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Rebuilding value & control via a 2-sided business model<br />Chris Barraclough, MD, STL Partners/Telco 2.0<br />
Agenda<br />What is a business model?<br />Problems with Telco 1.0 business model<br />New opportunity:  Telco 2.0<br />
A business model is the COMMERCIAL architecture of a business: how it makes (or loses) money<br />A 5-domain model<br />Th...
The success of a company’s (or collection of companies’) business model is ultimately a function of two factors<br />Value...
Control Drivers<br />Value Drivers<br />Control & Value Drivers<br />Value Network<br />Technology<br />Service Offering<b...
More companies sharing revenues and generating costs
More substitute products
Unable to match free</li></ul>Telco 1.0 business model is now under pressure in several domains<br /><ul><li>More modular ...
Decentralised network intelligence
More punitive regulation
Less vertical integration
Weaker customer relationships</li></ul>Source: Ballon 2007; STL Partners analysis<br />
Sexy new services paid for by end user will NOT yield continued revenue and profit growth<br />Short term revenue growth o...
Pre-2005<br /><ul><li>Retailer of books and games</li></ul>Now<br /><ul><li>Retailer + platform (Amazon Marketplace)</li><...
Pre-2005<br /><ul><li>Retailer of books and games
52,000 SKUs</li></ul>Now<br /><ul><li>Retailer + platform (Amazon Marketplace)
100,000s of SKUs</li></ul>Amazon – retailer-cum-platform provider<br />
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Chris Barraclough: Shareholder Value for Telcos - Telco 2.0 7th Executive Brainstorm

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Telco 2.0 MD Chris Barraclough's presentation from the Shareholder Value session at the 7th Telco 2.0 Executive Brainstorm.

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Chris Barraclough: Shareholder Value for Telcos - Telco 2.0 7th Executive Brainstorm

