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The Effect of Software People On Telco

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Some thoughts and observations on the effect Software People are having on the Telco industry.

The associated narrative can be found here: http://www.jamesparton.info/softwareandtelco/

Published in: Technology, Business

The Effect of Software People On Telco

  1. 1. v JAMES PARTON, DIRECTOR OF TWILIO EUROPE ALL CONTENT COPYRIGHT (c) TWILIO INC. 2013 THE AFFECT OF SOFTWARE PEOPLE ON TELCO
  2. 2. A LITTLE ABOUT ME
  3. 3. ALL CONTENT COPYRIGHT (c) TWILIO INC. 2013 INTERSECTION OF TELCO AND SOFTWARE
  4. 4. WHAT IS A SOFTWARE PERSON?
  5. 5. ALL CONTENT COPYRIGHT (c) TWILIO INC. 2013 WHAT IS A SOFTWARE PERSON? • You don’t have to write code to be a software person • Anyone that sees the world through the lens of software • Anyone that asks “How can this problem be solved by software?” • Anyone that believes any problem can be solved by software
  6. 6. ALL CONTENT COPYRIGHT (c) TWILIO INC. 2013 WHAT IS A SOFTWARE PERSON? Not Software People Software People
  7. 7. ALL CONTENT COPYRIGHT (c) TWILIO INC. 2013 WHAT IS A SOFTWARE PERSON? Not Software People Software People
  8. 8. ALL CONTENT COPYRIGHT (c) TWILIO INC. 2013 WHAT IS A SOFTWARE PERSON? Software PeopleNot Software People
  9. 9. ALL CONTENT COPYRIGHT (c) TWILIO INC. 2013 WHAT IS A SOFTWARE PERSON? Not Software People Software People
  10. 10. WHY SHOULD YOU CARE?
  11. 11. ALL CONTENT COPYRIGHT (c) TWILIO INC. 2013 COMMUNICATION REMAINS VITAL, AND COMMUNICATION IS MOBILE 5.9 billion people use SMS x6 x3 x2.5 In the UK we placed 240 billion call minutes in 2012 51.6% on mobile (flipped from landline in 2011) Source: OfCom and Tomi Ahonen, May & September 2012
  12. 12. SO WHAT’S THE PROBLEM?
  13. 13. ALL CONTENT COPYRIGHT (c) TWILIO INC. 2013 THE TELCO BUSINESS MODEL IS BROKEN Voice is God’s gift to humanity. It’s what differentiates us from the animals. And we position voice at zero — you don’t have to pay for voice. Voice is dead. ” “ Hakam Kanafani Group CEO of Turk Telekom Mobile World Congress 2013
  14. 14. ALL CONTENT COPYRIGHT (c) TWILIO INC. 2013 TELCO REVENUE DECLINING FOR FIRST TIME Source: ETNO UK 4G spectrum auction generated £2.3bn 2000 UK 3G action made £22.5bn
  15. 15. ALL CONTENT COPYRIGHT (c) TWILIO INC. 2013 ..BUT TELCO’S REMAIN CASH GENERATION MACHINES Source: Company websites $0 $33 $65 $98 $130 AT&T China Mobile Telefonica Deutsche Telekom Vodafone FT 59.360.9 76.4 81.884.1 126.4 2012 Revenue (USD Billions)
  16. 16. ALL CONTENT COPYRIGHT (c) TWILIO INC. 2013 CROSS INDUSTRY COMPARISON Source: Company websites, Wikipedia, Business Week, BBC $0 $50 $100 $150 $200 Samsung Apple AT&T IBM Sony Unilever Luxembourg Coca Cola Nike Heinz 11.6 24.1 48 58.3 67.4 79.1 107 126.4 156.6 173.9 2012 Revenue (USD Billions)
  17. 17. ALL CONTENT COPYRIGHT (c) TWILIO INC. 2013 ITS ALL ABOUT THE FUEL: GAS & FOOD Source: Company websites, Wikipedia, Business Week, BBC $0 $125 $250 $375 $500 Exxon Mobil Wallmart Toyota AT&T 126.4 226 443.9 482 2012 Revenue (USD Billions)
  18. 18. ALL CONTENT COPYRIGHT (c) TWILIO INC. 2013 Source: Company websites $0 $33 $65 $98 $130 AT&T China Mobile Telefonica Deutsche Telekom Vodafone FT 59.360.9 76.4 81.884.1 126.4 2012 Revenue (USD Billions) SO WHAT ABOUT THE DISRUPTORS...?
  19. 19. ALL CONTENT COPYRIGHT (c) TWILIO INC. 2013 SO WHAT ABOUT THE DISRUPTORS.... Source: Company websites, insideris.com $0 $38 $75 $113 $150 AT&T Telefonica Vodafone Google Skype 0.30.75 50.1 59.360.9 76.4 81.884.1 126.4 2012 Revenue (USD Billions)
