Technology Selection: Impact on Business Performance

For setting up new businesses there are several factors to be addressed. The market research plays a dominant role in the process. The short-term as well as long term market outlook are equally important. The market demand & supply analysis, product spectrum, pricing analysis, competitor analysis etc. are standard variants that the businesses take into consideration. Another critical dimension i.e. technology selection, is paramount for running the technology dependent businesses successfully and maintaining the leadership position in the market place.

The recent developments in the Indian telecom market with regard to dwindling mobile communications business of two telecom operators (Reliance Communications & Tata Teleservices) , who eventually originated from top Indian business houses, display certain similarities with regard to their technology selections for network roll outs.

Both of them started their journey in the mobile communications space in the year 2002 when the Indian telecom industry was poised for enormous growth.

At this time the existing telecom players in India were already operating GSM (Global System for Mobile Communications) technology based networks. The major global telecom players were also operating GSM technology based networks. However, at the very inception stage of the business, both of them rolled out their networks using competing CDMA (Code Division Multiple Access) technology.

Nevertheless, both of them diversified their networks using GSM technology in the year 2008. The adoption of another technology, after being in business for several years, is indicative of the fact that off late both of them would have realised the benefits offered by GSM over CDMA technology.

The telecom is capital intensive business and has inherent long gestation periods. Certainly, the initial years are very crucial for setting up the business. The technology selection plays very important role on the overall business performance. Setting up networks first on one technology and then adopting another technology multiplies the investments on the infrastructure, network operations, organisation etc. Possibly, this could also have been been one of the factors impacting the business performance of two telecom operators in India.

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