Thursday, February 10, 2011

Vision Mobile - MegaTrends - how software is fundamentally changing the telecoms value chain

[vision mobile] 1. The DELL-ification of mobile: The world of handset OEMs has been irreversibly changed by software and Internet players. All traditional top-5 OEMs (from Nokia to Motorola) that used to enjoy a combined 80% market share in 2008 are now reduced to below 60%, while Internet players are reaping the majority of industry profits and market growth. The OEM market now seems destined to match the shape of the PC manufacturer market, made up of price-led assemblers (Dell, Asus) and performance-led leaders (Apple). For the old guard of top-5 OEMs, the race is on to innovate or die.

2. Software: the new era for telecoms: Besides Android and iOS headline grabbers, more than 30 software platforms have risen and (mostly) fallen in the last decade; Lesson learned: big bucks and software DNA are critical success ingredients for software platforms. The 10 or so remaining software platforms are battling for mass-market smartphone reach below the $100 retail price barrier. At the same time, every major industry player – from telcos to facebook – are striving to grow their own ecosystem, spanning from UI to social networks. However, in the software era of telecoms, not everyone is born equal. Speed of innovation, addressable consumer income and access to a partner ecosystem are all home turf for Internet players, while telecoms incumbents (from Nokia to Vodafone) are taking small, naïve steps. The new rules are: if you can’t innovate in software, you will be replaced sooner than later.

3. The battle for Experience Ecosystems. Convergence between telecoms, PC and Internet has long been talked about. But it’s not about the all-in-one all-powerful smartphone. Convergence is proving to be not about technology, but about experience convergence; how the user experience can ‘roam’ from one screen to the next (phone, PC, TV, mp3 player, etc). Apple is the poster child of experience roaming by consistently integrating the key experience ingredients – from UI and industrial design to an apps ecosystem – across multiple screens. The next battle in mobile is to build experience ecosystems which create user lock-in and cross-sales – and therefore present a sustainable strategy for both handset vendors and telcos to survive commoditisation pressures.

4. Apps are the new web. Everyone wants to compete with their own app store these days, but only a handful of app stores are above the developer radar. Why is creating an app store so hard? Because a successful app store needs 5 unique ‘genes’ from 5 different ‘species’ across the value chain. And thanks to app stores, apps succeed where the web failed; in discovery, personalization and monetization. Apps are in fact a new information paradigm, which the web is adopting. Supported by web benefactors and technology commoditization, web is becoming mainstream application development platform, in what could be could termed the web 3.0.

5. Open + closed: two sides of the same coin. Android took the mobile world by surprise when it launched a free-for-all software platform. But like Qt, MeeGo, WebKit and many other open source projects, ‘open’ is only the tip of the iceberg, since Google et al are using closed governance models to control the direction of the product. Besides open source, ‘openness’ is used as a business strategy to commoditise product complements while closing off other products to protect core assets; in Google’s case commoditizing handset and networks while protecting its own ad network.

6. Developers, the engine behind telecoms innovation. Mobile software developers have come a long way, from back office engineers to front row success stories. However the mobile developer market is still in its infancy. We present a novel way of looking at the developer journey and reveal how most commercial products cater to just a narrow section of that journey, with opportunities abound for catering to the needs and wants of telecom’s innovation engine.

7. Communities: the new currency. Communities are the new frontier for differentiation in the mobile industry. Everyone has tried creating their own communities – from Nokia to Vodafone – but only companies with social DNA have succeeded. Why is that? while you can buy an audience (eyeballs or subscribers), you can’t buy a community (the user interactions). Building a community is a form of art where tools and techniques are being explored, from game mechanics to religion engineering. One thing is certain; that communities are now a core asset in customer attraction and are expanding into communication networks and handsets, with Facebook leading the way.

8. Telcos: stuck in the telecoms age
. Telcos are in the midst of an identity crisis and losing control point after control point – location, discovery, billing and authentication – while having no innovation to show in their core voice and messaging business. Yet the real value of telcos is still untapped with micro-billing, customer insights and retailing channels gone largely unexplored. We present 8 novel strategies for telcos and argue why WAC (the telcos’ answer to competing in the software age) is repeating history mistakes and is ultimately misguided.

Mobile Megatrends 2011

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