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IDGVI News: Portfolio News 2011

Spirit of entrepreneurship Vamshi Reddy & Shiva Bayyapunedi Founders, Apalya Technologies

The Times of India, Bangalore | 26th January 2011

They bring TV to YOUR MOBILE

By Swati Bharadwaj-Chand | TNN

When Dhoni hits a six this World Cup, you don’t have to scramble to find a TV screen, or peer through a shop window. You can catch all the live action, on the go, on your mobile screen. That would be largely thanks to Vamshi Reddy and Shiva Bayyapunedi. Their five-year-old company, Apalya Technologies, enables you to view over 120 channels on your mobile phone.

Apalya, which means ‘mobility’ in Sanskrit, is said to control the biggest share of the Indian mobile TV market, with over 4 million subscribers; the company claims it has 99% market share. And with the cricket World Cup kicking off in February and Indian telecom ringing in 3G services, the Hyderabad-based company is looking at a big leap.

Things were not always this good for Apalya, as its founders will tell you. Reddy and Bayyapunedi had chucked cushy MNC jobs in the US and Finland, respectively, to head back home in 2005. But the India they left behind in 1997 was vastly different, and the two computer grads from Babasaheb Naik College of Engineering at Pusad, Maharashtra, took six months to figure out what they wanted to do.

“We only knew we wanted to come back home and start something on our own for India,” says Reddy, 39, Apalya’s CEO, who has worked with Cisco in the Silicon Valley.

“We spent several months brainstorming on what to do,” says Bayyapunedi, 38. Bayyapunedi is the CTO and clearly the telecom expert in the partnership, having worked with GETS in the US and with Nokia in Finland.

The two narrowed down to the booming telecom sector and within it, the value-added services (VAS) space. “We saw the future would be driven by data and that TV was a direct way to connect to the consumer,” says Reddy.

They pooled their savings of $40,000 to start the venture. Friends from Silicon Valley chipped in with another $1,00,000. “We had a tough time selling the concept to VCs. Just being street smart doesn’t cut it and we had to spend a lot of time sacrificing not just the good life we had back in the US but also family life,” says Reddy.

Technologically, the challenge was to make video streaming work on India's slower 2G networks and handsets. Eventually, they came up with their own platform, which they called Apalya.

Apalya got its first customer—Idea Cellular—in 2007. Today it works with most leading telecom operators, mobile device manufacturers and TV content providers in India.

And VCs are flocking to Reddy and Bayyapunedi. Earlier this month, Apalya wrapped up its third round of funding—$7.5 million from Indo-US Venture Partners, IDG Ventures India and Qualcomm Ventures. The company saw its first round of VC funding when Mumbai Angels pumped in half-a-million dollars in 2007; friends came to the rescue once again then, throwing in another $1,00,000 into the venture. The second round of funding came from Qualcomm and IDG in 2008 when the two invested $3 million.

The company, which works on a subscription-based model, is yet to break even. The hope is that this year’s cricket fever—the World Cup and the IPL-will help them do that. IPL 2010 was a landmark event that helped Apalya cross the 3 million subscriber mark. The company is targeting 5 million subscribers and revenues of $3-5 million in 2011. “We should break even this year with profitability coming in next year,” says Reddy.

There is competition emerging from companies like Zenga and Percept Knorigin. Network equipment suppliers like Ericsson also have mobile TV solutions. Apalya is preparing to take on those challenges with newer solutions. A solution for tablet PCs is close to being rolled out. Apalya has also upgraded its platform to work on 3G and 4G networks. In 2G networks, the slower speeds mean that users spend an average of 3 minutes a day viewing TV on their mobiles. With 3G, Apalya expects this to go up to 22-26 minutes, the global norm. That could significantly improve revenues.

The success in India has encouraged Apalya to look at other emerging markets like Africa, West Asia and South East Asia. Those plans may be firmed up in a year. As it goes global, it will compete with global players like MobiTV, MediaFLO, NuNet, SlingPlayer Mobile and Vuclip. How Apalya manages that will be interesting to watch? It has at least one big advantage: it started off in the world’s second biggest mobile market.