Economic Models for Reinventing Telco - Innovation with APIs

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  • 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
  • Networks
  • Before: subscribers - equipment (landlines etc) - servicesAfter: Developers – Apps - APIs
  • 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)
  • Economic Models for Reinventing Telco - Innovation with APIs

    1. 1. Economic Models forReinventing TelcoTelco Innovation with APIs Andreas Constantinou VisionMobile @andreascon @visionmobile Apigee Bala Kasiviswanathan @apigee @BalaK
    2. 2. @apigee @VisionMobile @BalaK @andreascon
    3. 3. groups.google.com/group/api-craft
    4. 4. slideshare.net/apigee
    5. 5. youtube.com/apigee
    6. 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. 7. A New Playing Field for Telcos
    8. 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. 9. The domino effect in the telecom industry apps challenge telco core services hundreds of thousands of apps replace telco VAS 3 2 iOS, Android1 broke the walls of walled gardens Source: VisionMobile
    10. 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. 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. 12. The developer is the key in the app economy App Consumer App Developer API App API Team Systems User
    13. 13. The 5 ingredients of a successful ecosystem
    14. 14. Traditional financial tools fail predictably in the conditions of uncertainty 1. select wrong projects due to fundamental unpredictabilitySource: HBR, “Innovation Killers”How Financial Tools Destroy Your Capacity to Do New Thingsby Clayton M. Christensen, Stephen P. Kaufman, and Willy C. Shih
    15. 15. Traditional financial tools fail predictably in the conditions of uncertainty 1. select wrong projects due to fundamental unpredictability 2. disregard cost of doing nothingSource: HBR, “Innovation Killers”How Financial Tools Destroy Your Capacity to Do New Thingsby Clayton M. Christensen, Stephen P. Kaufman, and Willy C. Shih
    16. 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 nothingSource: HBR, “Innovation Killers”How Financial Tools Destroy Your Capacity to Do New Thingsby Clayton M. Christensen, Stephen P. Kaufman, and Willy C. Shih
    17. 17. Now the good news -mobile is a booming market
    18. 18. … but telcos need to re-invent themselves
    19. 19. 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 messagingDesigned as a billingconnectivity user identitybusiness with high authenticationCAPEX and OPEX consumer intelligence 3 take-all-or-nothing: services are tightly coupled to the network Source: VisionMobile
    20. 20. After Structure: the modular telco Untapped potential Distribution business Disrupted by alternatives with asymmetric business models Services business Profit pressure due to “prisoners dilemma” Connectivity business Source: VisionMobile
    21. 21. Before Ecosystems approach: compete Legacy telcos compete with platforms head-on e.g. LiMo, Vodafone360, RCS-e
    22. 22. After Ecosystems approach: leverageThe modern telco leverages ecosystems foster innovation diversify into new customer base & businesses subscriber loyalty drive usage
    23. 23. Before Innovation focusLegacy telcos innovate in networks:EDGE, WCDMA, HSPA, HSPA+, LTE, LTE-Advanced
    24. 24. After Innovation focusModern telcos add value to ecosystems beyond accesse.g local presence digital / physical distribution consumer insights user ID billing, voice APIs
    25. 25. BeforeDevelopersLegacy telcos see developers as a source of revenue high barriers to entry stringent processes lock-in relationships risk transfer to developers
    26. 26. AfterDevelopers Modern telco:  Developers are value-added resellers  Apps are shops  APIs are contracts
    27. 27. Before VoiceLegacy telco sees voice as telephonyBased on 19th century assumptions on technologyand user needs
    28. 28. After Voice Modern telco sees voice as API feature phones smartphones web voice = device voice = app voice = API
    29. 29. “I think, as a general rule, most of us are inmarkets that are booming. They are not indecline.Even the newspaper business is in a growthindustry. It’s not in decline. It’s just their wayof thinking about the industry that is indecline.”Clayton ChristensenProfessor, Harvard Business School
    30. 30. Questions?
    31. 31. THANK YOU Download VisionMobile Telco Innovation Toolbox at: visionmobile.com/apigeeweb Subscribe to API webcasts at:youtube.com/apigee Apigee @apigee

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