6. Agenda
How should Telcos deal with the challenges of today’s ecosystems-
driven competition?
The new basis of competition
The asymmetric business models
The price of doing nothing
The modular telco
How telcos can leverage ecosystems
8. The new rules of the game in mobile
telecom mobile computing
share of needs,
attention & wallet
4 apps 750,000+ apps
(phone, text, contacts, camera) (encompassing all user needs)
service
telco mobile platforms
distribution
basis of reliability & scale choice & flexibility
competition of networks of services
business
models proven & predictable new & unpredictable
Source: VisionMobile
9. The domino effect in the telecom industry
apps challenge telco core services
hundreds of thousands of apps replace telco VAS
3
2
iOS, Android
1
broke the walls of
walled gardens
Source: VisionMobile
10. OTTs compete with telcos for control, not for profits
Content
Ads Ads
Distribution
Connectivity
Access
software
licensing
Screen
Devices
retailing
User
denotes company’s core business
11. OTT competition with telco is asymmetric
Core product Complement
asymmetry
A product where a A product consumed
business generates with the main product
profits
OTT products Complement
asymmetry
Consumer electronics, high-speed mobile
on-line advertising, e- Internet access
commerce…
Telcos cannot compete with OTTs – they are in a different business
12. The developer is the key in the app economy
App Consumer
App Developer API
App API
Team Systems
User
14. Traditional financial tools fail predictably in the
conditions of uncertainty
1. select wrong projects due to
fundamental unpredictability
Source: HBR, “Innovation Killers”
How Financial Tools Destroy Your Capacity to Do New Things
by Clayton M. Christensen, Stephen P. Kaufman, and Willy C. Shih
15. Traditional financial tools fail predictably in the
conditions of uncertainty
1. select wrong projects due to
fundamental unpredictability
2. disregard
cost of doing nothing
Source: HBR, “Innovation Killers”
How Financial Tools Destroy Your Capacity to Do New Things
by Clayton M. Christensen, Stephen P. Kaufman, and Willy C. Shih
16. Traditional financial tools fail predictably in the
conditions of uncertainty
1. select wrong projects due to
fundamental unpredictability
3. marginal cost
analysis is biased
against investments
in new capabilities
2. disregard
cost of doing nothing
Source: HBR, “Innovation Killers”
How Financial Tools Destroy Your Capacity to Do New Things
by Clayton M. Christensen, Stephen P. Kaufman, and Willy C. Shih
20. Before Structure: the singular telco
•Optimised for
large scale
99,999% reliability 2 reliable delivery
of few
connectivity
services at large
scale
network
1 distribution and retail
telephony
messaging
Designed as a billing
connectivity user identity
business with high authentication
CAPEX and OPEX consumer intelligence
3
take-all-or-nothing: services are
tightly coupled to the network
Source: VisionMobile
21. After Structure: the modular telco
Untapped potential
Distribution business
Disrupted by alternatives with
asymmetric business models
Services business
Profit pressure due to
“prisoner's dilemma”
Connectivity business
Source: VisionMobile
23. Before
Ecosystems approach: compete
Legacy telcos compete with platforms head-on
e.g. LiMo, Vodafone360, RCS-e
24. After
Ecosystems approach: leverage
The modern telco leverages ecosystems
foster innovation
diversify into new customer base & businesses
subscriber loyalty
drive usage
26. Before
Innovation focus
Legacy telcos innovate in networks:
EDGE, WCDMA, HSPA, HSPA+, LTE, LTE-Advanced
27. After
Innovation focus
Modern telcos add value to ecosystems beyond access
e.g
local presence
digital / physical distribution
consumer insights
user ID
billing, voice APIs
29. Before
Developers
Legacy telcos see developers as a source of revenue
high barriers to entry
stringent processes
lock-in relationships
risk transfer to developers
30. After
Developers
Modern telco:
Developers are value-added resellers
Apps are shops
APIs are contracts
32. Before Voice
Legacy telco sees voice as telephony
Based on 19th century assumptions on technology
and user needs
33. After Voice
Modern telco sees voice as API
feature phones smartphones web
voice = device voice = app voice = API
34. “I think, as a general rule, most of us are in
markets that are booming. They are not in
decline.
Even the newspaper business is in a growth
industry. It’s not in decline. It’s just their way
of thinking about the industry that is in
decline.”
Clayton Christensen
Professor, Harvard Business School
36. THANK YOU
Download VisionMobile Telco Innovation Toolbox at:
visionmobile.com/apigeeweb
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youtube.com/apigee Apigee
@apigee
Editor's Notes
This video and other videos of the webcast series will be available on youtubeAt youtube.com/apigee
1. Apps are just the tip of the iceberg2. Telecom and computing started out as two disconnected islands. They are now merged.3. The new rules of the game in mobile
There is no way to predict how the market will unfold and how that will affect mobile operators
Telcos are collateral damage to OTT players
The path to ubiquity is along the value chain where the App Developer is key The path to this ubiquity is a value chain where the App Developer is key. For business folks, the app developer represents a brand new channel that enables expanding reach and revenue. There are apps for every type of human endeavor: productivity, entertainment, financial, and health monitoring to name a few. A critical internal component is the API Team, a cross functional team that manages API availability as the company manages its products. The team represents the investment that the enterprise makes to achieve the goals of their program. These are the folks that help you innovate at the edge of your business. The great news about the apps that are created is that the people using them overall are absolutely delighted.
To create an ecosystem you need 5 ingredientsThese are necessary to kick start the network effects
In 2009: Telcos were putting their bets on WAC and app stores2012: WhatsApp and Viber reach well over 100M users each.
Basicassumption that current business will perform as it is today – More likely “do nothing” scenario is non-linear decline in the current businessDCF disregards this
New capabilities are needed to compete in new market conditionsMarginal cost analysis makes investments in current capabilities look cheaper than investing in creating new capabilities from scratch.For example RCS-e appears to have a better RoI as it’s based on current capabilities.
Apps have opened telecoms to a whole range of new consumer budgets: entertainment, insurance, housing, transportation, healthcare, education
.. In order to tap into these opportunitiesThere are 5 areas in which change needs to happen
The modern telco is modular.- Each layer is affected differently by the change in market conditions
Telcos comparatively spend very little in digital innovation, compared to network innovation
“You cannot capture value without creating it”
- Needs business models aligned with developer needs
The modern telco frees voice from telephony:- Drives voice into new use cases - unlocking the limitations of telephony(end-points, initiation, termination, time, etiquette)