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Leveraging Operator Assets:A Business Model Perspective
Thesis work presentation
07.05.2010
Author: Jaakko KestiläSupervisor: Prof. Joerg OttInstructor: Hans Tiger
Agenda
• Introduction to the Study Background, Objectives, Research Methods
• Literature review• Leveragable assets• Case Studies• Interview Studies• Core Findings• Conclusions
Background
• Operator asset usage tapering off in the Nordic Countries (particularly old assets such as SMS messaging)
• New Internet-based communication services offer more functionality at the consumer price of data
• One way of extending lifecycle of legacy products is to offer their functionalities to third parties new applications using old functionalities
• These assets can be offered in the same fashion as Internet-based assets, through APIs
Objectives
• Telecommunications operators have functionalities (both legacy and new) that could be offered as assets for 3rd party developers. What could these be?
• What kind of business models could be employed to offer these assets? Which ones are feasible?
• What are the needs & requirements of the developers? What are the differences between different developer types?
Research Methods
• Literature research• Case studies• Qualitative developer interviews• Quantitative survey• Analysis based on interviews, case
studies and survey results
Agenda
• Introduction to the Study Problem Setting, Objectives, Research Methods
• Literature review• Leveragable assets• Case Studies• Interview Studies• Core Findings• Recommendations
Literature research – business model frameworks
• A business model is a conceptual architecture of a business, expressing the company’s logic of earning money. This includes describing the different components of this logic, as well as their causal relationships
• Used as a framework for evaluating the feasibility of a business venture, i.e. A conceptual system design aid
• Business model research a young field
• Consensus between researchers on a universal business model framework yet to be had
• Several proposals for business model frameworks found, none conclusive, but each with individual merit
Literature research – business model frameworks
• Based on 16 acknowledged publications on business model frameworks, the author developed a business model framework based on reoccurring components and patterns
• 52 different business model framework components boiled down to 10 based on occurance
• Divided into categories based on affinity
Product/service issuesProduct/service issues
Technical platform
Value proposition
Resources
Financial issuesFinancial issues
Revenue model
Cost sources
Market issuesMarket issues
Target customer
Channel model
Value network issuesValue network issues
Value network
Competitive strategy
Relationship
Agenda
• Introduction to the Study Problem Setting, Objectives, Research Methods
• Literature review• Leveragable assets• Case Studies• Interview Studies• Core Findings• Recommendations
Leveragable assets
Based on common mobile operator assets
• Standards based assets
- GSM standard, MAP protocol, GPRS protocol etc.
• Combinatorial assets
- Combining different functionalities to provide a complete asset, e.g. passive location discovery, authentication
• Operator assets
- Assets found with operators not directly connected to telephone/data networks, such as user data, billing machine
• Other assets
- Operator-specific legacy products such as , completely new functionalities (out of scope of thesis)
Categorizing leveragable assetsAsset Description
Voice communicationVoice calling Connects voice calls through an interfaceCall control services Such as call holding, waiting, barringNumber identification services Services such as Connected Line Identification
Presentation/RestrictionMessagingSMS/MMS services Sending and receiving SMS messages through an
interfaceCell broadcast Sending SMS messages to all recipients in an area, e.g.
a cellVoice Mail Receiving and recording voice messages for later
retrievalFax Mail Receiving and recording fax messages for later retrieval
ContextLocation services Determining the location of a MTAccess network/MT status Determining the available access networks for a MT
and/or network status of a MT (idle,ready,standby)Customer dataAnonymous customer data Access aggregated, anonymous customer dataBilling & AAAAuthentication Authentication via e.g. one-time pad delivered via SMS
& separate passwordBilling Bill customers via different systems, e.g. premium SMS
messaging, voice calls, credit etc
Agenda
• Introduction to the Study Problem Setting, Objectives, Research Methods
• Literature review• Leveragable assets• Case Studies• Interview Studies• Core Findings• Recommendations
Case studies
• Four different cases of operator API ventures
• Existing, commercial stage ventures
• Ventures analyzed through presented business model framework
• Chosen case studies: Orange Partner, DT Developer Garden, Ribbit Platform and O2 Litmus
• An example case study in this presentation is about Orange Partner
Case study example• Competitive strategy to offer universal assets to
small developers as well as Orange France exclusive assets to corporate developers
• Several target markets: professional developers as well as small developers
• Orange Partner offers two types of assets, exclusive and universal
• Assets exclusive to Orange France customers include location discovery, vocal service setup, access to customer information and billing
• Universal assets include SMS/MMS messaging, voice calls (one-to-one & conference)
• Revenue model reflects unrefined strategy: pre- & post-paid and revenue share models offered, with & without startup costs, depending on complexity and exclusivity
• Relationship with developers developed by trying to create a developer community via seminars, training days, networking opportunities, competitions etc. Multiple channels used.
