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Wi Fi in India: Opportunities & Challenges


The Future for Wi-Fi in India: Opportunities & Challenges
Executive Summary
The overall Indian Wi-Fi market (including WLAN hardware, systems integration and software services, not including embedded devices, laptops) is predicted to grow from the current $41.57 million to exceed $744 million by 2012 (CAGR of 61.4%). The necessary market drivers are in place to propel the growth, development and deployment of Wi-Fi into a mainstream technology across the country.

· As broadband wireless access grows, the WLAN network gear sector will exceed $275 Million by 2011-12 (from the current $23.1 Million).

· The combined Wi-Fi market (described as consisting of WLAN networking gear, systems integration, professional services and not including embedded devices and laptops) is expected to exceed $744 million by 2012 (CAGR of 61.4%).

Background:
With the Indian Ministry of Communications and Information Technology declaring 2007 as the Year of Broadband, the priorities are clearly set. The ensuing battle for market share currently on in the mobile space will likely spill over into broadband as a nation starved for connectivity will begin network roll outs. Over the next few years this will create a new digital India with ubiquitous broadband connectivity, both wireless and wired, teeming with an always-connected young generation that is mobile and empowered. At the forefront of this transformation will be a familiar wireless broadband technology: Wi-Fi.

India’s current broadband subscriber base is still just about 2 million (November 2006), a far cry from the Broadband Policy which targeted 3 million connections by end of 2005 (falling short by 33% a year later). This is now set to change as the Government spearheads a strong broadband penetration into the country. The combined effect of a number of macro economic and social factors together with a large domestic demand seem poised to bring in a phenomenal growth in wireless broadband in India.

This report is a detailed analysis on the current market scenario in India for Wi-Fi, its enablers, the market trends and applications within India. The report looks at what is coming ahead, how Wi-Fi and other technologies will co-exist, the opportunities and challenges moving forward.

Wi-Fi is not new to India and has been deployed in enterprises, campuses and SOHO sectors for several years. However, now more than ever before it is clear that all the enablers for creating a sustained Wi-Fi network will emerge. The availability of a robust national data-network backbone remained somewhat unutilized all these years due to the following reasons: high costs of data circuits and generally high bandwidth costs. This has changed significantly in the last year with a general drop of over 70% in data link prices.

End-Point Proliferation:
On the user side, a phenomenal 100% rise in laptop consumption over the last year is only an indication of shape of things to come.

As multi-national companies and Indian corporations continue to grow their Indian offices (expected growth in MNC hiring in tech sector to double in 2007) and global work-practices begin to be seen in India, the always-on connected professional is increasingly visible. Flexi-hours and home-office culture has set-in in the tech cities making laptop usage and home Wi-Fi a necessity. The small business enterprises are contributing significantly to the mobile work-force by becoming the fastest growing segment in laptop consumption.

The Indian Government is considering halving excise duty on hardware (proposal status as of January 2007) which will likely bring in taxation level on par with China. Should this become a reality, PC and laptop costs will come down further increasing consumption even more.

Undergraduate students and young professionals are picking up the laptop as their first computer purchase. This is a marked difference from the earlier days where desktop PCs was the trend. The PC segment continues to grow at about 22-24% per year but the laptop seems likely to continue to grow at 100% rates over the next two to three years. With an estimated 80% laptops shipped being Wi-Fi enabled, there will be a number of mobile Wi-Fi commuters in the cities.
Although the near-term opportunity for Wi-Fi is primarily oriented toward traditional data applications (web surfing, email) via a PC, India’s mobile revolution has already generated a cellular subscriber population of 143 million (as of December 2006). Adding in excess of 5 million subscribers per month, India is likely to cross the 250 million mobile population within 2008. With 3G scheduled to be launched, a whole community of data-capable, multi-band smart phones mobile devices will enter the market. The country will see a proliferation of Wi-Fi end points over the next three years driving demand for ubiquitous wireless points of presence.

Enterprise Wireless Applications:
India will witness innovative enterprise wireless business applications. One such example is the Roving Agent service where a ground staff of a domestic airline carries a Wi-Fi equipped device and prints off a boarding card for a traveler at a long line in the check-in counter. Or the convenience of paying petrol bills from the car via a credit card without having to walk up to the counter.

As companies seek wireless solutions to gain a competitive edge, Wi-Fi applications on the manufacturing shop-floor, in warehouses and points-of-sale will drive faster and more accurate transactions. Globally, organized retail sector is one of the largest consumers of enterprise wireless solutions. This sector is just opening up in India, as the global retail giants jostle for shelf-space to lure the massive middle class. These growth areas will drive up demand for Wi-Fi applications.
The growing Managed Services sector will extend into wireless enterprise as centralized servers will manage distant wired and wireless devices and applications for better control and improved operational efficiencies. Vehicular and goods control for transport and logistics organizations will continue to adopt wireless applications, many of which will be Wi-Fi powered.

