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October 2013

Google Hangout – II

By Samir Kapadia, Chartered Accountant
Reading Time 10 mins
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At the outset, I would like to mention that when I started penning the series titled Google Hangout, I had intended to cover more than just the features of the Google Hangout app. The intention was to build a bit of background and create awareness of where we were and where we are heading. While there is a growing perception that Google Hangout may be a game-changer, there is very little awareness as to what are the dynamics involved. In this series on Google Hangout, I have endeavoured to bring out some of the facts which I thought would put things in perspective. The concluding write-up of this series will cover some of the features which suggest that Google Hangout will change the way we communicate with each other.

About this write-up
: This is the 2nd part of the series of articles on Google Hangout. This write-up focuses mainly on the events before Google Hangout was put up in the public domain and how these events directly or indirectly will influence the things to come—one of which is the success of Google Hangout as an instant messaging app.

The previous article briefly discussed the events related to the development of the app-based ecosystem and the rise and decline of various players in the arena of instant messaging apps. In this write-up, we will discuss some of the popular instant messaging apps, which are relevant today, but in the foreseeable future may become ‘also rans’.

The previous write-up briefly touched upon the early events leading to the advent and subsequent developments related to the instant messaging ecosystem. The previous write-up also discussed why Short Messaging Service (SMS) became popular. Thereafter, BlackBerry Messenger (BBM) came into the picture and shook up the world. Today, the scene has changed; the tide has turned for BBM, which is fast losing ground to newer and more nimble players in the market. The following paragraphs, are some of the facts which help the readers understand some of the key factors at play.

The rise and fall of SMS

As discussed in the previous write-up, between the years 2000–2005, SMS was a popular means of communication. The (prohibitive) minimum cost of a voice call was the primary reason. But as time went by, technological advancements, easy and cheap access to mobile telephony, drop in the minimum cost per call, etc., led to the decline in the popularity of SMS as a means of communication. Once voice call rentals started to fall, users started realising that there were disadvantages to using an SMS, i.e., other than the difference in the cost of an SMS vs. voice call, factors such as limit to number of characters per SMS, limitations of the keypad on the phone, perceived need for rich media compared to plain vanilla text, abuse of the SMS system by mass advertisers, etc.

One may say that the role of SMS as an enabler of instant communication reached its peak when it became the de facto means of mass communication. At its peak, SMS was used to exchange greetings during festivals like Diwali, Christmas and Id; banks and other service providers sent updates of transactions related to money transfers, credit card use, bank balance; users exchanged daily SMS’s (containing jokes, positive thoughts, etc) on a mass scale. A whole new ecosystem had spawned due to mass SMS-ing.

While mass SMS-ing capability was the bright side, there was a dark side too. Mass advertisers started targeting a number of mobile users for mass messaging. Consumers across the country started receiving (mostly unwanted) messages. These would range from offers to supply services of a plumber, AC repairmen, to selling insurance, stock trading tips, so on and so forth. Somehow this development seemed inevitable. Mass marketers then found that their calls to mobile phone users (for selling various products and services) were being ignored due to the caller ID facility. Mass advertisers realised that while a call could be ignored, there was no way to stop someone from sending an SMS. The abuse became so rampant that the Telecom Regulatory Authority of India (TRAI) was forced to clamp down hard. TRAI imposed several restrictions such as the National Do Not Call Registry, imposed requirement to register mass advertisers and enforced a limit on the number of messages per phone number per day, among other diktats.

Thus, the fate of SMS as a means of instant communication was more or less sealed. Today, savvy users consider SMS-ing not only an expensive option; they also find it to be a limiting factor when they want to reach out to their ever-expanding network of friends.