  1. 1. Rebuilding value & control via a 2-sided business model<br />Chris Barraclough, MD, STL Partners/Telco 2.0<br />
  2. 2. Agenda<br />What is a business model?<br />Problems with Telco 1.0 business model<br />New opportunity: Telco 2.0<br />
  3. 3. A business model is the COMMERCIAL architecture of a business: how it makes (or loses) money<br />A 5-domain model<br />The marketplace<br />Service Offering<br />Value Network<br />Technology<br />Finance<br />Source: Faber et al; Designing business models for mobile ICT services, 2001; adapted and developed by STL Partners<br />Note: Each domain breaks down into several inter-related components that make up the overall business model. <br />
  4. 4. The success of a company’s (or collection of companies’) business model is ultimately a function of two factors<br />Value<br />Control<br />+<br />
  5. 5. Control Drivers<br />Value Drivers<br />Control & Value Drivers<br />Value Network<br />Technology<br />Service Offering<br />Finance<br />The Marketplace<br /><ul><li>Low/no growth in end user revenues
  6. 6. More companies sharing revenues and generating costs
  7. 7. More substitute products
  8. 8. Unable to match free</li></ul>Telco 1.0 business model is now under pressure in several domains<br /><ul><li>More modular technology
  9. 9. Decentralised network intelligence
  10. 10. More punitive regulation
  11. 11. Less vertical integration
  12. 12. Weaker customer relationships</li></ul>Source: Ballon 2007; STL Partners analysis<br />
  13. 13. Sexy new services paid for by end user will NOT yield continued revenue and profit growth<br />Short term revenue growth only +<br />Medium term capacity & cost issues =<br />Falling margins, lower profits… <br />
  14. 14. Pre-2005<br /><ul><li>Retailer of books and games</li></ul>Now<br /><ul><li>Retailer + platform (Amazon Marketplace)</li></ul>Amazon – retailer-cum-platform provider<br />
  15. 15. Pre-2005<br /><ul><li>Retailer of books and games
  16. 16. 52,000 SKUs</li></ul>Now<br /><ul><li>Retailer + platform (Amazon Marketplace)
  17. 17. 100,000s of SKUs</li></ul>Amazon – retailer-cum-platform provider<br />
  18. 18. Pre-2005<br /><ul><li>Retailer of books and games
  19. 19. 52,000 SKUs
  20. 20. Revenue from end user sales</li></ul>Now<br /><ul><li>Retailer + platform (Amazon Marketplace)
  21. 21. 100,000s of SKUs
  22. 22. New revenuefrom enabling services to traders</li></ul>Amazon – retailer-cum-platform provider<br />
  23. 23. Pre-2005<br /><ul><li>Retailer of books and games
  24. 24. 52,000 SKUs
  25. 25. Revenue from end user sales
  26. 26. Profitable but margin squeeze</li></ul>Now<br /><ul><li>Retailer + platform (Amazon Marketplace)
  27. 27. 100,000s of SKUs
  28. 28. New revenue from enabling services to traders
  29. 29. Profit underpinned by platform</li></ul>Amazon – retailer-cum-platform provider<br />
  30. 30. Pre-2005<br /><ul><li>Retailer of books and games
  31. 31. 52,000 SKUs
  32. 32. Revenue from end user sales
  33. 33. Profitable
  34. 34. Best-in-class logistics</li></ul>Now<br /><ul><li>Retailer + platform (Amazon Marketplace)
  35. 35. 100,000s of SKUs
  36. 36. New revenue from enabling services to traders
  37. 37. Profit underpinned by platform
  38. 38. Improved, lower cost logistics (more scale)</li></ul>Amazon – retailer-cum-platform provider<br />
  39. 39. Pre-2005<br /><ul><li>Retailer of books and games
  40. 40. 52,000 SKUs
  41. 41. Revenue from end user sales
  42. 42. Profitable
  43. 43. Best-in-class logistics
  44. 44. Big consumer base,strong relationships:
  45. 45. E.g. peer reviews</li></ul>Now<br /><ul><li>Retailer + platform (Amazon Marketplace)
  46. 46. 100,000s of SKUs
  47. 47. New revenue from enabling services to traders
  48. 48. Profit underpinned by platform
  49. 49. Improved, lower cost logistics (more scale)
  50. 50. More customers, stronger relationships:
  51. 51. E.g. Premium logistics – Amazon Prime </li></ul>Amazon – retailer-cum-platform provider<br />
  52. 52. A new telecoms business model<br />$<br />$<br />Source: STL Partners Analysis<br />
  53. 53. A successful Telco 2.0 business model restores elements of value and control to the Telco industry<br />Control Drivers<br />Value Drivers<br />Control & Value Drivers<br />Value Network<br />Technology<br />Service Offering<br />Finance<br />The Marketplace<br />Single platform for multiple industries<br />Operator remains gateway to end users<br /><ul><li>New revenue source from upstream customers
  54. 54. Services more complementary
  55. 55. End-users add value to platform
  56. 56. More customer intimacy
  57. 57. Centralised intelligence – resides in platform
  58. 58. Unclear – potentially a move into less regulated markets</li></ul>?<br />Source: Ballon 2007; STL Partners analysis<br />
  59. 59. Three things required to bring Telco 2.0 to fruition<br />Bad debt<br />Demographics<br />Leadership<br />MY CREDIT<br />MY PERSONAL DATA<br />MY RELATIONSHIPS<br />Address<br />Gender<br />Average balance<br />Skills<br />Name<br />Profile<br />MY INTERACTIONS<br />MY DEVICES<br />Preferences<br />Location<br />Presence<br />SIM<br />SoftSIM<br />Number<br />SIP Number<br />Pictures<br />Videos<br />Bank<br />School<br />Browsing History<br />Collaboration<br />MY CONTENT<br />MY IDENTIFIERS<br />MY CONTEXT<br />QR Codes<br />IP Address<br />Serial Number<br />Device details<br />Calendar<br />Friends<br />On/Off<br />Source: STL Partners analysis<br />.mobi domains<br />Address Book<br />Workplace<br />Roaming<br />
  60. 60. $375 billion opportunity (not guaranteed!)<br />EU-27 and North American Telecoms<br />$1,230bn<br />$689bn<br />Source: STL Partners, Telecoms Two-Sided Business Model Opportunity and Future Broadband Business Models, both published in 2008<br />
  61. 61. Thank You<br />More at www.telco2.net<br />

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