Saturday, March 15, 2008

A Virgin Concept in Mobile Telephony

More and more companies have realised that Innovation is the only thing that can distinguish any player in this ever increasing competitive environment. Richard Branson of Virgin Atlantic fame, has always been a forerunner in this aspect. He was on news for two reasons in the recent past. The first one for his unique experiment of flying his jet liner -for the first time-on bio fuels. This has raised many an eyebrow. Purists in the business argue, that there is nothing remarkable as far as that experiment goes, and that it was just another typical Branson trick to attract media attention. Well! that he certainly attracted. His eccentric, out of the box image has surely gone well with the media so far!

The second reason was his message on the launch of Virgin Mobile in India. Virgin announced a jaw dropping, 10 paise return back to the consumer for every 60 seconds of incoming call entertained. A unique idea atleast for the vast Indian consumer base.
The idea is clear enough. An innovative move to attract users to encourage more incoming calls to have a limit on their bill, and hence encourage more callers to subsribe to Virgin! Neat idea I must say . But before you jump over to change to Virgin connection a small analysis of your scheme would do no harm!

The service expected to be available any time this year, is expected to target the ever increasing youth consumer base (which is an estimated 400 million in India, six times the number in the US!) , and will be purely prepaid in nature. They plan to use TATAs CDMA network infrastructure .

Now for the catch. They plan to charge every subsriber 50 paise per minute for every outgoing call pulse of 60 seconds. So for every 60 seconds of call made on a Virgin -Virgin pair, Virgin stands to make 40 paise per minute, which is actually still higher than some prepaid schemes of Airtel or Vodafone, which make only 30 paise per minute! In both cases (Virgin or Airtel) the idea is to attract a larger volume of customers at the cost of lowering a revenue. But Virgin goes one step furthur by sharing that revenue with the consumer , by encouraging him to entertain an incoming call, thereby attracting a larger subscriber base, and still managing to make 10 paise per minute more than its rivals!
I remember way back in 2001 (When Mobile phones were still the gadgets of the rich!!) people carrying huge brick like phones , and paying heavily through their nose for both incoming and outgoing calls. Barely 7 years later, we are to see people actually being paid for using their phones. Now thats what I call a 'Virgin' concept!

6 comments:

Hari said...

This reminds of the scheme Used By Organized retail network in this town . Here old paper fetch you 6 Rs per Kgs. But in this new Mall they give 45Rs/kgs . Catch lies You have to buy four time high their selected item. So to get your 6Rs worth N.P They take from your pocket 141 Rs and you bring home Wanted(unwanted)goods!!!

Venkatesh said...

Krishna seems to have got his fundamentals wrong... Virgin cannot earn more on outgoing than any of its counterparts... who also charge 50ps...

Infact its counterparts have an advantage of nil IUC (interconnect user charges) for the Onnet calls(calls made within the network).

MVNO's (like Virgin) can be succesfull only if they are able to create niches for themselves... and there by able to charge more or address some need which so far had been obscure to the entire lot of Vodafones and Airtels...

If not for this niche.. then it has to be the excess capacity of Tata Tele at the most cost efficient price... not surprising, given the installed capacity of Tata Tele and the spectrum efficiency of the CDMA...

Further the incoming charges benefits pass-on to the customers seems incongruous to the lovely ads I saw on the TV.

Those advts costs... and cannot be indulged for long...

For those who are intrigued by the above... I will simplify further...

When you buy an tomato at the Reliance Fresh.. you know it will be the best in quality and lowest in price... But when you buy it with an objective of selling it, then you cannot be more cheaper than the Reliance Fresh....

and now as a consumer, if I know the above fact... will I come to you or go to Reliance Fresh...

Sita said...

Its good to have more and more players in the market for any commodity as no one can dictate the prices and customers will get the best prices!!! So, its a good news for consumers!!!!:)

Panduranga said...

It s certain that everyone wants to make profit in the business. Its just another concept of marketing and making people belive that its different. First question every individual will ask is this s only between virgin to virgin or other service proivders too. If its former one then its not going to make much differne in the market.

Panduranga said...

It s certain that everyone wants to make profit in the business. Its just another concept of marketing and making people belive that its different. First question every individual will ask is this s only between virgin to virgin or other service proivders too. If its former one then its not going to make much differne in the market.

Bullsight said...

I believe as per new player entering India Market, but Indian customer are different from every other one, Virgin still have long way to go.. only the concept will not work, hope they do something soon to get the market otherwise it is too lateto get absorbed in the sea