Business platforms vs. technology platforms
My regular flow of PR releases today includes the following typographically-challenged news from AOL:
AOL LAUNCHES DEVELOPER PROGRAM FOR AOL VIDEO SEARCH ENGINE
Open Platform Enables Developers to Integrate AOL Video Search Results Into Third-Party Web Sites
Also Makes it Easy for Content Owners to Submit Video Feeds in Real-Time to AOL Video Search Index
Whilst it's easy to poke fun at their copywriting skills, this is part of a bigger and important trend among the Internet players to open their platforms. AOL have already announced their open voice platform approach. Yahoo enable plug-ins for their IM client; Skype have made many mis-steps with their partners, but are clearly hitting the channels with co-branded hardware. This could become an innovation space that telcos, who mostly lack vibrant developer and partner programs, find hard to match, even on the promised rapid deployment cycles of IMS.
There's a deeper cultural issue here where operators struggle to market to niches and make their brands relevant to narrow sub-segments. The DNA of operators is to launch mass-market, closed and standardised products. Would any operator expose the underlying signalling to network end points under IMS and allow the users to buy the devices with the functions they choose? What's the telco equivalent of "Intel Inside" that assures common interoperability? Is there a "long tail" of communications and content that isn't making it to market?
We've previously discussed the need for operators to concentrate on the assets which differentiate them (not necessarily the network) and choose a "horizontal" strategy of customer intimacy, platform or pipe. By "platform", we mean easing 3rd party access to the complete suite of business functions necessary to deliver services to market, and not just network APIs. Think of it as automating business development in the same way we've computerised HR and Payroll using self-service apps. Any partner should be able to tap in and see how their product is generating service calls, causing bad debt, or creating inventory in the retail channel. Create APIs to the assets that the Internet players don't have, such as logistics, CRM, care, revenue assurance, etc. Today's news is that Amazon are doing just such a white label platform for their business. As I discussed with a client last week, a platform is a thing that enables an entrepreneur to pay the mortgage, not just build techno toys, and Amazon clearly gets this.
The driver for this must be metrics that make management do the right thing. Today's operator business models are very heavy in products susceptible to disintermediation, arbitrage or regulatory assault. The regulators themselves use metrics for market concentration, and we'd suggest you seriously consider "product concentration" a commercial risk that requires diversification. The enablement of more partners and revenue sources must be key to that process. The granularity can vary -- at one extreme is the co-owned MVNO (e.g. Sprint/Virgin Mobile); at the other the mon-and-pop garage developer who signs up on the web for a commerce account and API access, just like Google AdSense; in the middle is the traditional BizDev deal with someone like MSN to put Messenger on handsets. Today's management metrics, like ARPU, may be deeply counter-productive because they make it more attractive to place risky long-odds bets on new own-brand services. (We're not too hot on IPTV here at Telco 2.0, but another day...) You have to remember that i-mode -- the platform strategy of reference -- launched largely despite, and not because of, the culture and incentives at DoCoMo.
There are some operators like BT who have reduced their exposure to basic communications applications, focused on connectivity, diversified into services, and promise (semi-?)open platforms like 21CN. Yet even the best of the bunch struggle to match the breadth of business process and technology support the Internet's platform leaders are offering. Will I be able to track trouble tickets relating to my service running over 21CN and integrate that with my call centre, or will I have to hire BT to do it for me in a closed ecosystem? Another difficulty for BT could be that the wholesale 21CN platform is incomplete without the complementary CRM, billing, inventory, etc. assets stranded on the retail side of the fence.
There are three take-aways from all this:
1. You're probably over-estimating your own ability to define and deliver services, and under-investing in partnership-enabling infrastucture.
2. A business platform requires a wider set of functions than you'll find in technical standards like ParlayX, IMS, 3GPP, etc. If an event causes money to flow, it needs to be communicated externally.
3. You'll find a strategic conundrum in that a business platform requires many enabling functions across the value chain, but at the same time strong competition is forcing you to focus on a few narrow "horizontal" activities. With the example of BT probably leading ultimately to a break-up of the access and retail parts of the business completely severing the links between the network and core IT assets.
So the "platform" strategy has challenges, and there's no silver bullet. Yet we feel there's a lot of opportunity here. A huge number of mobile-centric start-ups failed in the dotcom boom. Second time around, allow them to access the core voice and messaging systems, support more of their business processes, and look to be less greedy in revenue share.