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MENA telecoms summit 2015: Delivering the digital future
© Analysys Mason Limited 2015
MENA TELECOMS SUMMIT 2015 DELIVERING THE DIGITAL FUTURE
CAPTURING VALUE THROUGH
MULTI-SIDED PLATFORMS
EDWIN GRUMMITT
11 NOVEMBER 2015
MENA telecoms summit 2015: Delivering the digital future
© Analysys Mason Limited 2015
Developing new multi-sided platform (MSP) businesses enables
telcos to capture greater value from digital economy services
The digital economy presents a significant opportunity for all players:
― encompasses all economic activity mediated by software, enabled by telecoms
infrastructure
― we forecast a total digital economy market size of USD5.9 trillion by 2020, more than
three times larger than the forecast for traditional telecoms services.
Capturing their share of the digital economy opportunity is one of the main challenges facing
telcos today.
Developing new multi-sided platform businesses enables telcos to capture greater value from
digital economy services:
― leverages telcos’ strengths, while ‘outsourcing innovation’ to other parties
― generates value by capturing the network effects of bringing together suppliers and
end users.
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MENA telecoms summit 2015: Delivering the digital future
© Analysys Mason Limited 2015
CONTENTS
INTRODUCTION
MULTI-SIDED PLATFORM MODELS
CORE vs COMPLEMENTARY APPROACH
CAPTURING VALUE
ABOUT ANALYSYS MASON
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© Analysys Mason Limited 2015 4
Goods and services within the digital economy can be broadly grouped as:
intrinsically digital – streaming video, ebooks, computing services, Facebook – including
core telecoms services such as voice, messaging and data
substitutes for established equipment and services – virtual private communications
networks, security services, virtualised PBXs
the marketing and sales of physical goods – Amazon, eBay.
The ‘digital economy’ is all economic activity mediated
by software and enabled by telecoms infrastructure
Ex
am
ple
s
The definition of the digital economy is simple but broad
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MENA telecoms summit 2015: Delivering the digital future
© Analysys Mason Limited 2015
5.9T
3.5T
2.4T
Total Developing and
emerging countries Developed countries
1.8T
Traditional telecoms
(excluding devices)
The addressable digital opportunity for telecoms operators is
forecast to be greater than for traditional services by 2020
Market size by type, USD trillion, worldwide, 2020
Note: We define traditional telecoms as fixed+mobile, excluding pay TV.
Source: Analysys Mason, BCG
Digital economy
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Re
ven
ue
op
po
rtu
nit
y
Investment requirements and risk involved
Infrastructure
provider
(‘dump pipe’)
Service
enabler
(‘platform’)
Application
development
and service
delivery
End-to-end
provider,
including
devices
A position closer to the traditional telco business model in
the digital economy space is the most feasible for operators
Opportunities to move up the digital economy value chain
Telcos naturally fit in
the role of
infrastructure
provider or service
enabler
Moving up the value chain adds
complications to the existing
business
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MENA telecoms summit 2015: Delivering the digital future
© Analysys Mason Limited 2015
CONTENTS
INTRODUCTION
MULTI-SIDED PLATFORM MODELS
CORE vs COMPLEMENTARY APPROACH
CAPTURING VALUE
ABOUT ANALYSYS MASON
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© Analysys Mason Limited 2015 8
Market side A Market side B
Multi-sided platform
Group A Group B
Provide each other with cross-group network effects
Affiliation Affiliation
The multi-sided platform business model is based on the creation
of cross-group network effects
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Traditional
telco
More people with mobile phones
attract more users to buy a mobile
phone
YouTube
More viewers increase the hit rate
of YouTube’s recommendations
engine
More viewers attract more content
providers, more content attracts
more users
Uber
More customers improve the
drivers’ feedback
More customers increase
competition for available drivers
More customers drive take-up for
drivers, which in turn improves the
service for customers
Example Same-side network effects Cross-group network effects
Video gaming
More users playing an online
multiplayer game offer more
opponent variety
More gamers attract more games
developers and publishers
Moving to an MSP business is an opportunity for telcos to exploit
cross-group network effects, as pure digital economy players do
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MENA telecoms summit 2015: Delivering the digital future
© Analysys Mason Limited 2015
Telcos can launch multiple MSPs to address different opportunities
B2B2C B2B2B
eHealth platform Connected car platform SME cloud services
