Telco 2.0 'Disruptors' - Packetmobile
This is the second in our series on "disruptors", who combine both new technology and business tactics. We've chosen them because they aren't just arbitrage plays (even if they can be used that way), and they present opportunities for operators as well as realistic migration opportunities to an all-IP world.
Today's is the mobile IM and VoIP service from Packetmobile. Whilst there are several technology competitors out there, we think their operator-friendly approach deserves a lot more attention than most.
In our ongoing Voice & Messaging Survey we got a big surprise to this question:
In competing with Internet voice and messaging services with rich functionality (e.g. IM vs. SMS, Skype vs fixed line), rank each of the following tactics: FIGHT, EVADE, CO-OPETITION, CO-OPERATION, RETREAT.
(The full descriptions are in the survey -- off you go, if you're burning time reading blogs, you've got 15 minutes to spare to do the survey, and you'll get the summary results for free when we do the analysis next month.)
The top answer at the moment, getting ranked as "best strategy" by 47% of people, is "FIGHT". The next-highest scoring answers are EVADE and CO-OPERATION on 15% each. That means operators need to aggressively deploy comparably services which also reach the desktop, and quick. But how? Step up, guess who...
What is it?
A small (<100Kb) mobile handset client, together with Lightweight Telephony Protocol (LTP). This optimises the deployment experience of IM and VoIP onto mobile devices, extending performance and battery life considerably compared to heavyweight solutions like SIP. Indeed, usable voice service can be achieved over GPRS. The preferred method of voice communications, however, is circuit voice, preserving operator revenues.
There is also a desktop IM/VoIP client, plus push-to-talk and click-to-call functionality.
Who is the user
Small-medium businesses, who tend to work in small, loosely knit and very fluid teams, and who don't fit the Microsoft/Lotus/RIM model of communications.
How does it work?
The handset vendor or operator pre-bakes the software into the phone. Users are not expected to download the software themselves as the primary distribution model. A network gateway interfaces between LTP and SIP (or other protocols).
Users who are not subscribers of the operator can download the mobile and desktop clients.
The product differentiates itself by offering presence capabilities not provided by normal IM clients (e.g. on the move, roaming, in-call):
Problem it addresses?
Operators are stuck between handing over the customer relationship to existing IM operators like Skype, and unattractive operator-only walled gardens. This provides a "third way" which is more open than walled garden, and keeps the operator in the loop. It doesn't rely on slow-moving industry consortia, or interoperability and settlement schemes.
There are technical problems in getting VoIP to work on handsets with limited battery life and CPU power. Skype recently admitted failure in getting their protocol to work on mobile handsets. PacketMobile's technology has been used to generate over 300m minutes of network traffic.
Unlike pure-play IM/VoIP technology providers (e.g. softphone vendors), Packetmobile have also built the kernel of an OSS/BSS solution.
Why it's disruptive?
The technology is hard to crack.
It also allows operators to attack each other by bringing users into their portal and being exposed to their services -- even if not a subscriber. This addresses one of James Enck's infamous instant classic 10 things I [the investor] hate about you [the operator] -- that telcos insist on extending their footprint physically rather than virtually.
Opportunities for Telcos?
Rather than a bypass threat, operators can give away such clients to their existing user base. Users can then make free IM or VoIP calls over any IP network. (If you can't beat them, join them...) Give away download clients to users with devices from other operators, but ensure their user identity is associated with your brand. When they come to your portal, market to them like mad.
The system acts as a segmentation tool between "economy class" VoIP and "business class" dedicated circuit networks. The identity lock-in works as a churn-reducer. As sales and acquisition costs grow as a proportion of the cost base, this becomes more of an issue than squeezing some additional ARPU out (with its associated marketing cost).