Paul Wallbank – Brilliant Communications

Author: Paul Wallbank

  • Where next for the telco industry?

    Where next for the telco industry?

    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.

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  • The fight for cloud computing’s sweet spot

    The fight for cloud computing’s sweet spot

    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.

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  • Zuckerburg’s curse

    Zuckerburg’s curse

    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.

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  • Klout and marketing’s holy grail – an interview with Joe Fernandez

    Klout and marketing’s holy grail – an interview with Joe Fernandez

    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

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  • Old business and new tech

    Old business and new tech

    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.

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