Startup Disruption in Telco
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Transcript of Startup Disruption in Telco
JAMES PARTON, DIRECTOR OF TWILIO EUROPE
@JAMESPARTON !
STARTUP DISRUPTION IN TELCO
IBEGYOURPARTON.COM @JAMESPARTON
WHAT SPRINGS TO MIND WHEN YOU THINK OF YOUR MOBILE PROVIDER?
A LITTLE ABOUT ME
SO WHAT’S THE PROBLEM?
IBEGYOURPARTON.COM @JAMESPARTON
TELCO REVENUE DECLINING FOR FIRST TIME
Source: ETNO
UK 4G spectrum auction generated £2.3bn!2000 UK 3G action made £22.5bn
IBEGYOURPARTON.COM @JAMESPARTON
THE TELCO BUSINESS MODEL IS BROKEN
Voice is God’s gift to humanity. It’s what differentiates us from the animals. And we position voice at zero — you don’t have to pay for voice. Voice is dead.”
“
Hakam Kanafani!Group CEO of Turk Telekom!
Mobile World Congress 2013
IBEGYOURPARTON.COM @JAMESPARTON
..BUT TELCO’S REMAIN CASH GENERATION MACHINES
Source: Company websites
$0
$33
$65
$98
$130
AT&T China Mobile Telefonica Deutsche Telekom Vodafone FT
59.360.9
76.481.884.1
126.4
2012 Revenue (USD Billions)
IBEGYOURPARTON.COM @JAMESPARTON
CROSS INDUSTRY COMPARISON
Source: Company websites, Wikipedia, Business Week, BBC
$0
$45
$90
$135
$180
Samsung Apple AT&T IBM Sony Unilever Luxembourg Coca Cola Nike Heinz
11.624.1
4858.3
67.479.1
107
126.4
156.6
173.9
2012 Revenue (USD Billions)
IBEGYOURPARTON.COM @JAMESPARTON
OIL, FOOD, TRANSPORT, COMMUNICATION
Source: Company websites, Wikipedia, Business Week, BBC
$0
$125
$250
$375
$500
Exxon Mobil Wallmart Toyota AT&T
126.4
226
443.9482
2012 Revenue (USD Billions)
IBEGYOURPARTON.COM @JAMESPARTON
Source: Company websites
$0
$33
$65
$98
$130
AT&T China Mobile Telefonica Deutsche Telekom Vodafone FT
59.360.9
76.481.884.1
126.4
2012 Revenue (USD Billions)
SO WHAT ABOUT THE DISRUPTORS...?
IBEGYOURPARTON.COM @JAMESPARTON
SO WHAT ABOUT THE DISRUPTORS....
Source: Company websites, insideris.com
$0
$35
$70
$105
$140
AT&T Telefonica Vodafone Google Skype
0.30.75
50.159.360.9
76.481.884.1
126.4
2012 Revenue (USD Billions)
IBEGYOURPARTON.COM @JAMESPARTON
SO WHAT ABOUT THE DISRUPTORS....
Source: Ovum, Company websites, insideris.com
$0
$33
$65
$98
$130
AT&T OTT 2016 China Mobile Telefonica Deutsche Telekom OTT 2013 Vodafone FT
59.360.971
76.481.884.1
106
126.4
2012 Revenue (USD Billions)
OTT 2013
OTT 2016
IBEGYOURPARTON.COM @JAMESPARTON
THE DECLINE IS PREDICTED TO CONTINUE
Source: Telco 2.0
NEW KIDS ON THE BLOCK
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THE RISE OF MESSAGING APPS
Source: Crunchbase, Wikipedia, mobilesquared , Ben Evans
2005
2010
2011
280m active
465m active
236m active
Over 50 social messaging apps on Google Play have more than 1 million downloads
NEW KIDS ON THE BLOCK
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CASE STUDY:
Source: ReadWriteWeb
mobile picture messaging user experience done right...
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CASE STUDY: PHOTO MESSAGING
Source: OnDevice
SPEED AND AGILITY
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RADICAL INNOVATION IN COMMUNICATIONS
~3,000 BC 1838 1876 1984
~4,800 years 38 years 108 years
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SOFTWARE TIMESCALES
2003 2006 2007 2008
3 years 1 year
3G Launch
2009
1 year 1 year
DNA
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SOFTWARE IS EATING TELCO
• Marc Andreessen was right about software eating the world, especially when it comes to Telecommunications...
- The innovation void is being filled by software people, not Telco’s
- Software people think web first. This style of thinking is inherently open
- Software people think collaboratively - APIs, collaborative working, open source
- Software people think about building communities & ecosystems
Why software is eating the world: http://parton.ly/17u5g5z Andreessen photo: http://www.flickr.com/photos/36521958135@N01/2443764501
Innovation
INTERNET
Copper
Switching
WWW
TELECOM
Copper
Switching
CONTROL = #FAIL
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CASE STUDY: INTERNATIONAL CALLING
Avg. cost of a 3 minute transatlantic call: !1927: $75 (today’s equivalent $1,000) 1964: $12 (today’s equivalent $90) 2010: $0.21 !Volume of transatlantic call minutes: !1964: 20 million 2010: 114 billion !!
Source: TeleGeography
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CHANGING USER BEHAVIOUR
Source: Ofcom
!Weekly mobile activity by 12-15s in UK with a smartphone, 2013!
Per Week
0
100
200
300
400
Phone Calls SMS App Messages
192
311
27
IBEGYOURPARTON.COM @JAMESPARTON
NO BUSINESS HAS A DIVINE RIGHT TO SURVIVE
“The fact is time is racing on: the economy is declining, technology is moving ahead and so are other parts of the world. The telecoms sector hasn’t had its ‘Lehman’ moment yet. But with declining revenues, rising debt and dated business models, I worry about that happening,”
European Commission Vice President !
Neelie Kroes
SO WHAT CAN WE LEARN?
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TAKE AWAYS
• Search for complacent industries with high margins and poor user experiences!
• Don’t just talk to your customers, implement what they tell you!
• Watch trends in your direct and indirect markets!
• Ensure your business model is multi faceted!
• Think about your DNA - create and integrate into ecosystems, become de facto.!
• Have a Plan B, anticipate change
IBEGYOURPARTON.COM @JAMESPARTON
PAYOFF IS HUGE
2005 & 2011
$2.6bn & $8.5bn
eBay & Microsoft
2009
$207m
O2
2014
$900m
Rakuten
2008
$105m
BT
2012
$1.1bn
2014
$19bn
IBEGYOURPARTON.COM @JAMESPARTON
CASE STUDY: M&A
• Think about what we have covered today!
• Despite being the clear number 1, Zuckerberg is not making the same mistakes!
• Facebook is under performing in Youth segments, Emerging Markets, and Mobile!
• Decision making at software speed, whilst resisting the temptation to build in house!
• He wants the next Facebook to be Facebook
IBEGYOURPARTON.COM @JAMESPARTON
FURTHER READING
Alan Quayle!http://www.alanquayle.com/blog !Tomi Ahonen!http://communities-dominate.blogs.com/brands/ !Disruptive Wireless!http://disruptivewireless.blogspot.co.uk/ !Martin Geddes!http://www.martingeddes.com/ !Benedict Evans!http://ben-evans.com !Telco 2.0!http://www.telco2.net/blog/
THANK YOU. @JAMESPARTON
IBEGYOURPARTON.COM SCOOP.IT/T/SOFTWAREANDTELCO
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