Economic models for reinventing telco webcast by vision mobile, apigee
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1) Traditional telco business models are challenged by new ecosystems-driven competition from OTT players like WhatsApp and WeChat that offer alternative services. 2) Telcos need to reinvent themselves from singular networks optimized for connectivity to modular structures that leverage ecosystems to diversify and drive new revenue from services. 3) A modern telco approach focuses on fostering innovation beyond networks by providing APIs, developer tools, and value-added services to ecosystems rather than competing directly with platforms.
Economic models for reinventing telco webcast by vision mobile, apigee
- 1. Economic Models for Reinventing Telco Telco Innovation with APIs Andreas Constantinou VisionMobile @andreascon @visionmobile Apigee Bala Kasiviswanathan @apigee @BalaK
- 2. @apigee @VisionMobile @BalaK @andreascon
- 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
- 7. A New Playing Field for Telcos
- 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
- 13. The 5 ingredients of a successful ecosystem
- 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
- 17. Now the good news - mobile is a booming market
- 18. … but telcos need to re-invent themselves
- 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
- 35. Questions?
- 36. THANK YOU Download VisionMobile Telco Innovation Toolbox at: visionmobile.com/apigeeweb Subscribe to API webcasts at: youtube.com/apigee Apigee @apigee
Editor's Notes
- #6: This video and other videos of the webcast series will be available on youtubeAt youtube.com/apigee