Last year, Mysore witnessed an inspiring partnership between policing and technology. As tourists poured in from India and around the world during the Dusherra festival, overflowing the throughway of the city of palaces, tourists and residents were greeted by khaki-clad cops zipping past in a never-before-seen trendy three-wheeler, guiding tourists and managing traffic congestions with equal ease.
At the centre of the city police's efficient handling of the situation was the battery-powered personal mobility device developed and built by Greendzine Technology, a Bangalore-based tech start-up founded by former TCS engineer N. Anjan Kumar. Irrway, a far cousin of the more well-known Segway, costs between Rs 40,000 and Rs 80,000 - a fraction of the Rs 3.5 lakh price tag of the entry-level US-made product. The price point and the efficiency of Irrway have not only made the Delhi, Bangalore and Chennai police sit up, but hotels, resorts, IT parks and up-market townships are also looking at it with equal zeal.
Like Kumar, Abhishek Latthe and Apurva Shetty had set their eyes on the stars to find success on ground. The two 26-year-old electronics engineering graduates set up Sensegiz in February 2013. Today, the Belgaum-based company has two subsidiaries in the US and Ireland, which handles its sales and marketing, and ships its two indigenously-built products - Star and Find - to over 50 countries, including the US and Japan.
Star, priced at Rs 7,000, is a wearable smart tech product, which can be clipped to clothing or worn as a band. It triggers automatic alarms on a paired smartphone to let a loved one know if the user falls or experiences a medical emergency. It also has a panic button, and can track fitness and sleep quality, apart from controlling simple phone functions. Find, the other product, is a simple Bluetooth-enabled tracking device that costs Rs 1,500. The company has sold more than 12,000 units of Find in the past year and expects a similar response to the recently-launched Star.
Greendzine and Sensegiz are part of an emerging breed of home-grown start-ups designing and manufacturing IT hardware, a segment in which India lacks sorely, despite a promising start way back in the 1950s and, later, a second coming in the '80s. Though India's start-up ecosystem still favours the country's $146 billion software services sector, and product manufacturing is considered a fool-hardy option, there is optimism among industry observers. Experts say the start-up ecosystem has been witnessing greenshoots in design-led innovation over the past two to three years and may see rapid growth by 2018.The central government's Make in India initiative and a spurt in interest shown by angel investors and venture capitalists to fund tech hardware start-ups might just give the much-needed boost to the industry. Though venture funding into hardware tech start-ups is abysmally low, with a recent report pegging the figure at around $40 million in the past year, entrepreneur-turned-angel investors are keeping a close watch on the developing success stories in this space.
However, to compete with the best in the world, India has to emerge out of the prototype phase into mass manufacturing of technology-driven hardware. That said, as setting up of infrastructure to scale up manufacturing takes time, India must, meanwhile, extablish itself as a product innovation hub, despite a few failed attempts. And, if Information Technology Minister Ravi Shankar Prasad is to be believed, the Centre is ready to travel the distance. "When it comes to technological innovations and manufacturing we will see a few failures along the way, but we have to be patient. Only then will we taste success," Prasad said at an India Today event recently.
So, as India take steps towards becoming a 'product nation', instead of remaining buried under a generic name - as the world's back office or an IT and ITeS services hub - the country will need to support individual efforts like that of Abhinav Verma of LiveBraille, as well as team players like Samay Kohli and Akash Gupta of Gurgaon-based Grey Orange Robotics, or Sagar Apte and Deepak Thomas of CarIQ, which operates out of Pune.
MORE KIDS PLAY HARDBALL
Verma, 20, is not just another engineering college dropout, but has won many awards as a social innovator with LiveBraille - a 24-gm electronic travelling aid for the blind that costs just Rs 2,000. The battery-operated portable device uses sensors to communicate the distance of objects through vibrations and helps the visually challenged navigate the world better.
