Software products make a trip to the drawing room

The last 18 months have seen a riot of many other such consumer-focussed software product companies—a sea change from few years ago when the Indian technology product story was mainly the story of enterprise class products like the Finacle and the Flexcube. The rise of cloud computing,viral marketing,and new distribution points such as Facebook have now enabled applications that can be sold across the world with very less start-up costs.

Consulting firm Browne & Mohan estimates the number of Business to Consumer (B2C) software product companies in India at 176 currently. TR Madan Mohan,managing partner,Browne & Mohan,says,“B2C companies broadly fall into four categories. There are search and recommendation firms,companies that facilitate purchases,community building,personalisation and analytics.”

Start up GloMantra has an online personal assistant product myBantu,which helps one search the Web and get three to nine personalised recommendations. Kerela-based Ohile Technologies is selling mobile applications such as stock market and expense trackers to consumers in the United Kingdom,Australia,Germany and Mexico. Bangalore-based Webyog is developing Cloud Magic,a super fast search for a consumer’s online data.

Mumbai-based Hayagriva will release in January next year a product that can save Facebook posts and help create online digital diaries. eMudhra,the consumer technology brand of 3i Infotech Consumer Services,announced last week the launch of MyMoney,a personal finance management product that helps users track spending and achieve financial discipline. Cloud computing company Nivio had launched the world’s first online windows based desktop and is developing more products. Among them are CloudBook and CloudPC—devices that will be priced around $100-200 and provide access to a Windows based operating system and applications that reside in the cloud.

Sachin Dev Duggal,president and CEO of Nivio says that the firm is increasingly making its mark in the consumer software industry. “We have a growing number of subscribers even before commercially launching our services and are positive to achieve a million subscribers by next year. Simultaneously,we expect to break even in 2011,” he notes.

It is difficult to estimate the revenue contribution of B2C companies in the Indian software product story as most of the technology firms are in the start up mode. Based on the September quarter,Browne & Mohan pegs the revenues from the overall software product sector to be in the range of $1.81 billion to $1.92 billion in 2010. “The domestic market for personalisation and others are limited. However,analytics,purchase facilitations and social media companies are discovering domestic revenues streams that seem to be growing quarter by quarter,” Madan Mohan says.

Sharad Sharma,member of Indian Angel Network,foresees an explosion of many more consumer product companies from India because of the level playing field created by the cloud and new distribution mechanisms. “Zynga (creator of social networking games like FarmVille and FishVille) could not get scalability if it did not ride Facebook. Now you need new distribution points. It exists in the West. The person who consumes applications from either FB or the iPhone does not care where it is coming from. But Indians can now participate in the ecosystem,” he says. One of the most talked about and successful Indian software product firms of recent years has been Zoho,which sells both consumer and enterprise applications over the Web.

Sridhar Vembu,CEO of the Chennai-based company says that more than 50% of its customers are from the consumer segment. While they typically use Office suite kind of application,enterprise customers use the firm’s CRM. “Now we have people who are the children of the first generation of IT professionals. They are coming into business and are a lot more confident to venture into the consumer segment,” Vembu says.

Encouragingly,many next generation entrepreneurs appear to be getting the money they require to start a firm—lot many firms are still being funded with family money but there is growing confidence about consumer product companies in the venture capital circle. This bodes well for the future of the country’s software product ecosystem. GloMantra received an angel funding of $1.3 million last year. Earlier this year,SMS GupShup,one of the country’s largest social network,announced a funding of $12 million,led by Globespan Capital Partners and additional financing from existing investors Charles River Ventures and Helion Venture Partners. Althea Systems raised $3 million from Intel Capital in June. Private equity major Sequoia Capital invested $12.8 million in anti virus firm Quick Heal Technologies in August.

However,many in the industry would want to wait and watch before concluding whether the B2C software product trend is a fizzle or a sustainable trend. If the companies can sustain both revenues and profits,it would be a remarkable thing; a nice evolution for India’s services-heavy technology industry.