The Effect of Software People On Telco
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Transcript of The Effect of Software People On Telco
vJAMES PARTON, DIRECTOR OF TWILIO EUROPE
ALL CONTENT COPYRIGHT (c) TWILIO INC. 2013
THE EFFECT OF SOFTWARE PEOPLE ON TELCO
A LITTLE ABOUT ME
ALL CONTENT COPYRIGHT (c) TWILIO INC. 2013
INTERSECTION OF TELCO AND SOFTWARE
WHAT IS A SOFTWARE PERSON?
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WHAT IS A SOFTWARE PERSON?
• You don’t have to write code to be a software person
• Anyone that sees the world through the lens of software
• Anyone that asks “How can this problem be solved by software?”
• Anyone that believes any problem can be solved by software
ALL CONTENT COPYRIGHT (c) TWILIO INC. 2013
WHAT IS A SOFTWARE PERSON?
Not Software People Software People
ALL CONTENT COPYRIGHT (c) TWILIO INC. 2013
WHAT IS A SOFTWARE PERSON?
Not Software People Software People
ALL CONTENT COPYRIGHT (c) TWILIO INC. 2013
WHAT IS A SOFTWARE PERSON?
Software PeopleNot Software People
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WHAT IS A SOFTWARE PERSON?
Not Software People Software People
WHY SHOULD YOU CARE?
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COMMUNICATION REMAINS VITAL, AND COMMUNICATION IS MOBILE
5.9 billion people use SMS
x6
x3
x2.5
In the UK we placed 240 billion call minutes in 201251.6% on mobile (flipped from landline in 2011)
Source: OfCom and Tomi Ahonen, May & September 2012
SO WHAT’S THE PROBLEM?
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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 KanafaniGroup CEO of Turk Telekom
Mobile World Congress 2013
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TELCO REVENUE DECLINING FOR FIRST TIME
Source: ETNO
UK 4G spectrum auction generated £2.3bn2000 UK 3G action made £22.5bn
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..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)
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CROSS INDUSTRY COMPARISON
Source: Company websites, Wikipedia, Business Week, BBC
$0
$50
$100
$150
$200
Samsung Apple AT&T IBM Sony Unilever Luxembourg Coca Cola Nike Heinz
11.624.1
4858.3
67.479.1
107
126.4
156.6173.9
2012 Revenue (USD Billions)
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ITS ALL ABOUT THE FUEL: GAS & FOOD
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)
ALL CONTENT COPYRIGHT (c) TWILIO INC. 2013
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...?
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SO WHAT ABOUT THE DISRUPTORS....
Source: Company websites, insideris.com
$0
$38
$75
$113
$150
AT&T Telefonica Vodafone Google Skype0.30.75
50.159.360.9
76.481.884.1
126.4
2012 Revenue (USD Billions)
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THE DECLINE IS PREDICTED TO CONTINUE
Source: Telco 2.0
NEW KIDS ON THE BLOCK
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THE RISE OF MESSAGING APPS
Total of $23 billion in texting revenue lost as of the end of 2012 to OTT messaging services
Source: WhatsApp and LATimes.com
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THE RISE OF MESSAGING APPS
Source: Acision
96% of users use SMS, but 50% prefer OTT messaging services
BBM
SMS
Whats App
iMessage
0 27.5 55 82.5 110
64
64
74
75
110
UK messages p/ week
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CASE STUDY: TRANSATLANTIC CALLS
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 million2010: 114 billion
Source: TeleGeography
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RISE OF SKYPE
Source: TeleGeography
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AND THE CHALLENGES KEEP COMING
2 billion iMessages per day
Source: Apple, LATimes.com
Facetime video since 2010Audio only announced at WWDC 2013
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AND THE CHALLENGES KEEP COMING
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THE NEW LANDSCAPE
Landline
Provide landlines (inc. WiFi)
Mobile
Provide mobile lines(inc. WiFi)
Over The Top (OTT)
Use other peoples networks to deliver
their services(Digital Cuckoo!)
Network Software
Cloud
Virtualize Telco capabilities in the cloud and directly
connect into networks
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NETWORK PEOPLE AND SOFTWARE PEOPLE SITTING IN A TREE....
