APIs 2.0 presentation at the Telco 2.0 conference in Orlando 11 December 2009


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Conference presentation discussing strategy and business models for carriers in opening up network and handset APIs to external developers

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APIs 2.0 presentation at the Telco 2.0 conference in Orlando 11 December 2009

  1. 1. APIs 2.0 – Models for Monetization<br />Sanjay Jhawar – Partner - Ideas and Plans<br />
  2. 2. 2<br />Who is Ideas and Plans?<br />Sanjay Jhawar<br />BridgePort NetworksSVP, Marketing & BD<br />Venture CapitalEIR - St. Paul VC, VP Wireless - CIR Ventures <br />Microsoft Mobile InternetDirector, Prog. Management<br />Sendit AB (mobile email)VP Marketing & BD (exit to Microsoft in 1999)<br />Motorola DevicesEuropean Bus. Mgr - smart phones/dataWAP Forum Founding Board Member<br />David Hose<br />Board Member Buzzwire, <br /> Useful Networks, <br /> CEO: PublicEarth<br />Advisory BoardsRave Wireless, NIM, SnapVine, m:metrics, Roundbox, Azteq, Scanbuy<br />Prior experience<br />OpenwaveChief Development Officer GM $100MM Client Business<br />SignalSoftFounder/CEO through IPO & acquisition by Openwave<br />Intrado/SCCVP Engineering<br />Perry LaForge<br />Founder/ChairCDMA DevelopmentGroup (CDG)<br />Board Member inOvate, FusionOne, Transaction Wireless, Nextivity<br />Advisory BoardsRosum, Roundbox, Tensorcom, Scintera Wireless, Bitfone (sold to HP), Wichorous<br />Prior experience<br />Co-FounderinCode Telecom Group Kodiak Networks<br />Eric McCabe<br />JumpTapVP Marketing & Co-chair, Mobile Search Group, Mobile Marketing Association<br />OpenwaveDirector of Marketing<br />SignalsoftVP Marketing & Board member for Location Interoperability Forum<br />US West: Associate Director, Corp. Strategy<br />Pittiglio, Rabin, Todd &<br />McGrath (PRTM)Lead Partner over 18 years during growth from 6 to 400 employees<br /> Early roles at Qualcomm, Airtouch/PacTel, Conner Peripherals<br />Network of Senior Level <br />Industry Affiliates<br />
  3. 3. 3<br />We focus on Mobile and Converged Telecom <br /><ul><li>Plugged-In
  4. 4. Thought Leaders at Board & CxO level
  5. 5. Strong network: operators, vendors, VCs, media and ad agencies
  6. 6. Close connections to startup community
  7. 7. Strategy
  8. 8. Market assessment & value prop development
  9. 9. Strategic and business planning
  10. 10. Strategic options
  11. 11. Execution
  12. 12. Early stage startup acceleration & fundraising
  13. 13. Marketing and Product Management
  14. 14. Business and Corporate development
  15. 15. Interim General Management</li></ul>AngelInvestors<br />VentureCapital<br />Funds<br />Entrepreneurs& founders<br />PrivateEquity<br />Funds<br />Growing mid/<br />late stage<br />companies<br />EstablishedTelecom<br />Equipment<br />Vendors<br />Affiliate<br />Individual<br />Consultants<br />NetworkOperators/xVNOs<br />
  16. 16. ISVs have many choices<br />BusinessMobility Framework<br />
  17. 17. Telcos have many potential API business models<br /><ul><li>Charge per API use
  18. 18. Transaction based (some combination of APIs used)
  19. 19. Capacity based (monthly fee for max no. of API calls/hr)
  20. 20. Bundled within premium minutes, messages or megabytes</li></ul>SELL<br /><ul><li>Advertising revenue share
  21. 21. App store, Telco revenue share 20-30%
  22. 22. Software as a Service, Telco revenue share 25-50%</li></ul>SHARE<br /><ul><li>Outsourced Managed Service, Telco revenue share 50-80%
  23. 23. In-network Managed Service with revenue share
  24. 24. License and deploy In-network</li></ul>BUY<br />
  25. 25. And Now For….<br />A Short Skit<br />…. between a Telco 1.5 executive <br />played by Sanjay Jhawar<br />…. and a Web 2.0 ISVplayed by Thomas Howe.<br />