  20. 20. ALL CONTENT COPYRIGHT (c) TWILIO INC. 2013 THE DECLINE IS PREDICTED TO CONTINUE Source: Telco 2.0
  21. 21. NEW KIDS ON THE BLOCK
  22. 22. ALL CONTENT COPYRIGHT (c) TWILIO INC. 2013 THE RISE OF MESSAGING APPS Total of $23 billion in texting revenue lost as of the end of 2012 to OTT messaging services Source: WhatsApp and LATimes.com
  23. 23. ALL CONTENT COPYRIGHT (c) TWILIO INC. 2013 THE RISE OF MESSAGING APPS Source: Acision 96% of users use SMS, but 50% prefer OTT messaging services BBM SMS Whats App iMessage Facebook 0 27.5 55 82.5 110 64 64 74 75 110 UK messages p/ week
  24. 24. ALL CONTENT COPYRIGHT (c) TWILIO INC. 2013 CASE STUDY: TRANSATLANTIC CALLS Avg. cost of a 3 minute transatlantic call: 1927: $75 (today’s equivalent $1,000) 1964: $12 (today’s equivalent $90) 2010: $0.21 Volume of transatlantic call minutes: 1964: 20 million 2010: 114 billion Source: TeleGeography
  25. 25. ALL CONTENT COPYRIGHT (c) TWILIO INC. 2013 RISE OF SKYPE Source: TeleGeography
  26. 26. ALL CONTENT COPYRIGHT (c) TWILIO INC. 2013 AND THE CHALLENGES KEEP COMING 2 billion iMessages per day Source: Apple, LATimes.com Facetime video since 2010 Audio only announced at WWDC 2013
  27. 27. ALL CONTENT COPYRIGHT (c) TWILIO INC. 2013 AND THE CHALLENGES KEEP COMING
  28. 28. ALL CONTENT COPYRIGHT (c) TWILIO INC. 2013 THE NEW LANDSCAPE Landline Provide landlines (inc. WiFi) Mobile Provide mobile lines (inc. WiFi) Over The Top (OTT) Use other peoples networks to deliver their services (Digital Cuckoo!) Network Software Cloud Virtualize Telco capabilities in the cloud and directly connect into networks
  29. 29. ALL CONTENT COPYRIGHT (c) TWILIO INC. 2013 NETWORK PEOPLE AND SOFTWARE PEOPLE SITTING IN A TREE....
  30. 30. SOFTWARE PEOPLE CREATE BETTER USER EXPERIENCES
  31. 31. ALL CONTENT COPYRIGHT (c) TWILIO INC. 2013 BETTER COMMUNICATION USER EXPERIENCES Source: OfCom ...and these experiences are being built by software people
  32. 32. ALL CONTENT COPYRIGHT (c) TWILIO INC. 2013 CASE STUDY: INSTAGRAM Source: ReadWriteWeb mobile picture messaging user experience done right...
  33. 33. ALL CONTENT COPYRIGHT (c) TWILIO INC. 2013 SOFTWARE PEOPLE DRIVING MOBILE DATA DEMAND Source: OfCom Avg. UK mobile data use: 71Mb p/month Jan 2010 rising to 154Mb in Jan 2012 3UK contract customers avg. was 800Mb (Feb 2012)
  34. 34. SOFTWARE PEOPLE GO FASTER!
  35. 35. Innovation INTERNET Copper Switching WWW
  36. 36. TELECOM Copper Switching
  37. 37. ALL CONTENT COPYRIGHT (c) TWILIO INC. 2013 LETS PUT THIS IN HISTORICAL CONTEXT ~3,000 BC to 1838 we communicated via cave painting, smoke signals, story telling, carving, writing
  38. 38. ALL CONTENT COPYRIGHT (c) TWILIO INC. 2013 1838 - THE TELEGRAPH ~ 4,800 years to point of innovation
  39. 39. ALL CONTENT COPYRIGHT (c) TWILIO INC. 2013 1876 - THE TELEPHONE + 38 years to point of innovation
  40. 40. ALL CONTENT COPYRIGHT (c) TWILIO INC. 2013 1984 - THE MOBILE PHONE + 108 years to point of innovation
  41. 41. ALL CONTENT COPYRIGHT (c) TWILIO INC. 2013 SOFTWARE PEOPLE TIME 3G data launched in 2003 2003 + 0 years 2006 + 3 years 2007 + 4 years 2008 + 5 years 2009 + 6 years
  42. 42. CONTROL = #FAIL
  43. 43. ALL CONTENT COPYRIGHT (c) TWILIO INC. 2013 YE OLDE MOBILE INTERNET
  44. 44. ALL CONTENT COPYRIGHT (c) TWILIO INC. 2013 WHY TELCO’S WANTED TO BE THE GATEKEEPERS • The gatekeepers “own” the customer experience, billing relationship and channel • The stagecoach, the postal service • The telegraph company • The phone company • The mobile company • The social network?
