Paul Wallbank

Paul Wallbank is a speaker and writer charting how technology is changing society and business. Paul has four regular technology advice radio programs on ABC, a weekly column on the smartcompany.com.au website and has published seven books.

Oct 302014
 
telstra-usb-4g-white-laptop-hires

The last thirty years have been good for the telecommunications industry; a wave of privatisations, regulatory reforms and technological change drove the sector and company profits.

As populations around the world adopted mobile phones users started enthusiastically calling and texting, Telco profits exploded.

Twenty years later the massive growth to the industry has peaked as customers have moved to using their cellphones for  less lucrative data services.

So where do the telecommunications companies go next for growth and profit? Today and tomorrow I’m attending the Ovum 2020 Telecoms Summit where they’re looking at the future for the industry.

Salvation from the internet of things

The great white hope for the telco industry is the internet of things and the machine to machine (M2M) technologies; the hope being that putting SIM cards into every car, kettle and shipping container that this will be another lucrative revenue stream.

Martin Creighan, Managing Director for Australia and New Zealand at AT&T, points out that by the end of the decade there will be seven times as many connected devices as live mobile phones. This is where the opportunity lies.

The problem with the M2M vision is annual revenues per user (ARPU) for connected devices are a fraction of those from voice and messaging over the last twenty years and telcos will need more than that to maintain their revenues, let alone grow.

Moving into the cloud

One of the other revenue streams is adding cloud services, again this is a low margin business and involves competing with global giants like Amazon and Google along with the myriad of specialist companies.

Another possibility is in providing professional services as Jennifer Douglas, Director of Fixed voice and platinum for Telstra, described in the company’s home support product.

The problem with both the cloud and professional services model this requires a change in culture for the telcos, the traditional contempt telecommunications executives have for the end user doesn’t cut it in the professional services and cloud computing industries.

For the telcos, this major change is something that’s been experienced by many other industries. That a comparatively protected industry like telecommunications companies are subject to these disruptions illustrates just how no sector is safe from being uprnded.

Oct 292014
 
Microsoft_Office_2010_launch

One of the great market battles of the PC era was the fight between the ‘best of breed’ software designed to do specific jobs well — Lotus 123, WordPerfect, and Harvard Graphics — versus the bundled ‘suites’ led by Microsoft Office.

Bundled suites of programs offered a common platform and cheaper price over buying products individually.

In the case of Microsoft Office, it also helped that the software giant was aggressive in undercutting the market and leveraging the deals it had made with hardware vendors and system integrators.

The winner of that battle was Microsoft as it turned out customers preferred the cheaper price points of the bundled packages and the common software platform made it easier to share data across the applications.

In the cloud computing field that fight is happening again as Zach Nelson, CEO of Netsuite, describes; “I think the next battle is going to be the same battle that happened in the client-server world. Is it the best of breed cloud apps or is it the suite?”

Nelson believes the suite vision will win out, “the suite is going to win again for exactly the same reasons why the suite won in the client-server world — it’s very hard to synchronise data between applications.”

Given Netsuite’s business, as its name suggests, is in providing a suite of software it’s no surprising that Nelson believes their way of doing business will prevail. Those providing ‘best of breed’ stand alone cloud applications naturally disagree.

Chris Ridd, Australian General Manager of accounting service Xero, disagrees with Nelson’s view. “With cloud and open APIs you have the holy grail of interoperability,” Ridd says. “In the 1990s the open systems were too early and didn’t work as well as they do today.”

Ridd also points out that Xero has over 350 add on services, ” I don’t think any suite can deliver that” he says.

History is on Nelson’s side but it may be that in this case history doesn’t repeat as the technology has moved along and now stand alone apps are what the market wants.

Time will tell although its unlikely whichever prevails will have anything like the success and market domination of Microsoft Office during the PC era.

Oct 282014
 
twitter-headquarters

Twitter yesterday released its third quarter 2014 results which saw the stock drop a stunning thirteen percent in the half hour after the announcement.

For Twitter’s management and shareholders the worrying thing about the stock drop is the result was in line with analyst’s expectations, the shares fell because its clear the service isn’t getting the traction investors believe is necessary to succeed online.

Investors however have only themselves to blame; as a business Twitter is simply not worth it’s thirty billion dollar stock market capitalisation; it may be worth five billion, it may be worth ten but it’s desperately overpriced at its current prices.

Zuckerberg’s curse

Almost all social media services, and many tech startups, are suffering the curse of Mark Zuckerburg — Facebook’s success has led investors to believe that all online businesses should be valued in the ten of billions.

Making matters worse, Facebook’s billion dollar purchases of Instagram, Oculus VR and WhatsApp have baked the expectation of huge valuations into the startup community. Now every service with a modest user base believes it’s worth something similar to WhatsApp’s $19 billion.

