This presentation talks about the Important Characteristics of the Software Product Industry, Why India needs The Software Products Industry. Indian Software Product Industry touches 3m small enterprises today. It will touch 30m enterprises – small businesses, rural schools, primary healthcare centers, small farms, etc. - in 10 years

1. India as a
Product Nation
The Next Google can come from India
June 2014
iSPIRT – Indian Software Product Industry Round Table is a non-profit think tank formed by leading practitioners of the industry
to assist in the cause of building a healthy, globally-competitive and sustainable industry. Visit www.ispirt.in for more details.

2. Simplifying Terminology
Entrepreneurship View Industry View
Software
Products
Software
Products
Software
Services
Telecom
Services
Restaurants
Auto
Ancillary
Plant
Telecom
Equipment
E-commerce
Startups
Product
Startups
Taxi
Services
Online
Content
Defense
Aerospace
Tech
Industry
All
Startups
Tech
Startups
Digital
Industry
Product
Startups
Software Product Industry
is at the intersection of “Tech Startups” and “Product Companies”
2 2

3. Important Characteristics of the
Software Product Industry
3 3
SCALABILITY. Cost of production is low and
business scales rapidly once the product is
established.
VALUATION. Markets value Product Companies far
higher than others, due to the non-linear
scalability and Intellectual Property
REGENERATING. One successful company
spawns many more for service, support,
distribution, etc. into a recursive growth
POTENTIAL. Innovation and new product
development has endless potential, once
mastered.

4. A brief Introduction to the industry. Establishes the power of the
industry and its potential for value creation.
Software Product Industry
4 4

5. What is the Software Product
Industry?
5 5
Tailor who can make shirts Ready-made shirts makers
SERVICE INDUSTRY PRODUCT INDUSTRY
Software products are not IT Services*
 IT services companies are like tailors who can either stitch
custom suits or alter a standard design for the client.
 Software product companies make readymade suits (mass
production). People select the suit they like, try it for fit, and
buy it on the spot.
* The Neti Neti (Not-this, not-this) definition has been traditionally popular in India, in defining a concept as
distinct from other known or established ones

6. Distinct Business Model
As distinct as the Airlines (people moving service) and
Aircraft (enabling Airlines) industry
6 6
SERVICE INDUSTRY PRODUCT INDUSTRY

7. Service Industry is built on
other people’s Products
7 7
TCS
Infosys
Global
Services
Company
SAP
Oracle
Microsoft
Customers
(India & Aboard)
Global
Customers
Impact:
Viability and market success of products
is mainly established by adoption by customers,
particularly in Winner-take-all software product market

8. Growing Service =
Growing Product Adoption =
Growing Value Creation.
8 8
Airtel
Verizon
Apple
Samsung
Cisco
India
Customers
Product Flow
Value Flow
US
Customers
Recent Example:
WhatsApp bought by Facebook for $19 Billion
Over $40/user. Had substantial Indian user base.
Same price/user paid to Hotmail by Microsoft in 1997.

9. 9 9
Trends indicate gradual, global
shift from custom-made
(expensive to build-own) to
mass-customized. Investments
into products is accelerating
world over.
Brand creates value.

10. Branded Products capture value
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Apple prints “Designed by Apple in California” on the back of
every iPod and iPhone it sells, sometimes in a ridiculously tiny
font size
Foxconn the leading manufacturer of Apple* products gets $8 Per iPhone**.
Apple, the owner of the design and Intellectual Property has $319 in
operating margin per iPhone.
* http://www.technobuffalo.com/2014/03/28/foxconn-credits-apple-with-13-profit-bump-in-2013/
** http://www.slate.com/blogs/moneybox/2012/09/25/foxconn_getting_by_on_8_per_iphone.html

11. The Macro-economic argument
Why India needs
The Software Products Industry
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12. 1122
Communications
Electronics Defense
Software
The Software Product Industry
is the enabling industry for
many sectors

13. Innovation and Software Products
are deeply Linked
Software Products are the quickest
way to deploy innovation at scale
1133
in many ways
Innovation leads to Intellectual
Property (patents) and further leads
The fastest pace of innovation
happens in the tech world
to product development

14. Software Product Startups
> Entrepreneurship
>> Competitiveness
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Other industries too becomes globally
competitive and attain scale
Increased consumption of innovative
technology at an affordable cost
They solve important problems of small
enterprises and consumers
Most new startups in India are software
product startups
India takes its
place in the world

15. Product imports are growing faster
than Services exports
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Growth in Indian
IT Services
Exports to Slow
Down**
Nasscom. 2012
India electronics
import bill could
surpass oil*
- senior advisor
Govt. of India
* http://www.reuters.com/article/2011/11/13/india-wef-electronics-idUSL3E7MC08E20111113
** By John Ribeiro, IDG News Service.
http://www.pcworld.com/article/249598/growth_in_indian_it_services_exports_to_slow_down_says_nasscom.html

