Indians love their smartphones.

The second-largest country in the world by population is getting online so quickly that the number of Indians connected to the internet has already surpassed the total population of the United States. At the forefront of this digital adoption are India's large rural markets.

This internet boom in India has given birth to a number of high-value start-ups that are now competing with the best in the world. Among these is Hike Messenger, an instant- messaging app that raised $175 million from China’s Tencent Holdings and Foxconn Technology group from Taiwan on August 16.

The company is now valued at $1.4 billion, pushing it to the coveted status of being a unicorn – a term used for privately held companies that are estimated to be worth more than $1 billion. There are about 10 start-ups that are unicorns in India, including internet giants such as Flipkart, Ola Cabs and Quikr. However, Hike has been marginally faster than the rest to enter India’s unicorn club, doing so just 3.7 years after its launch in December 2012.

The cross-platform instant-messaging service was founded through a joint venture between Bharti Enterprises and Japanese software investor Softbank. Hike Messenger, which claims to have more than 100 million users, is led by 28-year-old Kavin Bharti Mittal. Apart from free messaging, sharing of media and calling facilities on the app, Hike allows users to communicate using graphic stickers.

Talking through stickers

While Hike operates in the very competitive space of instant messaging, where behemoths like WhatsApp and Facebook are fighting for users, it prefers to be local rather than global in its approach – this, in fact, seems to be the strategy of many Indian start-ups, which are counting on capturing their next million users from the interiors of the country; among those who may not be conversant in English and prefer to communicate in their native languages.

Hike caught wind of this early on and introduced eight Indian languages last December on the app, including Hindi, Gujarati, Bengali, Tamil and Telugu. While there have been local-language keyboards around for a long time, Hike went one step further and customised its interface to these local languages. The app also introduced localised sticker sets in 40 languages which now contribute more than 30% of the traffic on the app.

Last year, it introduced “The Great Indian Sticker Challenge”, which invited people to design stickers for the app.

“Stickers have played a significant role in transforming the messaging experience,” Mittal had said on the occasion. “Today we see three billion stickers exchanged on hike.”

While many have compared Hike’s features to that of China’s WeChat, which had a not-so-pleasant experience in India and could not attract or retain as many users as WhatsApp, Hike insists that people are using it for different purposes, which allows it to grow without competing with WhatsApp.

WhatsApp vs Hike

“Once you realise that for us to win, WhatsApp doesn’t have to lose, the whole perspective changes,” Mittal told Livemint last week. “Now, data shows us that we sit side by side with WhatsApp...The kind of stuff you can do on Hike, you cannot do on WhatsApp. We have large amount of people using Hike alone, but an even larger amount people using both Hike and WhatsApp.” Mittal said that the app is second in the instant messaging market in India (WhatsApp leads the pack) in terms of engagement per user.

There are several Indian start-ups that, like Hike, have been increasingly localising their experience to cater to the market across the country and in its hinterlands.

Take for instance, the Indus OS, an operating system developed in more than 10 vernacular languages built over Android that now has more users in India than Apple’s iOS, because it comes with localised content and apps.

Analysts and experts say this is the only way forward for the app ecosystem, because they need to tap into the ever-rising number of smartphone users in rural markets to increase their user base.

Tarun Pathak, an analyst with Counterpoint Research, said smartphone penetration is slowing down because there’s still not enough support for local languages in the operating systems and app ecosystem.

“This [slowdown of smartphone penetration] is mainly due to lack of localisation and multilingual support in today’s mass-market phones, which has limited the scope to rope in the next half a billion users who do not speak, read or write in English or Hindi as their first language,” Pathak said.

And this is where the next big opportunity lies. Pathak believes localisation of content based on languages and cultural preferences is going to bring about an “inflection point” in India’s smartphone growth story and app-makers will do well to jump on this early.

Untapped potential

“There is a huge market for local language support in some of the popular OTT apps [over the tap apps that bypass the network provider and only need the Internet to provide services, such as WhatsApp and Hike],” Pathak said. “Going forward, these app platforms are going to be an ecosystem in themselves. To facilitate the growth and connect more users to the internet, local-language inclusion is must.”

A 2014 report from global consulting firm McKinsey had a similar analysis. “As more rural and semi-urban users in India connect to the Internet, adoption could be accelerated by developing local language content, with image‑based user interfaces and less textual content,” the report said. “Examples might include an India-specific mobile operating system, or a simplified weather information application for farmers.”

India is expected to hit 730 million internet users by 2020, with 75% of them coming from rural areas, according to a recent report brought out by The National Association of Software & Services Companies (Nasscom) with Akamai Technologies Inc.

This implies that more and more people in the country’s hinterlands will be buying clothes online, watching videos on YouTube and communicating instantly with their friends and family across the world using their smartphones. Cracking the local code, therefore, is going to be a big factor in the way app developers think about their next half a billion users.

With an eye on expanding its reach in the rural market, Hike is trying to capitalise on its unique features such as offline messaging, which allows people to send free SMS to their contacts if they are not online – thus coming to the aid of people in areas with poor connectivity – and stickers in various languages to boost its growth, apps like WhatsApp are too entering the fray by introducing support for Hindi and adding features like voice notes and free voice calling.

Almost 97% of Indian smartphone users use a communication app like WhatsApp on a daily basis according to a report by Jana, a start-up that offers free access to internet for users in developing countries. The report said 96% of the devices have WhatsApp installed on them with the app having more daily active users in the country than any other app.

This shows that there is a long way to go for Hike, which aims to be an ecosystem in itself by providing everything from sports updates to jokes through its in-app bot. Hike currently offers discount coupons to its users for various brands and in the future, it seeks to tie-up with these brands so that they can reach out to customers through the app and users can transact on Hike.

While India gets acquainted with messaging apps and expresses its feelings through stickers and voice notes, apps like Hike must further differentiate their product offering substantially and meaningfully from the likes of WhatsApp before the giants chip away at their market share.