Telco 2.0 - Exploring Multisided Models

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Telco 2.0 - Exploring Multisided Models

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Telco 2.0 - Exploring Multisided Models

  1. 1. Click to edit Master title style Telco 2.0 – Exploring 2 Sided Markets Why Telco’s are up in arms against Google, Skype, Apple Presenter: Vishal
  2. 2. AgendaTelco Markets, 1 Sided MarketTelco 1.0 Characteristics and Operational ViewEmergence of Web 2.0, The Long Tail PhenomenonDefine 2 Sided Market, Example – Google, ???Define 2-Sided Telco, Telco2.0Telco 2.0 Platform Offerings – Distribution, B2B B2C VASTelco’s Latent Data ExploitsWhy Google Envies Operators, Matured Telco’s Status
  3. 3. Telco Markets Wholesale Retail
  4. 4. Traditional Market Value moves from Left to Right Growth beyond some point usually leads to diminishing returns. Profit contribution is maximum when Marginal Cost = Marginal Revenue Cost Revenue Suppliers Price Advertise Create Move Distribute Service Customers (wholesale) (Retail) or Promote Upstream Value Chain Downstream Source: Strategies for 2 Sided Markets, Thomas Eisenmann, HBR
  5. 5. Traditional Telco Suppliers = Cost End User = Revenue Content, Apps, Consumers Devices Products (Partners) SMEs Network & Termination Products (Own) Enterprises Interconnect & Storage Multi-Nationals Upstream Telco Downstream Source: STL Partners, Telco2.0
  6. 6. Telco 1.0 Characteristics Mass Market Regular Business Model - Per minute, Flat rate Applications - Voice, SMS Technologies - Intelligent Networks, SS7
  7. 7. Telco 1.5 Late 90’s to earlier in decade Applications - Content, VAS Technologies - JAIN - Java API for Networks Revenue - Via Walled Gardens, Closed Systems
  8. 8. Telco 1.0 Operational View Millions in CAPEX and OPEX Silod services delivery, Technology stack built ground-up Many integration touch-points, High maintenance Limited flexibility Oriented towards single services, Resource-intensive Limited new deployments per year Long development cycles Time-to-market, and profit, for delivering new services
  9. 9. Emergence of Web 2.0Architecture of Participation - engaged users,3C’s - Community, Collaboration, Conversations Continuous Improvement - fail fast, Be in Beta.. Web as a Platform - Services not packaged Softw Users in control of UI -Rich UI (AJAX) Data transformability- Remixabilty of data (RSS Data is the King Cost effective scalability
  10. 10. Over 100 million users access Facebook from a mobile deviceMore than the combined population of Spain and Argentina - Facebook.com
  11. 11. Telephony Interactions Social Networks Communities Relationships Volume Conversations Telephony Calls Rendezvous Source: STL Partners, Telco2.0
  12. 12. Telco 1.0 vs Web 2.0 Revenue Share Telco Web 2.0 Services Platform Core Network Access Network Licenses Market Growth Low Rapid Web2.0 - Inverse Revenue Model, higher profits, higher growth Telco’s provide customer access and who owns them -???
  13. 13. Revenues: The First 9 YearsSix Times larger in 9 yrs in comparison to largest mobile operator $18 $16 Google, $17b $14 $12 Billions $10 $8 $6 $4 $2 $- Vodafone, $3b 1 2 3 4 5 6 7 8 Years After Inception 9 Source: STL Partners, Telco2.0
  14. 14. Telco1.0 Service Delivery Equipment Telco Vendor Service Provider Consumer Source: DSP IP , Telco2.0
  15. 15. Future Service Delivery Service Consumer Provider Equipment Telco Vendor Source: DSP IP , Telco2.0
  16. 16. Future Service DeliveryDumb pipe for service providers -??? Consumer Telco Source: DSP IP , Telco2.0
  17. 17. The Long TailWhere is the opportunity -??? Head Abundance Popularity Tail New Market Place Services/Products Source: The Long Tail, Chris Anderson
  18. 18. The Long Tail Head Telco 1.0 Popularity Telco 1.5 Tail Telco 2.0 Services/Products Source: The Long Tail, Chris Anderson
  19. 19. Telco MarketsWholesaleRetail2 - Sided
  20. 20. 2 Sided MarketValue moves in both directions, Left to Right and Right to LeftMarginal Revenue and Profit contribution is always increasing as user basegrows Network effect leads to economies of scale Upstream Downstream Customers PLATFORM Customers Revenue Value Chain Revenue Source: Strategies for 2 Sided Markets, Thomas Eisenmann, HBR