  26. 26. Skit / 1 <br />Telco 1.5 executive Web 2.0 ISV<br />I hear you have a cool application<br />Yes we are very proud of it<br />We&apos;re interested to see if we can put it on our network<br />How would that work?<br />Well, send us the specs and call flows of how your <br />app works and give us a month or so and we&apos;ll produce <br />a requirements doc on how you could port to our app server<br />Hmm, so if we do that we&apos;d have <br />a major development project. <br /> How long would it take to launch?<br />Well, BSS and OSS integration are the longest pole items.  <br />Our IT department is backed up for 9 months. <br />Lets do a lab trial first without BSS/OSS, say 4 months. <br />Then we&apos;ll do a market trial to assess user demand <br />Then we’ll look at BSS/OSS integration for launch. <br />You&apos;ll need to maintain a lab system for us as well as the live system. <br />We have to ensure the application is robust enough to carry our name and that it will scale.<br />A year, tops.<br />
  27. 27. Skit / 2<br />Telco 1.5 executive Web 2.0 ISV<br />And how would we fund our investment?<br />Well, we have the potential to roll this out to millions of users.  <br />When it launches we&apos;ll pay you a 15% revenue share up <br />to 100,000 users, and you provide the necessary infrastructure.  <br />Then we&apos;ll move to a per user perpetual license up to 1m users. <br /> After that we&apos;d look for a site license for a fixed fee.<br /> Could you fund our development up-front?<br />We don&apos;t typically do that.  <br />We want you to have “skin in the game” to see it succeed commercially.<br />Well will we at least have an exclusive with <br />you for this category of application?<br />You know we might be required to do an RFP at some point, so no, we can&apos;t do an exclusive.<br />How about you just promote our application on your portal and we sign up the users and give you a percentage?<br />Oh, we&apos;d want this to only have our brand on it.  <br />These are our customers you know.  <br />And it needs to show up on our customer&apos;s existing bill. <br />And I&apos;m sure we&apos;ll have a dozen things we need customize or change.<br />
  28. 28. Skit / 3<br />If I spend my development resources on my core service, <br />I see users sign up as soon as I release it and revenue immediately.  <br /> Over a year we&apos;ll roll out half a dozen major features upgrades.<br />You have to understand the way we work with our vendors.  <br />There&apos;s a whole certification process, and it takes some time. <br />We can accommodate maybe one major and one minor service update a year.  <br />But, listen … this could be huge for you! Why don&apos;t you send us your specs first and <br />then your team should come out to see us in a month ?<br />Hmm.  Listen, can I get back to you in a few … weeks? <br />Telco 1.5 executive Web 2.0 ISV<br />
  29. 29. What do ISVs want? To run a business….<br />Technical<br />No telco “science experiments”<br />Access to technical capabilities not available over the top<br />Revenues<br />Predictable time to revenue measured in months not year<br />Reach to largest addressable numbers of devices and users<br />Streamlined user experience especially for provisioning <br />No cap on the upside<br />Costs<br />Upfront understanding of total investment to go through certifications and trials<br />Business model matching costs to revenues for predictable margins<br />Lowered cost of communications compared to using 3rd party message aggregators call termination providers<br />
  30. 30. Strategic questions for Telco 2.0 carriers <br />Core/Non-Core<br />ToleranceforRisk<br />CustomerAccess<br />InnovationModel<br />Ability for <br />Org toEmbrace<br />Complexity<br />
  31. 31. Strategic questions for Telco 2.0 carriers<br />Science experiment?<br />Investment for telco to build app<br />Long tail or looking for hits?<br />Comms as the meat or as spice?<br />Business or consumer?<br />Core/Non-Core<br />
  32. 32. Strategic questions for Telco 2.0 carriers<br />Market adoption risk low or high?<br />How well is user behavior understood ?<br />What makes the similar app attractive elsewhere<br />Risk to performance of othernetwork applications <br />Tolerance<br />for<br />Risk<br />