Sharing a common interest is not uncommon between two friends. However, Thomas and Apte decided to make a meaningful contribution to India's aspirational lifestyle needs with CarIQ. The two automobile enthusiasts left their jobs at US technology firm PubMatic and built two prototypes of a plug-in device that connects to the Internet to equip your car with intelligent features. They went in for mass production in October 2013 after raising money from several angel investors, with two variants: the GSM SmartPlug and Bluetooth SmartPlug, which cost Rs 6,500 and Rs 4,000, respectively. The USB device tracks parameters such as coolant temperature, service alerts and engine load, and alarms the driver if it detects any anomaly.The story of the founders of Grey Orange Robotics is about following one's passion. It was not planned. But product development was the only thing the duo could think of even in their college days. The partnership between the two incubated at BITS Pilani, where both were studying mechanical engineering. It was Kohli who took the lead, with an indigenously-built humanoid robot, the AcYut in 2007. Soon, he and Gupta were a team. They represented India in robotics competitions across 13 countries, winning the gold at the RoboGames in San Francisco in 2009.
But, they had no idea that one day they would build robots that would replace manual labour to bring in more efficiency and minimizing errors in retail, logistics and ecommerce. In February, Grey Orange bore fruit, initially in the robotics education space, only to move away into the robotics products space by December the same year, aided by the e-commerce boom. "Grey Orange would not exist if not for the rise of e-commerce in India," says Kohli.
The other fruity in the product hardware space, Mango Man, has also shown the world how Indian companies can take the fight to global majors with quality products. The company, founded by Sai Srinivas Kiran G. and Shubh Malhotra in 2013, has put up a stiff competition to Google's Chromecast and Apple TV in the domestic market with its flagship Teewe, an HDMI dongle that allows consumers to connect their computers and mobile devices to a television. The streaming device is compatible with Android, iOS, Windows, Mac, Linux, and Chrome, and is available for Rs 2,000, compared to its competitor's price tag of Rs 3,000. Mango Man is also developing music streaming and home audio devices.
Another device that is doing well is Ezetap, a mobile payment solutions start-up founded by Abhijit Bose and Sanjay Swamy. The company has raised several rounds of funding and has sold over 20,000 devices across India, South East Asia and Africa. "Given the requirements and challenges in India, if you win here, you can win anywhere. We released a card reader at a price point which none of our global competitors have been able to match," says Bose, who wants to take on the likes of a Square in the US, once he scales up operations in India.
Confidence is high among Indian IT hardware manufacturers like Manish Patel, CEO of the Mumbai-based Mswipe, a point-of-sale device company. "Earlier, software and hardware operated in silos. They are now getting integrated. India may not be good at mass manufacturing, but we have the ability for highly-complex-low-volume work," says Patel. Mswipe, which has raised an undisclosed amount from Matrix Partners, Axis Bank and DSG Consumer Partners, has launched three products between 2012 and June 2015. The first mobile POS solution was a card reader. Then came the EMV Chip and PIN-compliant WisepadTM and, finally, SmartPOS, an Android phone that can be used to make card payments. Its customers include Corporation Bank, Ratnakar Bank, Shamrao Vithal Cooperative Bank and Axis Bank. Mswipe is also present in West Asia, the US and Southeast Asia through partnerships.
This list of product innovations is not exhaustive, but what may surprise many is the range of offerings across categories. "What we are seeing here is not vertical growth, but a broad-based foundation from where India can establish itself as leading player in the IT hardware space. The sheer variety of innovations is encouraging," says an industry source.
In the past there have been several attempts to make India a robust electronics hardware manufacturing hub, but without much success. However, the pioneering work at the country's premier space research organisations, the indigenously-built rockets and satellites, its space programme or its nuclear capabilities, are a case in point to India's talent pool and what it could have achieved at a fraction of the cost of what developed nations spend on research and development.
In 1955, India's first analog computer was built at the Indian Statistical Institute in Kolkata, and six years later the first digital machine was developed at the Tata Institute of Fundamental Research in Mumbai.
