Retail: The future of Telco

Most service providers have a multi-channel strategy, or a digital channel strategy, or some strategic objective to achieve “the right channel mix”.  In a typically inside-out view of the world, each new channel that emerges (social media is a “new” channel, for example) is added to the others, and attempts are made to leverage unified processes so that there’s an integrated view of the customer, or a 360 degree view of the customer.

Meanwhile, the entire retail industry is digitizing.  Just as IBM (who, in the interests of full disclosure, pay the wages of your correspondent) is talking about the increased importance of the CMO, Forrester have come out with some new research about how eBusiness is moving to the c-Suite.  Apple has revolutionised the mobile phone business, the telco business, the consumer electronics business, and – crucially – the retail business.  Everyone is racing to catch up, and while the traditional retailers have been lumbering into the online world ten or more years since mainstream internet adoption became real, suddenly they are being overtaken once again by an integrated digital mobile ecosystem that is further eroding retail conventions.  So different retailers have done different things.  Tesco and Walmart developed the online channel but both continue to struggle in a world that moves too fast for their scale; Best Buy still writhes in anguish; and Borders went bust.  Quoting from Peter Sheldon over at Forrester, “In tomorrow’s  Wi-fi connected, digitally enabled store, fixed checkout aisles and cash registers will fade away; instead the entire floor becomes the point of sale.”

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OTT and Telco: Threat? Opportunity? Head in the Sand?

It's ok, you can come out now!

There’s a strange dilemma in telco.  Worldwide demand for its core product is skyrocketing, and all that the industry can do is complain about it.  When you step back from it, it’s quite bizarre.  It’s like a spoiled child, given everything they could ever want, with no restrictions, and over-protective parents decrying any attempt at discipline.  Then, when the child has to fend for itself in the big bad world, she is totally unequipped to even consider the threats and opportunities that presents.

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Analytics Matters

Yesterday I watched a TED talk on Lessons from Death Row, where a death penalty lawyer talked about how death sentences were reducing in number because death penalty lawyers were intervening earlier and earlier in the process.  It was easier to avoid the sentence than to correct it, was the logic.  Mr Dow went a step further, however, and said that intervention should happen even sooner – before the murder was committed – because the stories of these guys on death row are 80% the same – broken homes, juvenile justice, and so on.  Appropriate, early intervention could save the lives of these people, and of course their future victims.  In essence, he was saying that everything was predictable.

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The Tao of Usefulness

Don Norman's Unusable Teapot

Telcos around the world – and you know who you are – have a habit of being really not very useful.  Matter of fact, they get into a habit of deliberately constructing cumbersome, poorly priced, stupid products that some people use only because they have to, because there’s no alternative.  Innovation in telecom is almost entirely redundant – over and above core connectivity and network engineering, there is almost nothing that the industry has come up with in the last fifty years that anyone could call innovative.  Text messaging happened by accident.  Mobile telephony should have taken off ten years before it did, except that the telecommunications industry was the one doing it.

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Telco Busting Business Model #487

Imagine for a minute all iPads were 3G enabled.  Now, imagine that no data plans were sold with them.  Next, all users get free access to the iTunes app store.  Now, everything is an app.  Connectivity is an app (for random browsing).  Bundles of call minutes could be sold as an app.  Text and instant messaging too, if anyone still pays for that stuff.  All other apps would have access bundled with them in a 3G context, in the same way as books for the Kindle have access bundled with them.  Telcos become infrastructure providers for consumer electronics and applications (media) providers.  The end.

The Untethering of Telco

Telcos have been losing their customer ownership and authority for many years.  First there was 1984, and the anti-Orwellian breakup of AT&T, and the ensuring deregulation of telecommunications around the world.  Then there was mobile, and the internet, two upstart technologies that threatened everything about telco.  Then there came over the top (OTT) service providers, and the device manufacturers – first mobile phone manufacturers, then every other consumer electronics manufacturer, then every metering and instrumentation manufacturer who could stick a SIM card in their electronics.  Now Google has changed tack on Android, and is upping the ante in its relationship (if it can be called that) with the service provider.  It is going to work with device manufacturers to get their devices out early and direct – specifically targeted at wresting control from the carriers.  According to the Wall Street Journal, this shift “marks a bid to exert more control over key features and apps that run on Android-powered phones and tablets, thus reducing the influence of wireless carriers over such devices.”

Tor many of the device manufacturers, telcos represent important channels.  for others, that’s less the case.  Austek, for example, has no such channel, and is deciding that rather than laboriously build such a channel, telco by telco, country by country, they will sell directly over the internet.  Motorola of course is becoming part of Google, and will continue its hybrid approach to the market, presumably in a trajectory that continues to reduce its dependence on the telco as channel.  Apple has long had alternate channels, and as tablets play an increasingly more important role in their business (especially with the much touted 7″ iPad due for release later this year) their dependence on iPhone sales will be reduced.  Tablet with a dialer, rather than phone with apps, you see.

The remaining tether to the service provider appears to me to be the phone number.   You know what would be a great app?  An identity app.  A simple, single function app that’s free, and that you share with your friends, that allows you to publish your current phone number, or – better again – that simply updates automatically when you swap SIM cards.  Then when you want to call someone, all you have to do is connect the app to your contact book, and call your contact using the app, instead of 555-1234-5678.  It would be great for people who swap SIMs a lot.  What’s more, it could ‘sense’ when someone else has changed SIM, or phone.  It would tie both SIM and IMEI number together, and create a single identity.  So when someone calls in, the app would be aware of the incoming call, go back to the server and ask about the number that’s dialling, and return with information to the recipient of the call saying that even though you’ve never seen this number before, it’s John who’s calling.

In Japan, something similar could be done with an email app, as email addresses are tethered to telcos there as well.

The net result would be a small footprint app, distributed for free, and promoted across social media.  We could figure out a business model later :-)

An Irish company called YAC (You’re Always Connected) tried to do something similar about ten or twelve years ago, but it wasn’t the same – they had this thing called YAC numbers, which were actual phone numbers, but universal across networks ( seems to be still limping along with a kind of eReceptionist thing).  Zouk Ventures (now a clean tech investor) had an investment in them.  There was a lot of config required both by the user and by the caller, which was a bit much.  They couldn’t quite get it over the line.  But the basic concept – removing the phone number tether from service provider control – remains valid.

Now.  Who can build my app for me….

The Sun Ain’t Shining on TV No More

The New York Times reports on falling Spring viewership for TV just as we approach what they call in the biz the “upfronts”, or the ad buying season.  Fox is down 20%, ABC 21%, CBS 8% and NBC 3%, all of which are quite savage.  One of the interesting things is the list of excuses as to why this is happening.  A substantial amount of the blame goes on the abandonment of linear viewing, that PVRs have allowed people to choose when they watch a show (skipping ads, of course).  Delayed viewing according to one exec would be the second biggest show on TV if it were ranked that way.  The decline of American Idol too has impacted, which is of course a live show, and therefore not as susceptible to the nonlinear thing.  They blame the quality of some of the shows…and they even blame the weather!  Bless!

None of them mention channel offset, which has to be one of the most significant factors.  I mean, there’s a simple question – if people are not watching TV, what are they doing?  How are they being diverted or entertained?  Why do none of them want to acknowledge that?  Maybe it’s because it’s such a pervasive trend (the shift from TV to internet, peer to peer and non broadcast media) now that it goes without saying…but I thought it was odd no one mentioned it.  Maybe – and here’s a wild thought – maybe people are reading books again? Ah, sure we can only dream!