Disruption! Where do we go from here?Brough TurnerSenior Vice President,Chief Technology Officer
Telecom Value ChainMore regulated than Christensens examples, still:PBX industryTransmission equipment industryCentral office switchesDeath of distance
Brough Turner - Needs complex build...First w/o "Internet" chevron show:1. Illustrate PBXs w/fat line around Chips, Components, Equipment & Enterprise2. Illustrate Transmission equipment w/ fat line around chips, components, equipment & backbone3. Illustrate CO Switches with by having the previous fat line turn another color4.Illustrate the death of distance with the same fat line in yet another color.
New Value ChainInternet largest opportunity in new applications and servicesVoIP gaining traction international wholesale, then IP-PBX & now consumer VoIP over fixed broadband accessMobile broadband (pure connectivity) still in the future
Profits in CommoditiesCan be highly profitable for the low-cost producerDell Computers focus on operational issues
Slow Evolution to Dumb PipesFixed Internet accessLeverage monopoly status lawyers & lobbyistsTriple play and other bundlesMobile InternetTechnology not there yet limited bandwidth; QoS still requires coordination across layersWalled gardens; Quad play (FMC)Competition service layers will go modular, eventually
Evolution of Mobile Voice and TextStartups trying to move SMS volume to P2P appsMXit, Hotxt, Text2me, Pica, Juize, CrickeeOthers trying to move voice to VoIPMig33, Vyke, Woize, Nimbuzz, Rok Viper, AQL, Fring, Mobiboo, Truphone plus Skype affiliatesCombo offerings not just voiceCommunications (email, chat, IM, voice messaging, voice & video)Community (moblogging, voicecasting)Pica 3M users in China; US VC $Skype already handling 7% of all international voice minutesHandset limitations an obstacleLess of an issue among youths using latest cool devices
Wheres the Money?Consumer devices handsets, Cisco, Moto, Sales, with long tail Facilitating transactions Targeted advertising Monetization strategy for most of Web 2.0CommunitiesIMs, MySpace, YouTube, Craigs List, WikipediaMonetized by ads, premium services, donationsSpecialized informationWestLaw, Ovum, IEEE Explore, Angies ListSubscription or monetized by ads
Specifics Social NetworkingCommunities are keyPlatforms must facilitate diverse user communitiesIndividuals participate in multiple communitiesI use four instant messengers and have multiple homepagesMySpace dominant today, but other platforms (even a mobile operators platform) have a chanceNeed to support growth of multiple user communitiesNot just family and friends on one operatorAt most, extra benefits for users on same operator
Picking MarketsPremium services# people making > $200/day
Mobile InfrastructureCountries by population
Youth servicesCountries by # of childrenWorldmapper maps by SASI Group (University of Sheffield) and Mark Newman (University of Michigan)
Services as PlatformsWildly successful Internet services are platformsAmazon, eBay, Google, Flickr Publish APIs, interfaces, web servicesFacilitate others building upon your serviceFoster mashups
NMS Platform SolutionsHelping you develop communications applications Telecom complexityIN migrating to IMSOSS/BSS, etc.Business complexityAccess to operators, NEPs, other partners
We handle telecom complexity so you can focus on your application
Communications OpportunityInternet plus mobile phones driving global economic, social, and political benefitsUnderlying technologies improving exponentiallyEnormous opportunity ahead! 6.5 B people, 2.4 B mobile phone subscribers Existing networks need continual upgradeHave fun, help mankind, make money !
The use of the term disruption in high tech was popularized by Clayton Christensen in his 1997 book, The Innovators Dilemma. Subsequent books and articles have elaborated on the ideas.From our perspective, the critical idea is: when the technology gets good enough, things go modular and value moves down (or up) the value chain.Theres high margin business where optimization is still required (the technology is barely adequate to realize customer requirements).And theres high volume business where operations are more important than technology (e.g. Dell in the IT value chain).Growth of an independent PBX industry fosters tons of new telephony services for enterprise users.Growth of independent transmission equipment industry enable emergence of MCI as a long distance bypass operator.Bell divestiture in the US, led to competitive central office switch market, which further enabled long distance operators.Eventually technology caught up with long distance, price dropped and we got the death of distance.
The first commercial success of VoIP technology was in international wholesale, I.e. iBasis and ITXC (later sold to Teleglobe). This worked technically because they could connect directly to the Internet backbone where excess capacity meant no QoS issues.IP-PBXs took off next because enterprises had excess bandwidth (at least internally) and/or were willing to adopt very simple QoS, I.e. Gold bit/Brown bit.More recently consumer VoIUP has taken off, because broadband became available. VoIP requires bidirectional capacity and broadband is usually lame on the upstream side, however, even 200 kbps upstream is enough and upstream priorities are controlled at the customer premises, e.g. within the VoIP gateway or other access device.
Mobile broadband lacks the needed upstream capacity so widespread adoption of 3rd party mobile VoIP is still in the future, but given mobile competition, its likely to appear the moment the technology can support it
Can be highly profitable for the low-cost producerDell Computers focus on operational issues
Bernstein Research study on Dumb PipesLots of profit available for low-cost providerBetter ROIBut smaller business than today
Mxit taking South Africa by storm because SMS in SA cost about 10 cents each while data plan for 1Mb is much less.Hotxt UK based
Worldmapper maps by SASI Group (University of Sheffield) and Mark Newman (University of Michigan) http://www.sasi.group.shef.ac.uk/worldmapper/index.html