  21. 21. Example 2 Sided MarketMassive Investment in Google PlatformGoogle Indexes 20B+ pages Free Product for Cheap Adverting for Low Cost Per End Users Brands Transaction (subsidised) Google Platform Source: STL Partners, Telco2.0
  22. 22. Other 2 Sided MarketsCompany Industry Type Platform TypeGoogle Web Search/Advertising Audience BuilderAmazon (ebay, Trading E-Retailer MatchmakerPost)Monster (Seek) Recruitment MatchmakeriTunes Music MatchmakerBetfair Gambling (betting) MatchmakerAP Moller-Maersk Logistics Cost Sharing Source: STL Partners, Telco2.0
  23. 23. 2 Sided Telco Upstream Customers Downstream Customers Developers, Content Owners Millions of Retailers, Utilities Customers B2B2C, VAS Government Telco Platform Brand Advertisers Thousand of Distribution Segments (SME’s Media, Finance Enterprises, Public Sector) Telco - Retail Source: STL Partners, Telco2.0 Source: STL Partners, Telco2.0
  24. 24. The Long TailTelco1.0 - carriers controlled the network as well as the user experiencesTelco2.0 - carriers open up the network as well as the innovation Service Bundles Voice Revenue Hosting Broad- band New Services Expanded Offerings Managed Services, Unified Comm, Cloud (SAAS, IAAS) Subscribers Source: The Long Tail, Chris Anderson
  25. 25. Telco 2.0Market - many niche marketsServices - PersonalisedTechnologies - Telco web services, (open API - SOA), meshups, blendedRevenue - Open Gardens, Connect to 3rd parties (mesh up)
  26. 26. Telco2.0 Platform OfferingsDistributionB2BB2C, VAS
  27. 27. DistributionData – iPad, Kindle
  28. 28. B2B B2C, VASAdvertising via upstream customers, if downside customer clicks,operators wont participate in it, but will report it
  29. 29. Telcos have many Valuable but Latent Data Assets Address Gender Bad debt Demographics Bank School MY PERSONAL MY MY CREDIT DATA RELATIONSHIPS Name Profile Preferences Average balance Workplace Friends SIM SoftSIM Browsing History MY MY DEVICES INTERACTIONS Device details Serial Number .mobi domains QR Codes Number SIP address Location Presence Pictures Videos MY IDENTIFIERS MY CONTEXT MY STUFF Email IP Address Roaming On/Off Address Book Calendar Source: STL Partners, Telco2.0
  30. 30. B2B B2C, VAS Offerings Advertising, Identity, Marketing Services Authentication & e-Commerce Sales & Business Security Intelligence Order Fulfilment - Order Fulfilment - Online (Electronic Billing & Payments Offline content) Customer Support Source: STL Partners, Telco2.0
  31. 31. Telco 2.0 Platform Customer Core B2B Capabilities Upstream & Products (for Downstream Platform Enablers or Customers Network Distribution Customers Services Process Data Platform) Identity, Auth Personal The needs of & Security and interfaces Voice & Mktg, Adv Device Devices with other Mesgng Millions of & BI industries has Customers been on neglect Identifiers Channel Partners Channel Partners e-Comm Sales side. Order Fulfill Context Some activity APIs Network Data Offline has been done Content with developers Order Fulfill Thousand of by individual Online Segments operators (by Interactions Billing & (SME’s MMA, GSMA Broad Payments Relationships Enterprises, and individual IT Band operators) and Public Sector) Customer Care Access with Media (by Financials MEF and others) New Commercial Models Source: STL Partners, Telco2.0 Source: STL Partners, Telco2.0
  32. 32. PayPal - Billing & Payments Merchant Consumer Paypal Rev($ Billions) 1.84 1.40 1.00 0.68 2004 2005 2006 2007Customer and Merchant data never leaves Paypal Source: STL Partners, Telco2.0
  33. 33. Google Envies OperatorsScale around communications and billing MY PERSONAL MY DATA RELATIONSHIPSScale around retail sales and customer careData - lots & lots of data, Limited Knowledge of customer MY DEVICES MY INTERACTIONS Weak!! MY IDENTIFIERS MY STUFF MY CONTEXT MY CREDIT Source: STL Partners, Telco2.0
  34. 34. Matured Telcos Architecture Maturity Business Standardised Optimised Business Silos Technology Core Modularity Global Flexibility High Flexibility Local Flexibility Low Flexibility Source: 2005 MIT Sloan Center For Information Systems Research
  35. 35. SummaryTelco’s traditional business model is under threatInnovation by digital companies like Skype driving Telco’s to re-inventMulti sided model on a Digital platforms has a lot of promiseTelcos’ are well positioned to leverage Multi sided model but time is running out
  36. 36. Questions

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