Between 1961 and 1978, however, IBM went on to capture over 80 per cent of India's market share by catering to the country's burgeoning hardware needs, as it tried to catch up with technological advancements in the West, neglecting its own research initiatives. The much-touted IBM 1620 and IBM 7044 found place in the Indian Institutes of Technology. Refurbished models were assembled and part manufactured in Indian units and then phenomenally high annual rentals were charged. For example, the IBM 1401, which was sold at $1,200 in the US, was rented out to Indian institutions at $20,000 a year.
As the IT giant shut shop in 1978, emerging Indian companies started dabbling in the hardware manufacturing space setting up R&D units. The 1980s saw the emergence of Infosys, Hindustan Computers (now, HCL Technologies) and Wipro, with notable contributions to hardware manufacturing, only to move away to the more lucrative software services sector by 1988. What remained of the product business was negligible.THE IT SERVICES LURE
The $146-billion Indian IT industry has grown at a quick pace. From $5.7 billion in 2000, the IT services sector is estimated to earn $110 billion-112 billion in 2015/16 from exports alone, according to industry group Nasscom. Today, the IT industry contributes about 9.5 per cent to the country's gross domestic product (GDP) and has provided over three million people with high-paying jobs. And, over time, Indian companies emerged as global giants.
In the first 10-12 years of the dot-com boom of 1997/2000, most Indian companies worked in areas of embedded software, integrated circuit (IC) design and firmware to help international players build products, but kept away from the products segment. And, with good reason. IT services was a lucrative business. Capital required was minimal and the segment did not carry undue risks. Executing orders was more stable than trying to innovate, and process innovation was easier than product innovation.
However, now that the IT services sector has become mature, a number of experienced veterans as well as hungry start-ups led by young minds have started experimenting in the hardware space. The initiatives may still be wrapped around software and, in some cases, services, but what is interesting is that product innovations in hardware is becoming a norm rather than an exception.
According to Nasscom, India has the third-largest and fastest-growing start-up ecosystem in the world with over 800 technology companies cropping up every year. A number of hardware start-ups are among them.
Mohammed Hussain Naseem, co-founder and CEO of 2mpower Health Management Services, attributes it to "a huge mind shift".
"Appetite for risk taking has gone up considerably," he adds. Naseem, a GE and IBM veteran, sells GetActive wearables designed and developed by an Indian company, which helps people track their fitness. He says a number of factors have come together to make it propitious for product innovation in the country. But hardware design and development is still a tough challenge to crack.
THE SOFT UNDERBELLY OF HARDWARE MANUFACTURING
To understand why product hardware is hard, meet Rohan Shravan, the CEO of Notion Ink. In December 2010, Shravan launched Adam, one of the first tablets on the Android platform, which was well received by the global media for its polished looks, unlike the crude Chinese tablets. There were even comparisons with Apple's iPad and Notion Ink was poised to take off.
However, when the units were shipped, it came as a disappointment on multiple fronts, including build quality, absence of the latest Android OS iteration and controversies related to shipping. Shravan, who has built the company with his own funds, says: "It is easy to criticise something. Remember, in India, there was no proper computer numerical control tooling, plastic injection moulding and there was nobody to handhold a hardware start-up. Unlike a software or a services startup, it is capital-intensive. You have to build and sell a product before you make your first rupee. There was no mentorship. The challenges were enormous."
Apte of CarIQ agrees: "There are no prototyping labs, no testing facilities and the mistakes you make can be very expensive. If an iteration of a product doesn't work, it has to be just thrown away. It is not a piece of code which can be rewritten."
Skanray Managing Director, Vishwaprasad Alva, too, believes hardware development in India is not for the faint hearted. Skanray manufactures X-ray machines that cost a third of what is charged by its multinational competitors. Says Alva, a veteran of GE and Kirloskar Healthcare: "I used to have close to a 100-member product development team at Kirloskar Healthcare and we did some good work in developing indigenous technologies. However, the success of the services industries meant that it took away my best talent. Today, of my original team, more than 90 per cent are in services sector. India's success in services has been a curse and a double-edged sword."