16. Now, the need to play the
Product innings
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Made-in-India Products
Made-in India Services
Telecom (Airtel)
Airlines (Indigo)
SW Services (Infosys)
Hospitals (AIIMS)
Natural Resources
Iron-ore, marble, etc. (unfinished)
Leather, gems, etc.(semi-finished)
Body shopping (human)
Defense
Aerospace
Electronics
Software Products
First innings
Second innings
NOW!
Third innings
Need to build Higher-value Export Portfolio

17. Our Software Product Industry is solving India’s hardest problems
Transforming India
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18. Productivity Gains =
Transformative Potential
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Agriculture Healthcare Education
Software products offer solutions that can be
deployed in a distributed fashion to millions of
small enterprises and consumers untouched by
technology till today.

19. Example.
Tally accounting software product has helped nearly a
million SMBs gain control on their finances and taxes
1199
Made in India. Made for India

20. Software Products for Agriculture
2200
Agriculture
Farmers can embrace new knowledge
and information to improve efficiency
and speed in the agri supply chain

21. Software Products for Education
Education
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Creation of innovative test-prep
products and state-of-art teaching to
bring in learning effectiveness.

22. Software Products for Healthcare
Healthcare
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Software based medical devices and
personalized oncology treatment is
improving productivity manifold.

23. SPI will provide innovation blowback
to the rest of the world.
Not just India for India.
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Tremendous untapped potential
to innovate exists in India

24. This section outlines some of the factors that influence creation of a
successful software products industry.
What creates a successful industry?
2244

25. Lack of Productization.
We are unable to create value out of our
successes. Examples.
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We conducted the
World’s largest successful
election. Are we
becoming the “Microsoft”
of Polling machines?
Should we not be a
global leader in identity
implementation, apps
and services with
“Aadhaar”?

26. Why Indian Products are
unable to gain advantage from
large domestic opportunities
2266

27. Can we tilt the balance?
Creating level playing field.
2277

28. Buying Services rather than
products leads to inefficiencies
2288
Main issues:
1. Cost of development is far
higher than cost of
customization.
2. Maintenance and update cost
would exceed cost of
development.
3. Lost product opportunity.
Certificate
Certificate
A simple survey of
A simple survey of
software used by 57 large
cities in India issue of a
“Birth certificate” shows
that almost every city got
software used 57 large
cities in India for issue of a
“Birth certificate” shows
that almost the every city
got it done on own.
it done their own.

29. Does the Government have a role
in developing an Industry?
2299
Government as a Participant Government as a Catalyst
Many examples are available
where the government has set
the agenda that was fulfilled by
private enterprises

30. Software Product Markets =
Winner-take-all.
3300
opinion
leaders
significant
control
direct
control
Corporate
local
Subsidiary
Distribution
Strategic alliances
Customers
Communities
Analysts
Opinion* Matters.
Startups wielding less
opinion-making power,
lose out to established
players despite good
product
* Branding, euphemistically
** Depiction borrowed from Concept Green, LLC. Although the idea is very common.
http://www.conceptgreen.net/buzz/blog/hello-world-welcome-to-concept-greens-inaugural-blog

31. Government Could help.
While the Private sector helps itself.
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problems through Challenge Grants. d Software Product Industry recognized as
Pool of Software
products of
importance
Govt. should promote incubation
centers under PPP-model to improve
odds of success for startups.
Industry think tanks and organizations would create buyer
awareness for “Made for India” products, Govt. should
create platforms for apps through APIs.
d
d
d
While the Industry promotes entrepreneurship and employment in startups as a
good career option, the Govt. should draw focus of the best minds on critical
a National priority
Market Making, to create viable
domestic opportunity
Make it easier for
startups to climb the
ladder
Strategic
software
technologies
d
Reward
success

32. Shift from Services to Products is not easy
India’s ticket to becoming a Product
Nation
3322

33. Why “Product Nation”
Based on the Story of Israel
(called “Startup-Nation”) that
has become a power house of
Technology product startups
that gain global acceptance.
3333
ISRAEL
Second largest in companies doing IPO on NASDAQ
Second highest number of tech acquisitions in the world

34. Software Products Industry can do
what the Space Program did in the 90’s
3344
The train has not left the station
and a small nudge for Software
Products will deliver big wins for
the country

35. The possibilities are astronomical
 Indian SPI touches 3m small enterprises today. It will
touch 30m enterprises – small businesses, rural
schools, primary healthcare centers, small farms,
etc. - in 10 years
 Creation of 1,00,000 Software Product Companies in
India, leading to employment of 3.5 million technical
people, and creation of $500+ billion in Market
Value in 10 years
3355