SOFTWARE PEOPLE CREATE BETTER USER
EXPERIENCES
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BETTER COMMUNICATION USER EXPERIENCES
Source: OfCom
...and these experiences are being built by software people
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CASE STUDY: INSTAGRAM
Source: ReadWriteWeb
mobile picture messaging user experience done right...
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SOFTWARE PEOPLE DRIVING MOBILE DATA DEMAND
Source: OfCom
Avg. UK mobile data use: 71Mb p/month Jan 2010 rising to 154Mb in Jan 20123UK contract customers avg. was 800Mb (Feb 2012)
SOFTWARE PEOPLE GO FASTER!
Innovation
INTERNET
Copper
Switching
WWW
TELECOM
Copper
Switching
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LETS PUT THIS IN HISTORICAL CONTEXT
~3,000 BC to 1838 we communicated via cave painting, smoke
signals, story telling, carving, writing
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1838 - THE TELEGRAPH
~ 4,800 years to point of innovation
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1876 - THE TELEPHONE
+ 38 years to point of innovation
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1984 - THE MOBILE PHONE
+ 108 years to point of innovation
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SOFTWARE PEOPLE TIME
+106 years on software comms arrive
3G data launched in 2003
2003 + 0 years
2006 + 3 years
2007 + 4 years
2008 + 5 years
2009 + 6 years
CONTROL = #FAIL
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YE OLDE MOBILE INTERNET
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WHY TELCO’S WANTED TO BE THE GATEKEEPERS
• The gatekeepers “own” the customer experience, billing relationship and channel
• The stagecoach, the postal service
• The telegraph company
• The phone company
• The mobile company
• The social network?
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OWNERSHIP OF USER IDENTITY
• Carriers always (still?) believed they owned the primary address for everyone on the planet. The phone number
• But where has the innovation been with the customer experience?
• Which is more user friendly?
+44 20 xxxxxxxx or @jamesparton
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THIS IS WHY SOFTWARE IS EATING TELECOMMUNICATIONS
• 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
SO WHATS NEXT?
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HOW TO AVOID THE KODAK MOMENT
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WHAT IS THE STRATEGY?
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CAPEX IS RISING, BUT NPD IS BROKEN....
Source: PwC & ETNO
Between 2001 - 2010 avg. ROI was just 6% = NDP Brokenbut note Telco’s are investing less than 20% of revenue
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NEW BUSINESS MODEL
Consumer Retail Store Producer
Packaged Goods!
Internet Services!
Consumer Developer Provider App
Source: http://www.slideshare.net/samramji/darwins-finches-20th-century-business-and-apis
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MIXED RESPONSE FROM TELCO
Source: Informa
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THE SAME OLD THINKING IS STILL THERE
Source: Informa
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APIS FOR MUGGLES
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PARTNER TO REACH DEVELOPERS
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CREATING A VIBRANT DEVELOPER ORIENTATED ECOSYSTEM
Connectivity
Start Ups
Channel
ISVSI
Customers
Enterprise
Direction of money flow
Hackers{SingleAPI
Abstraction
ALL CONTENT COPYRIGHT (c) TWILIO INC. 2013
REMEMBER THIS QUOTE?
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 KanafaniGroup CEO of Turk Telekom
Mobile World Congress 2013
ALL CONTENT COPYRIGHT (c) TWILIO INC. 2013
MAKING HACKNEY SPARKLE
http://vimeo.com/56125403
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SOME CLOSING THOUGHTS
1. Stop building product
2. Partner to provide the right developer tools
3. Partner to reach software people that will drive traffic on your networks to counter OTT threat
4. Big guns are designed to hit large targets - help software people sell into Enterprise
ALL CONTENT COPYRIGHT (c) TWILIO INC. 2013
FURTHER READING
Alan Quaylehttp://www.alanquayle.com/blog
Tomi Ahonenhttp://communities-dominate.blogs.com/brands/
Disruptive Wirelesshttp://disruptivewireless.blogspot.co.uk/
Martin Geddeshttp://www.martingeddes.com/
Benedict Evanshttp://ben-evans.com
Telco 2.0http://www.telco2.net/blog/
THANK YOU.@JAMESPARTON
WWW.IBEGYOURPARTON.COM/SOFTWAREANDTELCO/