India’s fledgling start-up scene has a reason to rejoice. Twitter’s acquisition of Indian mobile phone marketing out-fit ZipDial, reportedly for $30-40 million, shows the global tech giants’ appetite for innovative firms as they look to grow in the world’s fastest growing Internet and mobile market.

So far, Silicon Valley darlings have been acquiring firms in India purely from technological standpoint. For instance, last year, Facebook bought Little Eye Labs, a firm that builds performance analysis and monitoring tools for mobile apps. Yahoo bought Bookpad, whose service allows developers to add document viewing and editing to their own applications.

Seen in this backdrop, Twitter’s ZipDial acquisition is strategic in nature. With a slowing growth in the U.S., the firm has to bank on emerging markets such as India where the Internet user base is set to cross 300 million, as per the Internet and Mobile Association of India. Some conservative estimates peg this number at 120-130 million.

However, the challenge in India is most people use basic phones without net connection or even those who use smartphones consume very little data, which they use for services like Whatsapp or Viber. On average data consumption of an Indian user is just 5 per cent of what a typical American user consumes, according to ZipDial. ZipDial gives clients phone numbers for use in marketing campaigns. The service works on a premise that consumers call the numbers and hang up before connecting and incurring charges, and then receive promotion-related text messages. ZipDial has more than one billion connections with over 500 brands across 60 million users. Twitter can now tap ZipDial’s rich technology to reach out to every Indian with a mobile phone, sans internet connectivity.

The firm has to catch up with its rival Facebook on user base in India. Facebook has a user base of 112 million. While Twitter does not officially share its Indian numbers, data from eMarketer suggests India overtook the U.K. to become Twitter’s third-largest market, with 17 million users last year. ZipDial’s deal also comes as an image booster for India Inc. India, which has so far thrived in global scene through its Indian IT services industry and big ticket acquisitions made by traditional conglomerates like Tatas, Birla and Mahindras, is often criticised for lack of innovative companies.

Even, the internet companies that have emerged from India such as Flipkart, Snapdeal or Olacabs, in which investors have pumped in $4.1 billion last year, are all copycat versions of global peers like Amazon or Uber.

The time is right for innovations to flow in India. With the slew of Silicon Valley firms making the march towards India to participate in Narendra Modi’s digital India vision, Indian start-up firms will do well in coming out with innovative ideas to solve the challenges of internet access and reach, rather than carrying a ‘me-too tag’.

sanjay.v@thehindu.co.in

(This article first appeared in The Hindu dated January 26, 2014)

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