.Lance posted about the fact that the iPhone is having difficulty coping with telco giant mobile content offerings over in Australia. Lance puts it better than I could when he says that;
The news is that these services are not really wanted - and have only been used to date because it has been too hard and to expensive to do anything else with your phone. This walled garden approach went the way of AOL years ago in Internet space, and so it should in mobile Internet space.
I’ll keep saying this forever - [the Telcos] should stay out of the content game and in the provision of decent network game. As soon as they enter the content game then they are competing against the entire Internet - and that’s a game they will lose
I couldn’t agree more but that leaves a rather big question for the telco strategists to ponder. In this day of falling revenues from traditional telco services (landlines, tolls etc), where will that revenue be replaced?
To me it’s pretty simple and without wanting to harp on about my favourite theme, it’s about aggregation. One thing telcos do well is build large, robust infrastructure networks. They’ve also got decades experience at selling SaaS (after all what’s the difference between a plain old telephone line and SaaS? - both service delivered, both subscription based).
Put the two together and what can you create? A business model where the provider (the telco) aggregates together lots of discrete offerings and build the platform upon where they sit - the sort of stuff the telcos should be able to do add real value to are things like the billing systems and the integration part of bringing all these offerings to the users.
So yes Lance - I’m with you - give up on creating content but focus hard on bringing together lots of different content streams into one place.
This might be obvious but I see it time and time again. Old world companies are so fixated on risk that they are going nowhere. Old world companies behaviour can be characterised by panic, followed by engaging consultants and outsourcing to drive down cost and build ‘unique capability’. End result: not a lot of action, no differentiation, but a whole host of warm fuzzies are derived. That is to say it’s more about the process and less about the outcome.
Let me expand on this.. I had coffee with a friend who attended a senior managers day at a large Telco. The interesting thing about this conference was some very insightful thinking provided by Michael Porter who spoke at this event. He asked the executive if they had engaged McKinsey’s to help with their strategy. When the response was ‘yes’, he challenged this decision saying
how do you think you are going to be different from your competitors when you are all engaging the same consultants and getting the same advice?
Michael hit the nail on the head there. It’s an interesting phenomenon, maybe 15 or 20 years ago it wouldn’t have mattered because everyone played cosily in their own markets, but globalisation has changed all that. Unfortunately management practices haven’t kept up. His point also raises a cultural issue. To me he also said “why is your culture supportive of outsourcing key decision functions, ticking a box and not on creating real differentiation”
Consulting isn’t unique in this. The current flavour of the month with Telcos is reinventing themselves. But here’s the kicker, they are all doing this with the same company. Check this out
Tech Mahindra, a company which is incidentally 43% owned by BT, is currently doing systems/transformational/rebuilding of the following Telecommunications companies, Fuji, BT itself, Telecom NZ, Botswana and if you look at their own website a bunch more.
How are these guys going to differentiate themselves when there is a strong possibility they will be getting the same stuff - consulting, design, software…
It appears to me that New World companies are different, they’re disrupting, attracting talent and getting on with it. They back themselves to achieve and, generally speaking, make things happen. Why can’t old world companies have this kind of attitude?
Awesome to see that, fresh after the British Telecom move into creating a SaaS aggregation platform, Telstra has done similarly for Australia. The idea is that the platform will include applications from the major international players as well as offerings from smaller local companies.
Telstra is targeting SMEs with the platform. The move is a double win for SaaS;
It introduces SaaS to businesses that otherwise would not utilise it. Telcos already have eyeballs, those eyeballs will now be exposed to SaaS
It allows new local entrants to get a step up, helped by both the credibility and exposure of the telco, but also from the credibility of the larger SaaS companies taking part in the platforms
This is a logical move for a Telco - they’re generally not nimble enough to create their own SaaS offerings, but what they arguably do execute well is large scale technology platforms. These sorts of SaaS aggregation locations are a natural fit for a Telco’s core competencies.
What will be really interesting will be to see how much vendors sitting on these platforms sell in comparison to their more direct sales. Is the increased turnover and exposure that comes from these moves worth the hit in margin that these deals invariably cost? Or put another way, how does the cost of direct sales compare to the revenue cost through being a part of these platforms?
There been a lot (actually a huge amount) of talk about the iPhone 2. But the pricing and contract situation caught my eye.
Firstly I have some queries about the “USD199 maximum worldwide” promise. For a start, and in New Zealand at least, it is against the law for a supplier to set the retail price the end customer must pay. Jobs’ comment seems to fly in the face of this. Secondly where is the flexibility for Telcos? At $199 telcos need to get a decent commitment in order to be able to pay Apple the up front hit that el Jobso is no doubt extracting from them. The $199 comment would seem to remove the possibility for telcos to offer the phones to prepay customers or so it would seem.
Sure the same thing happens with other makes of mobile, but they’re also generally available at a higher price unlocked or pre-paid. Maybe not so much of an issue when you’re only selling via one channel partner, but when you’re putting together a worldwide customer base these things change a little.
They’re also demanding an instore activation and suggesting some sort of penalty to buyers who don’t activate. Where does this leave the unlockers - what is the angle they’ll explore with this incarnation?
Bob has an excellent post looking at the Apple shift from the longer term subscription model to the more traditional sale price + telco commission model. Bob surmises that the reasons are;
That perhaps they fear the legion of iPhone clones that are coming and want to take money off the table ASAP. Perhaps they sensed that now was the time to really corner the smart phone market if only they would give a little to the telco’s wishes. Perhaps international adoption was severely hampered by the deal structure they were trying for. Or perhaps they did the math and figured out they were losing so much money to illegally unlocked iPhones that the original model was not a money maker in the long run.
Going back to the device itself, there is a fascinating dialogue over on RWW discussing whether the iPhone is a game changer or not. The general consensus is that the iPhone doesn’t really do anything that other phones haven’t done for years, but it does them in a way that is attuned to the mind of the user. Given a pre-existing feature that no one used before becuase of its unfiredliness, and the current state of affairs of people becoming more and more keen to use features - I guess we can say that the product is game changing. It may not be revolutionary in terms of function, but it’s revolutionary in terms of delivery.
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There been a lot (actually a huge amount) of talk about the iPhone 2. But the pricing and contract situation caught my eye.