End users End users
Service
providers
Service
providers
Service
providers
Service
providers
Service
providers
Service
providers
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© Analysys Mason Limited 2015
Deutsche Telekom has invested in a healthcare business unit and
is focusing on key assets to build enabling platforms
11
Separate healthcare business unit
Investing in building healthcare platforms
that leverage their core technological
capabilities to take end-to-end
healthcare services to market
eHealth Connect is a B2B platform
focused on providing end-to-end
capabilities including devices, managed
connectivity, application hosting, back-
office support, BSS and logistics to
healthcare providers
Supports billing, payment and settlement
between disparate players in the
ecosystem as well as its partners
Deutsche Telekom’s remote patient monitoring service
eHealth Connect platform
Managed connectivity, security, BSS, data
analytics tools, logistics and distribution
GeTeMed’s
ECG device
Deutsche Telekom’s
Physiogate base
station
500 CVD
patients
Weight, blood
pressure, ECG
Brandenburg
Hospital
Data analytics
by physicians
Clinical data flow
Treatment, advice
Platform services
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MENA telecoms summit 2015: Delivering the digital future
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Multi-sided platforms are a timely solution for telcos which offer
strategic benefits and leverage their intrinsic strengths
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Outsourcing innovation – transfer innovation risk and product
development costs to third parties
Competitors can drive growth for the host platform
Insulation from the strategic uncertainty and cost of responding directly
to the threats posed by Internet giants
Established customer
relationships
Big data
Product development
Transmission networks
Data centre and cloud services
NFV/SDN
Mature systems and frameworks
Analytics and NFV/SDN available and economical
Mature capabilities to support traditional telecoms services
Expansion into new business services is increasingly relevant
Strategic benefits
Leveraging
intrinsic strengths
Timelines
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MENA telecoms summit 2015: Delivering the digital future
© Analysys Mason Limited 2015
CONTENTS
INTRODUCTION
MULTI-SIDED PLATFORM MODELS
CORE vs COMPLEMENTARY APPROACH
CAPTURING VALUE
ABOUT ANALYSYS MASON
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© Analysys Mason Limited 2015 14
Description
Example
(non-telco)
MSPs can complement a
company’s core business, in
order to achieve a different
business objective
Core: selling devices
at high profit
Complementary:
platforms to increase
loyalty
MSPs can be created as the core
business of an existing or new
company
Complementary Core
Apple
Core: ecommerce
platform
Complementary:
selling devices at low
profit
Xiaomi
An MSP can be introduced as either a core service in its own right,
or as a complement to existing core services
Example
(telco)
Core: connectivity
Complementary:
platform to enable in-
car services that drive
data consumption
Core: data analytics
support for clinical
trials
Complementary: M2M
connectivity
AT&T
Drive
Vodafone
e-health
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Apple
devices iTunes App Store Apple Store Apple Pay
Media and
content
producers
Developers Accessories
manuf.
Banks
Stores
Apple users
(consumers)
Apple users
(businesses) MNOs
Business
partners
(e.g. IBM)
Platforms Core business Market side 1
(suppliers)
Market side 2
(consumers)
Devices are Apple’s core business, while the platform services are
largely complementary
MSPs as Complementary
Apple‘s ecosystem
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Source: Statista.com, retrieved on 2 September 2015
This is reflected in Apple’s revenue breakdown, with devices
consistently generating more than 80% of the top line
Apple‘s revenue breakdown by product line, 1Q 2012–3Q 2015
MSPs as Complementary
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%1
Q 2
01
2
2Q
20
12
3Q
20
12
4Q
20
12
1Q
20
13
2Q
20
13
3Q
20
13
4Q
20
13
1Q
20
14
2Q
20
14
3Q
20
14
4Q
20
14
1Q
20
15
2Q
20
15
3Q
20
15
Per
cen
tage
of
reve
nu
e
Other products
Services
Mac
iPad
iPhone
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MENA telecoms summit 2015: Delivering the digital future
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Apple fully realised its potential when it started managing the
ecosystem of core and complementary services
MSPs as Complementary
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MENA telecoms summit 2015: Delivering the digital future
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▪ AT&T offers automotive OEM partners a
managed connectivity service:
– infotainment services, voice recognition,
partner management and multi-sided
billing.
End users
(i.e. drivers)
AT&T
Digital
Life
app
AT&T Drive
iHeart
Radio
Volvo Audi? GM? Tesla?
