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Voice ‘Mash-Ups’ - Futuristic Buzzword or Critical To Prepare for Today?

To help with the debate on the role of ‘Mash-Ups’ in securing telcos’ future in core voice and messaging at the Digital Product Innovation summit on 16 Oct, we’re delighted to have Thomas Howe as a stimulus speaker.

Thomas is a ‘VOIP’ veteran (2 decades at Versatel, Picturetel, Comverse etc). He’s just set up a new company focused on ‘real time communications mashups for the enterprise’. One of the reasons we asked Thomas to speak is that he won the O’Reilly Emerging Telephony Mashup Contest earlier in the year: he designed and commerically launched (repeat: commercially launched) a unique call manager service for Doctors…in 45 minutes (in the room, there and then!).

The term ‘mash-up’ is just as abused as ‘web 2.0’. Thomas defines it as an application that uses 1) modern Web integration technologies, 2) to take content or services from two independent sources, 3) to solve a unique or niche problem. “In general, you’d have to have all three to qualify in my book,” he says in an excellent article here. Prime yourself with two presentations from him here.

So, we might now have a better understanding of what a mash-up is, but why is it important to the future of telcos? The context for the October Summit, and for what Thomas will be talking about is as follows:

We’ve had a flurry of email discussions with various people about the ideas in last week’s article about what SDPs should really be enabling, what a ‘platform’ business really looks like, why it probably offers the brightest future for operators, and why enabling a vast plethora of mash-ups for niche markets will be critical.

But we’re encountering so many people working in the so-called ‘here and now’ - managing product pipelines within telcos or selling enabling technology to them - don’t feel this future is relevant to them: ‘it’s too far away’, ‘not our problem’, ‘doesn’t affect our business right now’

Our view, based on some recent analysis, is simply this:

  • Operators are not great product innovators (our survey earlier in the year reconfirmed this: 75% of telco practitioners felt they didn’t understand the future needs of their end-users in their core business of voice and messaging)
  • Margins are under severe pressure in this area which makes up typically 70-80% of telcos’ revenue.
  • There are many new entrants bypassing the traditional operators (our forthcoming report has a directory of these), including including not just small start-ups, but also industry giants such as Nokia, Apple, Google, and the social networking sites (VC’s are pouring money into this area right now).
  • Our current survey respondents are saying that 40% of total mobile voice minutes (in mature markets) will flow through alternative forms of (non-incumbent) voice services in 5 year’s time. Half of these will come from competing ‘horizontal’ voice services like Skype; however, the other half will be embedded into ‘vertical’ applications like games, dating applications, etc. - i.e. mashup territory. (that’s the industry talking, not us!)
  • In this environment, mass-market telco services will not be as compelling as enabling ‘long-tail’ applications (see research here).
  • Telcos (fixed and mobile) have great assets that could help others innovate.

So, business model innovation, as we all now, is key. But business models cannot be changed by a small series of tactical measures, like putting in some app servers and creating some APIs. If the world is changing in the next 5 years in the way that the industry is itself saying it is, then we need to align these tactical measures with the emerging business models now. 5 years is, after all, not that long in terms of capital depreciation cycles!

At the moment, we’re seeing too little action by the operators. Particularly, most worryingly, by the mobile operators. Lots of rhetoric, but not enough dynamism. Given how over-the-top services like MXit in South Africa have displaced operator offerings, this complacency could be punished severely.

So, the question is not about ‘mash-ups’ vs mass market services. The answer is ‘both’. The bigger questions for today, right now, are: what innovation to insource via partners vs perform in-house; how to support those partners commercially and technically; and how to remain a value-added supplier in the value chain for voice and messaging services rather than being bypassed entirely by “over the top” players.

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