When I reached India for a three week vacation early this week – the first thing I noticed was that the only Paid Phone Booth left in our apartment complex had closed.
A lot of Mom n Pop stores have extra phones installed in them – through which, customers can make paid phones call. These phones are usually installed in a booth – hence the name.
India adds about 8 – 10 million mobile phone subscribers in a month, and has about 300 million mobile phone subscribers in total. In terms of rate of growth – it is second only to China in this market.
India also has the cheapest telephone rates in the entire world. Mobile phones are also very cheap, and can start with as little as thousand rupees or about 20 dollars.
All these factors make mobile phones ubiquitious, and you will rarely find anyone without a mobile phone.
Video killed the Radio Star?
New technology will always replace older technology, and only a company that constantly reinvents and innovates (even move to another industry) can survive in the market place.
As an investor, it is always better to stay away from companies that operate in industries where major game changing technologies are showing up in the marketplace.
For this reason, I have carefully stayed away from at least two industries – Newspapers and Publishing and Fixed Line Telephone operating companies.
The Internet is changing the newspaper market in a profound manner, and while a lot of the newspaper companies may reinvent and innovate – there are simply too many other stocks to pick from.
Mobile phones are already replacing landlines and I am away from those stocks also.
In my mind, these are easier decisions. The harder decisions are things like the leather industry. The green movement is growing, and more and more people are shunning leather. However, the rate of change doesn’t seem to be of an alarming magnitude. In general, it seems that our love for shoes is more than our love for goats.
Another interesting industry is the mobile phone service providers. I have recently used quite a bit of Voice Over Internet Protocol (VoIP) phones – and they are lot cheaper than mobile phones, and get you the same voice quality.
I believe VoIP will rise considerably with the rise in internet penetration in countries like India, and will have a substantial market share in the telephone market. However, this doesn’t seem to be such a threatening factor to mobile phones in the near term.
A lot of these industries will be substantially different in the next ten years or so and if you watch closely – you will find examples of a lot of businesses that are dying slowly around you. As an investor you want to spot these dying businesses, and get away from them.