Street-
line …
MSPs as Complementary
AT&T’s connected car proposition, Drive, aims to capture streaming
data traffic while in the car
Platforms Market side 1
(suppliers)
Market side 2
(consumers)
Simplified view of AT&T Drive
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MENA telecoms summit 2015: Delivering the digital future
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Xiaomi
devices
Xiaomi
App/MIUI
Store
MIUI Social
Hub
Media and
content
producers
Developers
Xiaomi
users MNOs
Youku
Todou
(online
streaming)
Xiaomi
mobile
payment
MSPs as Core
Xiaomi, on the other hand, uses devices as a complementary offer,
shifting the core business onto their App Store
Xiaomi‘s ecosystem
Platforms Core business Market side 1
(suppliers)
Market side 2
(consumers)
Banks
Stores
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MENA telecoms summit 2015: Delivering the digital future
© Analysys Mason Limited 2015 20
20 Vodafone is developing applications to support its connectivity
offering in clinical trials and the pharmaceutical sector
MSPs as Core
Managed connectivity,
security and data
analytics tools
Vodafone
M2M SIMs /
devices
Third-party
products and
services
Volunteers and
subjects worldwide
Clinical trial companies
Electronic
data capture
Trial data
▪ Worldwide connectivity to support
clinical trials in many countries
▪ SaaS platform to assist data collection
▪ SIMs and managed connectivity for
tablets and other medical-grade
devices
▪ Mobile Relationship Manager SaaS
solution to encourage patient
engagement
▪ ‘Beyond the pill’ – working with
pharmaceutical companies to develop
tools to provide more-tailored support
to patients depending on their
condition
Vodafone‘s proposition for clinical trial and pharmaceutical companies
Clinical data flow
Treatment, advice
Platform services
MENA telecoms summit 2015: Delivering the digital future
© Analysys Mason Limited 2015
CONTENTS
INTRODUCTION
MULTI-SIDED PLATFORM MODELS
CORE vs COMPLEMENTARY APPROACH
CAPTURING VALUE
ABOUT ANALYSYS MASON
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MENA telecoms summit 2015: Delivering the digital future
© Analysys Mason Limited 2015 22
Ecosystem management
Delivery capabilities
(e.g. SDN, data analytics)
Tech
nic
al
pla
tfo
rm
Str
ate
gy
an
d p
lan
nin
g
Va
lue
pro
po
sit
ion
Digital economy
platform business
Technical platform
Procurement
Systems capabilities assessment
APIs definition
Strategy and planning
Mission and vision definition
Buy or build case assessment
Strategic framework definition
Value proposition
Product development
Identification of market sides
Go-to-market plan (for both market sides)
The successful development of a multi-sided platform
business requires three cross-functional pillars to be in place
Platform business pillars and foundations Activities associated with pillars and foundations
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MENA telecoms summit 2015: Delivering the digital future
© Analysys Mason Limited 2015
CONTENTS
INTRODUCTION
MULTI-SIDED PLATFORM MODELS
CORE vs COMPLIMENTARY APPROACH
CAPTURING VALUE
ABOUT ANALYSYS MASON
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MENA telecoms summit 2015: Delivering the digital future
© Analysys Mason Limited 2015
Contact details
Edwin Grummitt
Partner
[email protected] Boston
Tel: +1 202 331 3080
Fax: +1 202 331 3083
Cambridge
Tel: +44 (0)1223 460600
Fax: +44 (0)1223 460866
Dubai
Tel: +971 (0)4 446 7473
Fax: +971 (0)4 446 9827
Dublin
Tel: +353 (0)1 602 4755
Fax: +353 (0)1 602 4777
London
Tel: +44 (0)20 7395 9000
Fax: +44 (0)20 7395 9001
Madrid
Tel: +34 91 399 5016
Fax: +34 91 451 8071
Milan
Tel: +39 02 76 31 88 34
Fax: +39 02 45 07 53 23
New Delhi
Tel: +91 124 4501860
Paris
Tel: +33 (0)1 72 71 96 96
Fax: +33 (0)1 72 71 96 97
Singapore
Tel: +65 6493 6038
Fax: +65 6720 6038
Basel
Tel: +41 61 5881000
Fax: +41 61 5881011
Manchester
Tel: +44 (0)161 877 7808
Fax: +44 (0)161 877 7810
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MENA telecoms summit 2015: Delivering the digital future
© Analysys Mason Limited 2015
Research from Analysys Mason
25
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MENA telecoms summit 2015: Delivering the digital future
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