Sudheer Reddy, the CEO of Jay Robotix, believes lack of access to capital has also hindered growth of product hardware companies in India. Blaming venture capitalists, Reddy says: "They are ready to fund the 100th iteration of an e-commerce idea, but will not back a 'risky' hardware start-up. Where are the product hardware funds and accelerators for this segment of companies?"
Also, when product hardware companies are discussed, most people think of them as hardware manufacturing, which is a different story altogether, points out Pinkesh Shah, Director of Product Leadership Institute. Shah says China is way ahead in electronic manufacturing services. "Apple does not manufacture its phones in America. The iPhone is, however, designed, developed, marketed and branded in the US. So, India can have successful product hardware companies without necessarily always having to manufacture them here, though it would be good if we did."
He, however, says: "Unlike earlier, what has changed now is that we are ready to offer an integrated bundle which includes hardware, software and services."
THE CHANGING TERRAIN
Vishal Gondal, 38, is the right person to turn to when it comes to the changed scenario that has made Indian start-ups tackle product hardware successfully. Gondal started Indiagames before cashing out and selling it to Disney, and now makes GoQii, a wearable device which he considers a fitness-as-a-service offering.
The coming of several technological innovations, such as cloud technology, open-source architecture and software as a service, in the last few years, has translated into lower cost for developing hardware. "You can just rent server time, software and you could 3D-model things, or even 3D-print things, easily. Experimental platforms like Raspberry Pi and Arduino have boosted opportunities and confidence. The playing field is a bit more level today for Indian companies," says Vishal.
Investments by well-heeled angels and select venture capitalists have eased the capital access issue as well, but not fully, says Apte. Mentorship of organisations, such as iSpirit and TiE, which have championed their cause, seems to have also boosted the confidence of product companies.
While India does not have a robust EMS (electronics manufacturing services) base, which can support mass manufacturing, a number of maker labs have emerged. These help in rapid prototyping, fast experimentation, tooling, laser cutting, mould making and product validation. 3D printing has further boosted the whole process.
A growing domestic market, the capability to take higher risks, rise of Internet of Things, software as a service, cloud technologies, open source architecture, 3D printing, improved access to capital, mentorship and industry bodies advocating their cause, have played an important role to boost product hardware companies in India. Says Lathhe of Sensegiz: "India has always done well in applied innovation. Now Indian companies are building IP, too, and 90 per cent of our sales come from international markets."
Verma of Livebraille says it is only a matter of time before Unicorns emerge from the product hardware ecosystem in India. "We will have our own Flipkarts and Olas in the next few years." The CTO of Diabeto, a medical device to track health parameters, Shreekant Pawar, says that hardware which had been ignored for long in India is getting its mojo. "Doing hardware is seen as sexy."
Naseem of 2mpower says government should play a role in enabling the success of product hardware companies as this could lead to manufacturing. "Whether it is South Korea, Taiwan, China, Singapore or Malaysia, governments have played a proactive and positive role. If the new government with its Make in India initiative gives a push, there is no reason why we cannot build brands out of India in this space."Sanjay Swamy, Managing Partner of Prime Venture Partners, who has led and now invests in start-ups, says: "Venture capitalists from around the world now realise that hardware, as part of an overall solution, is no longer a liability. Instead, it could well become a competitive differentiator for a company. While this is still nascent in India, I expect to see more action on the hardware front. I wouldn't be surprised if dedicated funds to invest in hardware-centric start-ups crop up in India in the near future, even as existing VCs take measured bets in the space."
For a country accustomed to success only in services, the next few years are poised for a boom in hardware innovation with the new breed of Indian start-ups conquering not only the domestic market but also taking the fight to foreign shores.