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Economic Models for Reinventing Telco - Innovation with APIs

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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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