Opportunity For Hosters With SMBs In India May, 2013

Transcription

1 Opportunity For Hosters With SMBs In India May, 2013 This report is solely for the use of Zinnov Client and Zinnov Personnel. No Part of it may be quoted, circulated or reproduced for distribution outside the client organization without prior written approval from Zinnov

2 India has one of the largest SMB base in the world 1 Countries With Largest SMB Base 50+ Mn ~47 Mn ~26 Mn ~14 Mn ~8 Mn China (Rank 1) India (Rank 2) USA (Rank 3) Brazil (Rank 4) Russia (Rank 5) Small Enterprises Micro Enterprises Professional Services 5% Others 23% Retail 41% Medium Enterprises ~ 1.3 Mn ~ 16.0 Mn ~ 29.7 Mn Education 4% Healthcare 2% Manufacturing 25% Vertical Split (~47 Mn SMBs) 100-1,000 Employees Employees Horizontal Split (~47 Mn SMBs) 1-10 Employees Source: Zinnov Internal SMB Study

3 SMBs contribute significantly towards the economy, however, only ~20% are addressable from an IT stand point currently 2 SMB Contribution To The Indian Economy 17% Of Total Indian GDP 99% Of Total Indian Firms 40% Of Total Indian Workforce Vertical Wise Addressable SMB Units (~9.6 Mn) Retail Mfg. Healthcare Education Prof. Serv. Others 1.79 Mn 1.43 Mn 0.43 Mn 0.89 Mn 1.87 Mn 3.2 Mn 19 % 15 % 4 % 9 % 19 % 33 % 73 % 48 % 55 % 32 % 98 % 58 % Total Addressable Units % of Total Addressable Units % Micro SMBs 45% Of Total Manufacturing Output 40% Of Total Exports From India 25% Of Total Domestic IT Spending 26 % 48 % 40 % 67 % 1 % 38 % 1 % 4 % 5 % 1 % 1 % 4 % 57% (~5.6 Mn) of all addressable SMB units in India have a PC today Micro 2.9 Mn Total PC Penetrated Units Small 2.4 Mn % Small SMBs % Medium SMBs Medium 0.3 Mn Source: Zinnov Internal SMB Study

4 Opportunity for domains and websites in the SMB segment is still tremendous 3 Current Base Of SMBs With Domain Names ~ 1.1 Mn Websites ~ 520 K ~ 90% addressable SMB market still untapped Current Addressable Opportunity 1 Conversion rate from domains to websites < 50% ~4.5 Mn SMBs with PC Access ~2.6 Mn SMBs with PC internet access ~1.4 Mn SMBs with Access ~1.3 Mn SMBs online through aggregators Note: 1 All figures exclude ~1.1 Mn SMBs with domain names Source: Zinnov Internal SMB Study

5 Tech savvy and social internet consumers are driving the SMBs online to tap their target customers 4 >890 mobile users Second largest in the world; Greater than France and UK combined >25 Mn PC Installed Base ~218 Mn Mobile Shipments ~16.3 Mn Smartphone Shipments ~3.1 Mn Tablet Shipments >150 Mn internet users (>29 Mn Internet Households) Third Largest in the world; More than the population of Japan Tech Savvy Indian Consumers >70 Mn social media users More than the population of Italy >18 million LinkedIn users; Second largest in the world >48 billion videos watched on YouTube annually by Indian users >15 million Twitter users; still only 3% of world total >18 million internet users added every year Adding Netherlands population every year Source: Zinnov Knowledge Centre

6 Innovative firms are driving SMBs online too (1/2) 5 Helping businesses create online presence through SMS 1 2 User registers by SMSing FLOAT to Sends business details like Name and Address via an SMS 4 Website identity with URL user.nowfloats.com is created instantly and is optimized for location based search 3 Sends desired website name (e.g. User) over an SMS 5 User content can be uploaded via SMS or a mobile app NOWFLOATS provides domain name (e.g. user.com) if user requests in partnership with Versign Source: Nowfloats, Zinnov Knowledge Centre

7 Innovative firms are driving SMBs online too (2/2) 6 Through Phone.cc initiative, Netcore in partnership with Verisign allows Indian mobile phone users to create his/her own message inbox on the web Benefits To Consumers Benefits To Enterprises/SMBs Allows selective blocking of SPAM messages. Users can block individual brands/marketeers rather than categories Negates the effects of Do Not Disturb Services and user continues receiving selected promotions over mobile internet Reduces marketing costs since SMS based marketing has become expensive Allows business to expand customer reach Phone.cc Message Published Over the internet to Over the cellular network SMS Inbox Source: Zinnov Knowledge Centre, Company Websites