Government Initiatives:
Government initiatives for unwiring the city (as in Pune and the Unwire Bangalore project) are ambitious attempts and strong indicators of government commitments to make wireless broadband a reality. These projects are a mix of WiMAX and Wi-Fi where WiMAX links up to the backbone and Wi-Fi points proliferate in the access segment from within enterprises and homes. The success of these projects depends on several factors including a viable public-private sector joint model, transparency and clear business ROI for private sector players.

Innovation in Wi-Fi:
Innovation is being driven by firms and academic institutions seized by the potential of Wi-Fi stemming from its speeds, lower cost and use of unlicensed spectrum. Cost-effective point-to-point and point-to-multipoint Wi-Fi solutions being developed and have begun to be deployed in a number of large campuses and rural areas. Top technology schools are driving research and prototype implementations on new MAC technologies that will use off-the-shelf Wi-Fi chipsets for rural broadband over 10-30kms ranges.

Key Findings of this report:

· Broadband wireless access will grow and subsequent WLAN network gear sector will exceed $275 Million by 2011-12 (from the current $23.1 Million).

· The combined Wi-Fi market (described as consisting of WLAN networking gear, systems integration, software services and not including embedded devices and laptops) is expected to exceed $744 million by 2012.

· The overall Wi-Fi market in India is still in its infancy and is on the cusp of a period of sustained growth. Growth inhibitors such as lack of bandwidth, low penetration of laptops and PDAs are fading away and a buoyant device market is projected. Tonse projects that the laptop market will double for the next two years and will exceed 5.5 million annual units by 2009-10.

· Increasing number of Wi-Fi end-points will drive public domain hotspots across the country. Hotspots in cafes and malls will grow but hotspot billing, and roaming related issues need to be resolved.

· Early WiMAX trials will grow into full fledged deployments but they will be predominantly limited in backhaul for the next two years. Wi-Fi equipped laptops, smart-phones and devices will continue to feed off of these broadband wireless links through Wi-Fi access points at home/office and at hotspots. In the longer term, mobile WiMAX may bring additional methods of connectivity to India, and Wi-Fi will continue to complement WiMAX

· The Government’s strong push toward Broadband and ‘unwired-city’ initiatives will provide enablers for broadband Internet applications. As Internet penetration increases, on-line life styles will become more prevalent and wireless access will become more ubiquitous. India’s emerging content industry fuelled by Bollywood, cricket and music will feed a new generation of youth that will seamlessly use cellular and Wi-Fi networks to exchange files and upload personalized content. Nokia has introduced dual-mode Wi-Fi handsets, Motorola is contemplating release of a dual-band Wi-Fi cellular device in India in 2007.

· Applications such as Voice over Wi-Fi (VoIP over Wi-Fi) continue to hold the key to even more turbulent market changes. But with VoIP being currently restricted, VoWi-Fi is not yet a reality in India. Once the restriction is lifted, a proliferation of dual band Wi-Fi-cellular devices would happen.

· Wi-Fi certification and testing services will begin to grow in India targeting both Indian and overseas semiconductor, ISV as well as networking gear companies. Indian firms have already been developing Wi-Fi IP for the global market, and this sector will grow further. The innovations developed in India will address local applications as well as global markets.

Opportunities and Recommendations

· There are clear opportunities in the hotspot market for full fledged billing, PIN/security administration for users, and roaming solutions.

· Travelers to tier-2 towns would immensely benefit if Airport Authorities move from high flat monthly rentals to revenue-shared models, enabling the system integrators to profitably run the hotspots.

· There is a clear need to increase general awareness and education about the new Wi-Fi solutions, standards and capabilities so corporate network heads/system Integrators can make better informed decisions and benefit vastly from them. There are alternative emerging technologies and it is important to ensure that the market is educated well enough to differentiate between benefits delivered today at current prices and what is likely to happen in future.

· Innovative enterprise applications adapted for the needs of the Indian enterprise will fly.

· Wi-Fi based solutions have a great opportunity to provide appropriate wireless solution at feasible prices for large tracts of rural India. In combination with long-haul wireless technologies such as WiMAX, Wi-Fi proliferation is bound to multiply and is ideal for quickly connecting rural communities.

· Wi-Fi is well suited to becoming a strong product differentiator for the millions of cellular handsets that are being sold every month, as ‘attach rates’ rapidly climb up.

In short, the emerging Indian broadband market is on the cusp of a huge growth curve. And Wi-Fi is perfectly positioned to provide instant broadband access today from devices that are already available, over unlicensed spectrum in a safe, secure and reliable manner.





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