The rise and (eminent) fall of BBM
During 2005–2010, i.e., right about the time that the reign of SMS was nearing its end, BBM started gaining ground as the de facto means of instant messaging and communications. The BlackBerry (BB) device was already quite popular as a smart device for official communication (i.e., emailing). With a growing number of users and easy access to the BB data services, BBM started covering ground lost by SMS. By 2008-09, BBM was already accepted by the corporate world as a reliable instant messaging service. In the BB world, email was the official means of corporate communication and BBM was the unofficial yet cool means of communication. Users formed groups and used BBM to exchange jokes, positive messages, etc., just like they had used SMS in the past. The advantage that BBM offered was zero cost. As pointed out in my last write-up, while the BBM service itself was free, one would need to purchase a BB (approx cost 18K plus) and pay for the data charges. Another relevant point was that right up to 2007-08, users would restrict their BB subscription to mail and data services, voice calls were used sparingly. Apparently, at that time, BB had not been permitted due to which the cost of a voice call was far too high. Soon thereafter, various Indian telecom players started offering BB services (data & voice) at an affordable cost. Even then a user would have to purchase a BB device, the cost of which was quite steep for the common man.

Post 2008, a series of changes took place:

• Increase in the penetration of mobile technology— widespread usage across the country
• Advent of global players in the telecom sector
• Falling rentals for voice calls
• Introduction of 3G technology
• Easy access to Internet, through smart phones
• Introduction of better quality of smart phones
• Rise of the iPhone

While one could argue both ways on all of the above factors, it remains an accepted fact that easy access to the Internet and availability of cheaper technology, i.e., both hardware as well as software, were the key factors to the upheaval that was to come. By 2008, Nokia had already started losing ground to BB devices. It was no longer a “status symbol”. At that time, users (and to a great extent Nokia too) started realising the perils of not keeping up with the changing times. Users realised that Nokia’s Symbian-based phones could not match up with increasing end-user expectations, mainly related to emailing and access to the Internet. Also, BB was uniquely positioned because it offered a full QWERTY keyboard. While other device makers did try to play ‘catch-up’, they had already missed the boat.

BB’s troubles really began to surface after the introduction of the iPhone 4. It was slick, userfriendly and what many industry watchers would say ‘path-breaking’. There were several reasons for and against the iPhone, some of which are:

• It was expensive but users felt it was worth it.

•    While users were restricted to the iOS and the iTunes environment, these environments themselves provided for so much that one did not feel the need to look beyond that factor. As a matter of fact, the feeling was that none of the other players provided so much.

•    There was a paradigm shift in the user interface environment. While a standard number pad was considered as a serious limitation, the famed QWERTY keyboard and track ball/pad also seemed to be laborious when compared the iPhone’s touch-based interface.

The dynamics were completely stacked against the QWERTY keyboard when Apple introduced Siri, its much touted voice-based interface.

•    The ease in Internet access gave much needed succour to Internet-dependant apps like Google Talk and WhatsApp. (Here I would confess that I started using an iPhone just about then— around December 2009, and at the instance of my mentor, installed WhatsApp. To be candid, I was more than happy to see my phone bill go down due to the lower number of SMS’s).

•    The Apple app store made sure that more and more (free as well as paid) apps kept cropping up. Users were spoilt for choices. It was only a matter of time that they realised the limitations in the offerings of BBM.

•    The increasing popularity of the apps market place and introduction of iPhone clones was a strong sign that BB, and as a natural consequence BBM, would see that its days were numbered.

•    Many IT players saw the growing popularity of instant messaging apps and felt that there was a gap between what BBM had to offer and what the consumers at large were expecting. Thus, WhatsApp, WeChat, etc., came into the market. Text-based messaging was destined to be a thing of the past. People were already expecting more. Between WhatsApp and We-Chat they got to sent voice-based messages, videos, pictures, map locations, etc. It seemed that BBM was already gasping for breath at that time.

While there are several other facts which one would want to consider, I think it would be suf-ficient to say that players like Nokia (which recently decided to sell out to Microsoft) and BB (taking losses, likely to cut approx 5,000 jobs, considering a sellout, recent announcement that it would of-fer BBM on Android phones) are feeling the heat or as one can say, are dropping out of the race.

The next write-up will be about the popularity of apps like Skype, WhatsApp, WeChat, etc., and how these apps (like their predecessors) are likely to face competition from Google Hangout—the new kid on the block.

I wish all the readers the best of luck with the tax audit season.

Disclaimer: The purpose of this article is not to promote any particular site or person or software. Further comments about various products and services are based on the user experience related information available in the public domain. There is no intention to malign any product or service in any manner whatsoever. The sole intention is to create awareness and to bring into the limelight some thought-provoking content.

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