8 However, a variety of factors are still impeding SMBs to tap their online customer segment 7 1 SMBs Satisfied Via Alternate Sales Channels Most of the SMBs are satisfied with aggregator websites Satisfied with other sales channels such as tele calling,sms/ marketing and word of mouth 2 High Cost A large number of SMBs do not budget for web presence; for those who do, the budget is usually less than INR 5,000 3 Lack of Internal IT Staff Most of the SMBs are struggling with lack of internal skills to manage and run website and managing website content 4 Lack of Awareness SMBs are not aware about the key benefits by having their own website due to lack of knowledge and being less tech savvy Source: Zinnov Knowledge Centre

9 Indian domain and hosting market is fragmented and provides tremendous opportunity going forward 8 Current Market 3.5 Mn Domains >1,000 active hosting companies >100 K active resellers Top 5 Registrars focussed on the Reseller Model 3 Domains per 100 internet users Huge Growth Opportunity USA and UK have 27 domains/ 100 internet users currently 16 Mn Domains 7 Domains per 100 internet users Market Opportunity By Mn Hosting Packages ~USD 500 Mn annual Sales Source: Reseller Club, Zinnov Knowledge Centre

10 A number of trends are emerging in the Indian hosting and domains market 9 1 Increasing Focus Of Global Competitors Decreasing Price Points/Changing Business Models 2 3.com The Preferred Indian Choice Increasing Evangelizing Activities 4 Source: Zinnov Knowledge Centre

11 Top global hosting companies are now targeting the India market aggressively 10 1 GoDaddy India customer base increased by 2X last year showing tremendous growth > 150,000 customers supported, currently Customer care facility recently inaugurated in Hyderabad, India. The centre operates in local languages to increase customer satisfaction 60% of GoDaddy India SMB customers are from tier-2,3 cities Hostgator established it s Indian office in Mangalore, Karnataka. Servers are located across Mumbai, Hyderabad and Mangalore Dedicated support provided through partner in India from Mangalore Payments accepted in INR and cash payment facility now provided to gain traction Source: Company Websites, Zinnov Knowledge Centre

12 Increasing competition has led to rapid decline in price points and change in business models 11 Hosters Initiatives To Attract Customers and Generate Margins Website Building Assistance Build your own website models introduced Local website developer search platforms created 2 Website hosting pricing plans have declined by >60% in the last 4 years Hosting plans start from ~ $16 per annum compared to ~$40 earlier Source: Company Websites, Zinnov Knowledge Centre Hosting Discounting/Coupon Promotions Auxiliary Services Services like certificates, web development to sustain business and generate margins BigRock providing free web presence to Justdial customers and monetizing through auxiliary services Mobile Website Freebies Verisign offers its product MobileView to registrars for free. The benefits are in turn passed on to the end customers Net4 has over 20,000 customers using Verisign's free MobileView product

13 .com is dominating the consideration of businesses/influencers 3 12 Domain Name Entity Under Consideration; India Preferred Choice SMB Ecosystem Influencer Ecosystem 1 st Registration Preference 1 st Recommendation Preference.com 41% 74% Globally,.com and.net command >48% share in TLDs 1.net 2% 34% 1 st Aternative.in 11% 44% Note: 1 Top Level Domains Source: Millward Brown Study, DNIB

14 Evangelizing activities is on the rise to stimulate the ecosystem further 13 4 Educating SMB clusters on online identity benefits through various roundtables and education seminars across Gujarat, Bangalore etc. Go Daddy partnered with Google in an offline campaign to promote.com website adoption amongst SMBs in Delhi, Mumbai and Hyderabad Go Daddy providing a bundled offering (.com domain, website and ) to SMBs after assessing their requirements. Google Ad-word freebies also included Dell teamed up with BigRock to bring web products and services to Dell customers at discounted rate by up to 70 per cent to increase adoption Source: Zinnov Knowledge Centre

15 Hosters are well poised to tap the opportunity 14 Hosters have an advantage to tap the SMB opportunity What Do the Hosters Need To Do? Customer Proximity Invest In Marketing Give customers choice. Have multiple brand offerings to create excitement Display and explain offerings in detail. Bucketize offerings as products Customer Needs Create Relevant Offerings Partnerships Product/Service localization is of great importance Increase value rather than decreasing cost Offers and freebies are always welcomed Partner with innovative firms like Nowfloats to gain customer access and differentiation Partner with established players like Google looking to evangelize the market to gain mindshare Offline Payments Give Unforgettable After Sales Service Gain customer stickiness and trust Customers willing to shell out money for quality of services Source: Zinnov Knowledge Centre

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