  33. 33. Strategic questions for Telco 2.0 carriers<br />Internal vs. external innovation<br />Strategic or tactical application?<br />Feature extension or whole application?<br />Telco technical value add?<br />Golden Assets, Service Aggregation, QoS …<br />Access to necessary IP?<br />Legacy system architecture constraints?<br />InnovationModel<br />
  34. 34. Strategic questions for Telco 2.0 carriers <br />CustomerAccess<br />Is Telco buying or selling ? <br />Which way does the money flow?<br />Who is bringing the customer?<br />Who has the sales force able to sell?<br />Who is able to bill?<br />Branding<br />Importance of community value to proposition<br />Value in existing app brand to customers<br />Fit with telco marketing proposition / brand?<br />Feasible for Telco to do customer support?<br />
  35. 35. Strategic questions for Telco 2.0 carriers <br />Telco ability to create the whole solution / value chain / ecosystem<br />Shared customer support model?<br />Willingness for multi-year investments<br />Ability for <br />Org toEmbrace<br />Complexity<br />
  36. 36. 17<br />Business Model - Demand Curve Mapping<br />OperatorBusinessModel<br />Revenue Share<br />Broker / Bill on Behalf Of (%)<br />Subscription/traffic<br />Co-brand<br />App Provider<br />Operator<br />Branding <br />High touch support<br />Lo touch support<br />Operator RFP<br />Developer<br />Support<br />ExternalIndependent Partner<br />Operator<br />Internal<br />Managed<br />Service Vendor<br />Operations<br />Control<br />Feature<br />Roadmap<br />Control<br />Shared<br />App Provider<br />Operator<br />core<br />services<br />extended<br />features<br />from <br />external<br />services<br />4a. Enabled e.g. 1-800 (no brand association)<br />4b. Endorsed – the new “on deck” e.g. T-mobile channel on Android Market<br />4c. Open apps – e.g. GetJar<br />fully<br />fledged<br />service<br />better<br />probability<br />of a “hit”<br />possible “hits” within target segment<br />1<br />2<br />3<br />4<br />1a. Build internally<br />1b. Feature via managed service provider<br />1c. Feature via external mashup<br />
  37. 37. Examples<br />1 - Core carrier owned & branded service <br />Sprint Voice SMS<br /><ul><li>Extension of both voicemail and SMS
  38. 38. Managed Network Service plus handset clients, both provided by Core Mobility (now Smith Micro)
  39. 39. API to existing voicemail system
  40. 40. Included in certain plans / handsets</li></ul>2 - New carrier branded complete service proposition<br />Verizon VZ Navigator<br /><ul><li>Managed Network Service plus handset clients, provided by Networks in Motion (now TCS)
  41. 41. API for A-GPS, messaging. Sold as an app with $10/month or $3/day usage fee or free with certain plans. </li></li></ul><li>Examples<br />3 - Co-branded partnership services model – shared customer ownership<br />Verizon Ringback Buddies powered by envIO<br /><ul><li>Facebook app to assign and share ringback tones with friends
  42. 42. Revenue share</li></ul>3 - Co-branded partnership services model – shared customer ownership<br />T-Mobile/RIM - Wi-Fi Calling with MobileOffice<br /><ul><li>Blackberry Mobile Voice System
  43. 43. PBX number & functionality on Blackberry
  44. 44. Co-sales to enterprises</li></li></ul><li>Telco Golden Assets – Use Them or Lose Them<br />Eroding - telcos did not act fast enough<br />Location outdoors <br />Google Maps using cell tower info & GPS<br />Network address book <br />ISVs can sync from the smartphones too<br />Call control integration with voicemail <br />Google Voice, Youmail, Talk2Us etc.<br />Still Golden for now<br />Subscriber intelligence and profile <br />Billing and rating <br />Call control - inbound triggers<br />Outbound identity management – <br />Making a call or sending a message that comes from subscriber phone number<br />Video optimization for device, and dynamic network conditions<br />Access to QoS<br />Carrier class voice<br />Three screen usage - ability to get on the TV vis STB<br />
  45. 45. Who could use network call control APIs?<br />Blackberry Mobile Voice System<br />
  46. 46. sanjay.jhawar@ideasandplans.com<br />