Arvind's Newsletter

1.India's internet user growth has stalled: Of India’s roughly 1bn mobile-phone users, a third still use old-fashioned dumb-phones, mainly for voice calls. And recent data suggest that they are not about to upgrade them. All but a tiny proportion of Indian internet users get online using their phones. Yet the number of wireless broadband connections is flat. In October last year, the latest month for which figures are available, the telecoms regulator counted 790m wireless broadband connections, barely exceeding the previous peak of 789m, which was recorded in August 2021.

Smartphone sales are down. After growing for a decade, sales peaked at 161m units in 2021, according to idc, a market researcher, which reckons that last year the number fell to 148m. Meanwhile the average smartphone price has surged, from $163 before the pandemic to $220 in 2022.

The digital divide: A number of recent studies point to the scale, and deep unfairness, of the digital shortfall. GSMA, a telecoms trade body, estimates that half of adult Indian men owned a smartphone in 2021. Only a quarter of Indian women did. Another divide is between rural and urban India. The internet penetration rate is 103% in cities (because of individuals with multiple connections) and 38% in the countryside. Three-quarters of graduates have a mobile phone of some sort, while three-quarters of those with primary-school education do not.

A slowdown in internet growth isn't good news for India. Without a smartphone, it becomes difficult for many to access government welfare benefits, rations and vaccines, among other things.

2.Tech meltdown- not just in the west: India’s IT and startup sectors may lay off 15,000 to 20,000 employees in the next six months, battling slowing demand after the hiring frenzy of the last two years inflated salary costs.

“Fifteen thousand employees will get retrenched over the next six months, but this will be the last leg of the recession. However, there are skilled employees who are getting absorbed into the industry. Attrition in many of the product or IT service firms are upwards of 15%, which means despite layoffs, there is room for lateral hirings," said Kamal Karanth, co-founder of Xpheno, which specialises in technology and startup hiring.

Investments in start-ups peaked in March 2022 when $3.7 bn was invested, but since then the climate has cooled down significantly and only 0.9 bn was invested in December.One reason is the woeful performance of firms that went public in 2021: Zomato (food delivery), Freshworks (enterprise software), Paytm (payments), Policy Bazaar (insurance) and Nykaa (fashion). The share prices of each has tumbled in excess of 59%.The poor performance means that other planned listings, such as that of PharmEasy, an online pharmacy, will not now go ahead. Acquisitions have been similarly hit.

In response to the tougher environment, costs are being cut. Inc42, an online publication tracking startups, counts 20,500 layoffs over the past year, probably foreshadowing a much bigger wave. Edtech has been especially hard hit, with 16 companies axing over 8,000 employees, the most coming at Byju, India’s most valuable startup, which is sacking 2,500 employees.

Anand Lunia of India Quotient, a VC firm in Bangalore, quoted in the Economist, believes a quarter to half of the current unicorns will become zombie firms that will exist in name but cease to be funded or operate. 

3.In an interesting development, Brazil and Argentina to start preparations for a common currency. Other Latin American countries will be invited to join which could create world's second currency union.

Brazil and Argentina will this week announce that they are starting preparatory work on a common currency, in a move which could eventually create the world’s second-largest currency bloc. South America’s two biggest economies will discuss the plan at a summit in Buenos Aires this week and will invite other Latin American nations to join.

The initial focus will be on how a new currency, which Brazil suggests calling the “sur” (south), could boost regional trade and reduce reliance on the US dollar, officials told the Financial Times. It would at first run in parallel with the Brazilian real and Argentine peso.

4. It’s ChatGPT vs Google, and the world is on the verge of a paradigm-shifting technological revolution. ChatGPT has undeniably taken the world by storm. The Internet is lit with its extraordinary natural language processing capabilities and crisp responses. However, the AI chatbot from OpenAI has gained more notoriety as the ‘would-be Google killer.’ 

The hype surrounding ChatGPT has raised existential issues for Google. After all, ChatGPT can provide detailed responses to complex questions instantly. ChatGPT has proven that conversational responses appeal more to users ( ChatGPT crossed 1 million users within the first week of its launch) than search-based queries.

This brings us to a critical question – Will ChatGPT replace Google? This blog post attempts to answer this question with a side-by-side comparison of Chat GPT vs Google.

 5. It’s James Cameron’s world; and we are just swimming in it. The director’s film, Avatar: The Way of Water, topped $2 billion at the box office this weekend, becoming just the sixth movie in history to reach the milestone. Cameron is responsible for three of those six—Avatar, Titanic, and Avatar 2 (the others are Avengers: Endgame, Star Wars: The Force Awakens, and Avengers: Infinity War).

It will be just a matter of days until Avatar 2 climbs from No. 6 on the list to No. 4, leaping over Infinity War ($2.04 billion) and The Force Awakens ($2.07 billion) as it heads into its seventh week in theatres. When that happens, the movie could earn another accolade: being profitable. Before the release of the super-costly Avatar 2, Cameron said it was the “worst business case in movie history” and would need to become the third- or fourth-highest grossing film of all time to break even.

Good news for movie theatres which are currently been going through a crisis, is that old reliable Cameron plans to release three more Avatar instalments in the next five years.