  45. 45. ALL CONTENT COPYRIGHT (c) TWILIO INC. 2013 OWNERSHIP OF USER IDENTITY • Carriers always (still?) believed they owned the primary address for everyone on the planet. The phone number • But where has the innovation been with the customer experience? • Which is more user friendly? +44 20 xxxxxxxx or @jamesparton
  46. 46. ALL CONTENT COPYRIGHT (c) TWILIO INC. 2013 THIS IS WHY SOFTWARE IS EATING TELECOMMUNICATIONS • Marc Andreessen was right about software eating the world, especially when it comes to Telecommunications... - The innovation void is being filled by software people, not Telco’s - Software people think web first. This style of thinking is inherently open - Software people think collaboratively - APIs, collaborative working, open source - Software people think about building communities & ecosystems Why software is eating the world: http://parton.ly/17u5g5z Andreessen photo: http://www.flickr.com/photos/36521958135@N01/2443764501
  47. 47. SO WHATS NEXT?
  48. 48. ALL CONTENT COPYRIGHT (c) TWILIO INC. 2013 HOW TO AVOID THE KODAK MOMENT
  49. 49. ALL CONTENT COPYRIGHT (c) TWILIO INC. 2013 WHAT IS THE STRATEGY?
  50. 50. ALL CONTENT COPYRIGHT (c) TWILIO INC. 2013 CAPEX IS RISING, BUT NPD IS BROKEN.... Source: PwC & ETNO Between 2001 - 2010 avg. ROI was just 6% = NDP Broken but note Telco’s are investing less than 20% of revenue
  51. 51. ALL CONTENT COPYRIGHT (c) TWILIO INC. 2013 NEW BUSINESS MODEL ConsumerRetail StoreProducer Packaged Goods! Internet Services! ConsumerDeveloperProvider App Source: http://www.slideshare.net/samramji/darwins-finches-20th-century-business-and-apis
  52. 52. ALL CONTENT COPYRIGHT (c) TWILIO INC. 2013 MIXED RESPONSE FROM TELCO Source: Informa
  53. 53. ALL CONTENT COPYRIGHT (c) TWILIO INC. 2013 THE SAME OLD THINKING IS STILL THERE Source: Informa
  54. 54. ALL CONTENT COPYRIGHT (c) TWILIO INC. 2013 APIS FOR MUGGLES
  55. 55. ALL CONTENT COPYRIGHT (c) TWILIO INC. 2013 PARTNER TO REACH DEVELOPERS
  56. 56. ALL CONTENT COPYRIGHT (c) TWILIO INC. 2013 CREATING A VIBRANT DEVELOPER ORIENTATED ECOSYSTEM Connectivity Start Ups Channel ISV SI Customers Enterprise Direction of money flow Hackers {Single API Abstraction
  57. 57. ALL CONTENT COPYRIGHT (c) TWILIO INC. 2013 REMEMBER THIS QUOTE? Voice is God’s gift to humanity. It’s what differentiates us from the animals. And we position voice at zero — you don’t have to pay for voice. Voice is dead. ” “ Hakam Kanafani Group CEO of Turk Telekom Mobile World Congress 2013
  58. 58. ALL CONTENT COPYRIGHT (c) TWILIO INC. 2013 MAKING HACKNEY SPARKLE http://vimeo.com/56125403
  59. 59. ALL CONTENT COPYRIGHT (c) TWILIO INC. 2013 SOME CLOSING THOUGHTS 1. Stop building product 2. Partner to provide the right developer tools 3. Partner to reach software people that will drive traffic on your networks to counter OTT threat 4. Big guns are designed to hit large targets - help software people sell into Enterprise
  60. 60. ALL CONTENT COPYRIGHT (c) TWILIO INC. 2013 FURTHER READING Alan Quayle http://www.alanquayle.com/blog Tomi Ahonen http://communities-dominate.blogs.com/brands/ Disruptive Wireless http://disruptivewireless.blogspot.co.uk/ Martin Geddes http://www.martingeddes.com/ Benedict Evans http://ben-evans.com Telco 2.0 http://www.telco2.net/blog/
  61. 61. THANK YOU. @JAMESPARTON WWW.IBEGYOURPARTON.COM

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