Agenda
• Introduction to the Study Problem Setting, Objectives, Research Methods
• Literature review• Leveragable assets• Case Studies• Interview Studies• Core Findings• Recommendations
Interview studies• Both qualitative and quantitative studies conducted• Qualitative interviews conducted in a thematical fashion with
different types of developers (corporate service, application, web developers)
1) Does the API approach bring value to developers?- In general yes, somewhat late for innovative applications- Handset clockcycle usage delegation interesting- A supplementary service compared to the actual value proposition of an
application
2) What are the expectations for an operator API environment?- Reasonable (not telco-grade) reliability expected, failure notifications- Active communication on maintainance- Support via a forum enough, communal events deemed unnecessary- Universal access technologies such as REST preferred
3) Asset interests?- Legacy assets (SMS/MMS,voice) necessary- Passive location discovery, mobile payment and anonymous customer
data most interesting- Functional completeness dependent on developer type- Assets necessary to be universal, or at least universal in one country
4) Pricing and business model views- Pre&postpaid equally preferred, no startup costs- Advertisement & shared revenue models thought to be too unwieldly &
resulting to probably conflict of interests- Price point to be set low enough to enable e.g. advertisement based sites
Quantitative survey• Conducted as an international
questionnaire, yielding 37 replies• Replies segmented through level of
interest, current job / focus and age-group
• Generally the quantitative survey supported the interview studies
• Divergences on distribution method of applications occurred in the survey, with application and surprisingly web designers preferring a centralized marketplace run by the operator to self-distribution
• Also, shared revenue was deemed the most interesting pricing model, with the exception of repliers concerned about web content/management.
• Pre-paid pricing also generally interesting, with the exception of web developers
Agenda
• Introduction to the Study Problem Setting, Objectives, Research Methods
• Literature review• Leveragable assets• Case Studies• Interview Studies• Core Findings• Recommendations
Core findings• The case – and interview studies
yielded three business model archetypes: the open model, the hybrid garden model and the marketplace model
• Each model is relevant to operators in different situations and looking for different strategies: big, incumbent players willing to sacrifice revenue potential to customer lock-in can employ the marketplace model, smaller players employ an open model, differentiating with service level and ease of use.
• Current ventures suffer from social networking hype, basic approach to customer relationship enough
• Universality of all assets essential, roamability issues need to be solved, at least per country
• Hybrid garden model a result of above lack of universality, rather than a strategic choice
Agenda
• Introduction to the Study Problem Setting, Objectives, Research Methods
• Literature review• Leveragable assets• Case Studies• Interview Studies• Core Findings• Recommendations
Recommendations
• Operators willing to constrict to corporate customers in big markets with an incumbant status can make the marketplace model feasible.
• Hybrid garden model employers (such as the Orange example) should try to move to an open model through technical and contractual roaming of exclusive assets, at least on a nation basis.
• Open model has the biggest market potential and is by far the most appealing to developers roaming issues need solving
• Window of opportunity to construct innovative applications to younger, techn-savvy segments has passed (with the exception of passive location discovery and mobile payment).
• For mass- and late-market applications looking for the lowest common denominator to reach customers, operator APIs offer for years to come due to customer mass
• Customer reach (universality) necessary for widespread use
Thank you
Questions?