36. Brand India
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GREAT ENGINEERS GREAT IDEAS
Software services
branded Indian
talent
Software products
will brand Indian
innovation across
the world
Gradually change the branding
(reflection in the minds of outsiders)

37. The Two-part Products Story
The Current Theme
3377
Gradually shift from Current theme
“Made In India” or “India Inside”
Global Brands
Software developed
in India

38. The Two-part Products Story
The New Theme
3388
We are in the
best position to
understand and
meet the needs
of India
Our innovation
and scale can
serve global
market
demands
MMaaddee ffrroomm IInnddiiaa
To a new theme of
“Made for India” + “Made from India”

39. Three fold controls
The Software Product Industry could provide
3399
The choice of technologies that
could provide the best outcomes,
chosen through studied approach.
Focus on building
user experiences
that work best under
local conditions
(e.g. Mobile First
approach).
Products made in
India could address
the current and
pressing needs of
the local market.
2.
Consumer
Experience
1.
Customer
Priorities
3.
Technology
Rollout

40. Do we have the right enablers that are needed for the emergence of
Indian Software Product Industry in a big way
Enablers of the Transformation
4400

41. 4 Major Technology Enablers
4411
Mobile
Smart phone that
can run application
and deliver services
When and where you want
Cloud
Pay-as-you-go
inexpensive infrastructure.
Scalable as needs grow
API
Flexible, safe and
easy way to combine
applications that use
each other
Open Source
Free to use software
that can be combined
effectively into apps
and platforms
$

42. Cloud makes Infrastructure
Affordable and Accessible
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CLOUD CLOUD
“Public Cloud”
(Lease Rented Apartment)
Infrastructure from
a service provider.
Pay for use only,
one machine at a time
“Private Cloud”
(Self-owned Apartment)
Your owned Infrastructure
made easy to use
All paid upfront. Privacy
means confidentiality
Comes in Two Flavors
Cloud Providers
Any Corporation
Any Government
Build and own your Cloud.
Tools available

43. One device formula
User Computing Device = Smart phones with Apps
4433
Smartphones Are PCs..
...only they're more personal...
...and do nearly everything better...
India is seeing a surge in Smart phones (one device for voice
and computing needs) and could become the default user
computing device to build “Made for India” apps
Headlines from the article on LifeHacker: http://lifehacker.com/5681573/your-smartphone-is-a-better-pc-than-your-
pc-ever-was-or-will-be

44. The Apps Economy: How it works.
4444
Software
Platform
API
Management
Choose Apps
they need and
install
Sell apps they
make
Key technologies of Cloud (distribution), API (secure, controlled access
to platform), App
App Store
(Marketplace on Cloud)
Apps
(Paid or Free)
Developers End Users

45. The World is moving towards API
4455
API* enables independent entities to build software
(products) that can link and work together with ease.
Integrated applications or products is necessary for
good user experience.
Data
Core Banking
Application with
API access
Personal
Finance
App
Tax
Planning
App
* Application Programming Interface (API) is fast moving to become a business concept than a technical one.

46. API Technology mature and
now available
4466
Many products
and major apps
Provide API service
Advertising
App
Games
Other well-known API providers
Tripit
Travel
Google
Maps
Walmart
Shopping
Walgreens
Pharmacy

47. 4477
Free and open-source software now
powers every computing need
$
Open-source
Free software
* The world has realized that Open-source cannot compete on price alone
Free
Source
Code
Expertise*
Adoption
Innovation
+
Certain critical areas of
technology may need National
initiatives to make open source
software usable and practical

48. National Initiatives on Open-source
Infrastructure: A Chinese Example
4488
• * People’s Republic of Open Source: China Preps
National Linux Distribution
• The reference architecture is being defined by
the Ministry of Industry and Information
Technology’s The China Software and Integrated
Chip Promotions Centre, or CSIP
* Some useful links on the subject: http://www.wired.com/2013/03/ubuntu-china/
Technical Evaluation Report. The Emergence of Open-Source Software in China
[http://www.irrodl.org/index.php/irrodl/article/view/331/762]. Open Source in China
http://www.slideshare.net/jaaronfarr/open-source-in-china-updated

49. Affordable Platforms that enable
Product Innovation
4499
$
Cloud Computing
• Reduce capital expenditure
on hardware infrastructure
• Subscription pricing affordable
Smart Phones & Apps
API-driven Development
• Designed for building software
that integrate with each other
• Easy to build services that get
widely adopted
Open-source software
• Smart phones would be the
future of user computing devise
• Easy to build with small teams
• Reduce capital expenditure
on software infrastructure
• Free, but needs work on
making effective use

50. 5500
Thank you