| Voice & Messaging 2.0: Strategic Threats and Opportunities, Presentation by Phil Laidler, Director, Consulting, STL Partners. Which of the disruptors – Apple, Facebook, Google, Skype – is the biggest menace? Presented at EMEA Brainstorm, November 2011. |
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Example slide from the presentation:
Many, many different companies are pushing into the key Telco 2.0 field of communications-enabled business processes, or CEBP, which unites both the Voice & Messaging 2.0 and Enterprise VAS elements of our thinking. It’s one of the undemarcated frontiers, or creative tension zones, where most of the value is going to be created. In this note, we’re going to examine four leading CEBP platforms, all of which have been featured on the Telco 2.0 blog before, and try to identify some key trends and commonalities that explain something about how to succeed with CEBP and Voice 2.0.
No-one is quite sure where the roles of telcos, Web2.0 players, ISVs, and systems integrators begin or end, or what distinguishes the VAS and voice & messaging elements. But it’s precisely this combination of complexity and openness that gives the scope for differentiation through business model innovation.
Fundamentally, this field is attractive to telcos and others because of the extreme disjuncture between the volume of bits involved – which drives cost – and the social and economic value attached to them, which drives the potential revenue from them. This makes it possible to achieve SMS-like “fascinating margins” and to actively substitute for the falling price of the core consumer voice and SMS products. You might remember that ten years ago, it would be worth employing someone to save an hour of phone calls, and that we calculated that a few text messages at the right place and time could save the UK transport industry £218 million a year.
No wonder operators we surveyed for the Voice & Messaging 2.0 report were so keen on APIs and commerce, although we still think they are worryingly unengaged with voice… The following chart represents the relative priorities a sample of operators assigned to different issues in the survey.
Source: STL
The products and companies we’re going to look at are Ribbit, IfByPhone, Intelepeer, and VoiceSage. (NB We’ve written about all four in the past; on Ribbit, we’ve done Ribbit: the amphibian of telco platforms, why Ribbit is worth $105 million to BT, Ribbit and BT’s evolving platform strategy, and trying to fix BT Global Services with open source. We interviewed IfByPhone CEO Irv Shapiro, and the CEO of Intelepeer, and VoiceSage have been to every Telco 2.0 event we can remember.) We’ve also done a Q&A with Thomas Howe, CEO of their rival, Jaduka.
In case those are too many links for one paragraph, let’s recap exactly what these four companies do.
Ribbit is a platform for voice and messaging-based applications, usually CEBP but not necessarily, which provides a software toolkit for the user-interface front end and a hosted softswitch with extensive APIs for the back end. Being part of BT, it has access to BT’s global network, peering/interconnection, and datacentre resources. It is marketed to developers, and its monetisation model is that the developers who use it pay for their use of network resources and adjacent products like hosting and bulk voice service, whereas the software-development kit is given away free to encourage user recruitment. This is a telco version of the now-classic IT model introduced by Microsoft at the end of the 1980s.
IfByPhone provides a Web-based interface for setting up voice – and messaging-enabled CRM applications, which run on a hosted cluster of Asterisk servers. It’s marketed to small and medium businesses, and also to small US telcos who peer with their SIP network. Users pay for service.
Intelepeer is a full-service virtual telco, which provides a hosted switching system with an extensive API (AppWorx), a private ENUM registry for mapping e164 telephone numbers and URIs, and widespread VoIP peering. Users – essentially developers, niche service providers, or enterprises – pay to host their voice applications on their systems.
VoiceSage is a Web-based environment for creating basic CEBP applications. It’s a single box solution from the end user’s point of view, providing relatively few options compared to one of the all-purpose developer platforms, but it offers quick deployment with a minimal technical overhead.
Looking at these, there’s clearly a spectrum of specialisation here; VoiceSage does just a few things – sending messages during business processes. IfByPhone is considerably broader; Ribbit is a general purpose developer platform for voice & messaging, and Intelepeer is a whole telco with hosting and APIs. On the other hand, as you move along that, the minimum buy-in in terms of technical investment also changes; the more you have to configure and engineer yourself, obviously, the more commitment you need to make.
If you’re building something using Intelepeer or Ribbit’s platforms, you’ll need to undertake non-trivial software development; IfByPhone has a graphical user interface, but still offers quite extensive scope for customisation and development. VoiceSage requires the least engineering investment to get something up and running.
Of course, the cost of having a “noddy” user interface is that it restricts the possibilities of further development and customisation, at least if you don’t have access to the underlying systems it abstracts. This, of course, has consequences for the business model; creating a user interface involves a vision of the user, and therefore also of the customer. If you’re building a highly specialised and supposedly user-friendly GUI, your product is going to be end-user focused. The more general-purpose the product, and the greater the technical buy-in required, the more likely you are to be offering it to developers and enterprises with their own development capability rather than to end users, whether organisations or individuals.
And this is what we see: Ribbit and Intelepeer are targeted at developers, IfByPhone is targeted at technical corporate users (and service providers as a white-label), and VoiceSage at non-technical users.
In our post on BT Osmosoft (and Ribbit, come to think of it), we quoted J. P. Rangaswami as saying that the dividing line between open-source and proprietary software depends on how generalised or specific the application is; as your product becomes applicable to more things, it becomes more appropriate to go open source, because otherwise it just gets too difficult to keep track of all the things that need maintaining. However, it’s rare that anyone will have solved a highly specific business process problem unless they expect to make money from it, so the more specific and specialised you get, the more likely you are to be proprietary.
This can be applied here as well. If your product has relevance to a very wide range of applications – like Asterisk, or perhaps like the Telco 2.0 VAS platform – or if it’s a commodity, like traditional voice, it’s most likely that the appropriate business model will be driven by wholesale, and success will hinge on finding the best possible partners to get it into their own specific markets. If it’s software or content, you should seriously consider making it open-source and perhaps free.
This chart shows these ideas as a 2×2 matrix; towards the top right, we’ve got hyper-specialised and still highly technical tools for very specific jobs, and towards the bottom left, commodities. The interesting bits are in the zone of value, shown in gold (of course), which incorporates both retail-ready, specialised, ready to use products, at the bottom right, and also the highly technical general purpose platforms that make them possible, up at the top left.
Essentially, the crucial markers are whether the product has a very large range of possible applications, whether it can be incorporated into another product, and whether an upstream customer is needed to market it to the end user. Of course, the ultimate possible range of applications is being useful across the whole economy; another reason to forget “content”.
Value is not just migrating to the network edge; it’s migrating to the edge of your business, where it makes contact with others.
So, it’s crucial to identify and develop the right partnerships to bring your valuable general-purpose platform capabilities to the people whose highly specific business process problems need them. And it’s important to be aware of what opportunities to profit from a specific niche product there might be. But given the highly generic nature of many telco platform capabilities, wholesale is going to dominate. The aim of Telco 2.0 is to facilitate getting from highly generic data transport and big IT capabilities to specific user value. That’s how you get into the zone of value.