The worry is that companies like Twitter carry out dumb and ill advised things to emulate Facebook and maintain its overvalued stockprice which will damage both their brands and customer base.

For many of these social media services it might be worthwhile admitting that they aren’t Facebook and accept they are a niche product.

It may well be those niches are more profitable than being a mass market product and the idea that online success involves huge takeup is just another relic of the Twentieth Century broadcast model.

Unfortunately while Facebook dominates the social media market and Google continues to draw most of its revenue from online advertising, the wild over valuations and flawed business models will continue.

Oct 272014
 
the retail industry is cahnging with our shopping habits

For three months in 2007 Joe Fernandez had his jaw wired shut following surgery and found himself relying on social media for news and companionship.

Over that three months of sitting on the net Fernandez found he had become a social media influencer and the idea for Klout was born.

In many respects Klout is the classic startup in that Fernandez started with a series of spreadsheets with the algorithm being an Excel formula, something he now calls a ‘Minimal Minimum Viable Product’.

“It was super minimal,” Fernandez remembers. “When people would register for Klout, it would send me an email and I would manually download their social media data into Excel and run the algorithm and then I’d manually update their page.”

Today Klout processes fifteen billion accounts every day with data pulled from four hundred data points including 15 social media services.

Like all tools, Klout does have some limitations and Fernandez admits he gets frustrated with businesses giving priority to users with high scores, another area that concerns him is marketers who don’t examine the relevance of individuals to the business before making judgments on that person’s influence.

One of the key things that Fernandez is proud of is how Klout is spawning its own alumni in a similar way to the PayPal mafia that developed out of the payment service at the beginning of the Century.

“It’s really awesome to see people go on and take on big challenges and do different things.”

As social media develops, tools like Klout are going to become more important for businesses trying to understand how

Oct 262014
 
mobile payments through smartphones and other devices are changing business

The payments war has been well and truly on as companies like Stripe, Apple and PayPal battle it out to control the next generation of currency.

One of the more hapless bystanders in this has been the CurrentC consortium, a group of US retailers set up to take advantage of mobile technology and bypass merchant fees.

This weekend news leaked out that some of the consortium members have disabled Near Field Communications functions in their store Point of Sale systems to prevent Apple Pay and Google Wallet from working while they wait to roll out CurrentC.

In a deep dive review of CurrentC, Tech Crunch looks at how the service works and its limitations. One of the things that jumps out in Tech Crunch’s review is just how cumbersome the system is compared to its competitors.

Despite being founded in 2011 and having the backing of some of America’s biggest companies, CurrentC is two, or possibly three, iterations behind other services which illustrates the problem of incumbents trying to innovate their way out of problems.

No doubt the committee model of CurrentC hasn’t helped the development process along with the aim being addressing the consortium’s fixation with merchant fees rather than making things easier for customers.

It’s hard not to conclude that CurrentC is doomed and the actions of retailers in blocking competitor’s products is only staving off the inevitable. When old businesses embrace new tech they have to be thinking of their customers’ problems, not theirs.

Oct 252014
 
nest-iot-aquired-by-google-protect-black-pathlight

Since Google bought smart smoke detector company Nest earlier this year it’s become apparent that the search engine giant sees the smarthome as one of its big marketplaces in the near future.

Nest’s acquisition of smarthome automation company Revolv yesterday illustrates this and shows that Nest is Google’s smarthome division.

As the smarthome becomes more common, the value of controlling the systems that run the connected home’s devices becomes greater. So the positions being taken by Apple, Google and Samsung are going to be important as the marketplace develops.

The latter relationship — Google and Samsung — is particularly fascinating as Samsung’s smartphones and tablets are locked into the Google Android system which makes it harder for the Korean industrial giant to strike off in an independent path.

All of this of course is based upon homeowners being happy with having their smarthomes locked into one vendor’s platform. We may yet see the market rebel against the internet giant’s ambitions to carve up the connected world.

Oct 242014
 
innovation

“Technology is part of the solution, but it’s also part of the problem,” says Brian Solis, the

Brian Solis describes himself as a digital anthropologist who looks for how businesses are being disrupted. We talk about digital darwinism, how businesses can approach change and the role of individual changemakers within organisations.

“My primary responsibility is to study disruptive technology and its impacts on business,” says Solis. “I look at emerging technology and try to determine which one is going to become disruptive.”

To identify what technologies are likely to disrupt businesses it’s necessary to understand the human factors, Solis believes.

One of the problems Solis sees is the magnitude of change required within organisations and particularly the load this puts on individuals, citing the story of one pharmaceutical worker who tried to change her employer.

“Her mistake was thinking this was a short race, she thought everyone could see the opportunity inherent in innovation and change when in fact it was a marathon. She burned herself out”

“What that means is to bring about change you really have to dig yourself in because you’re ready to do your part. You can’t do it alone, you have to do change in small portions and win over the right people.”