pie, the competitors fought each other in earnest.

Mobilink Vice-President A J Ishwar Kumar agrees "All paging companies are in a hurry to capture the market and little significance is given to concept selling or even the service.'' The blind rush did help the industry grow by an average of over 50 per cent in the last couple of years. But it now faces inelastic demand.

Kumar admits that a further price cut may not boost demand. Also, while lower prices brought in larger volumes initially, it has also eaten into the bottom lines of most operators.

No company is willing to talk about financial figures. Kumar points out that none is comfortable with the current price levels.

"We cannot be selling a pager at Rs 4,000 for long when the purchase price is around Rs 8,000. It will only delay the break-even for all operators,'' he adds.

This has made operators look at enhancing the market size on the one hand, and on the other, offering value addition to retain active subscribers.

Pagepoint Services (India) Private Limited, a joint venture with Motorola, operating in cities like Bangalore and Hyderabad in the South, is focussing on adding more value to its current subscribers.

"We firmly believe that price cutting will not expand the market and the solution for long-term sustenance is providing value-added services,'' says Pagepoint General Manager Suresh Srinivasan.

Pagepoint is selling paging as a business productivity tool. It has launched two services - Corporate Hotline and Personal Hotline.

Corporate Hotline assigns a separate pager number for a company. Now if you have to page an employee of the company you don't have to remember another number. All you go to do is page the company and leave a message for the employee by her name and the message will be forwarded to the specific person.

Personal Hotline is about an electronic diary, which reminds subscribers of appointments and daily schedules.

Srinivasan claims that the winning edge for any service provider will be superior service quality.

But Hutchison Max Telecom is of another opinion. The company believes that hardware is still the key. "Since awareness about difference between a pager and a paging service is still low in the country we decided to launch our own pager and create better awareness for our service,'' says Hutchison Max Telecom CEO Sandip Das.

Service quality differentials do matter but only after a consumer knows the difference between the hardware and the software, he elaborates.

The company was the first to launch its own brand of pager called 'Spider'. It was imported from Hong Kong. Mobilink followed suit immediately with its 'Smart' pager. Hutchison Max Telecom is believed to have spent Rs 250,000 on promoting Spider. Industry observers wonder whether it is a good strategy for a service provider to launch its own pager. Will the company make money in the long run? Will it not lose focus since its primary business is to provide service?

Das says it has become inevitable for a company to adopt this route if it is to be a leader in the market and break even early. The kind of positive response that Spider has received absolves all doubts about the strategy, he claims.

As the situations is today, all will perhaps depend upon how much financial muscle does a service provider have to back its pet strategy in creating a niche for itself.

Earlier: India leads the pack in growth of paging market

- Compiled from the Indian media

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