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The Innovation-Driven Disruption of the Automotive Value Chain

8 Apr

In the last two years I have spoken to several business, technology, innovation, and corporate venture executives about their companies’ innovation goals and the initiatives they establish to address these goals.  Several of these leaders work in the automotive industry and through our conversations I have concluded that a) in the next 10 years we will create more innovations that will impact the automotive industry than we have created in the previous 100, b) these innovations frequently couple technology with business model, sales model, overall user experience and other types of innovation, c) software-, Internet- and big data-driven innovations will have greater impact than those in the car’s hardware platform, and d) because of all the automotive innovations that were introduced in the last 2-3 years, and the ones that will be introduced in the near future, particularly those relating to the electric-autonomous-connected car, the automotive industry is approaching a tipping point of disruption.

In this post I discuss three points:

  1. The disruptive innovations are coming from companies outside the traditional automotive ecosystem.  These companies, many of which are based in Silicon Valley, are offering fresh visions on transportation.
  2. Recognizing that they may be disrupted by such companies, automakers and their suppliers are starting to steps to re-invent the way they innovate and how they interact with companies in innovation clusters such as Silicon Valley.
  3. The automotive industry’s efforts in this direction are still small compared to the magnitude of the potential disruption and it is too early to tell whether they will lead to a marked reduction of the disruption risk these companies face.

A Few Facts About the Automotive Industry

Before discussing some of the innovations that can disrupt the automotive industry and in order to appreciate the potential impact of these innovations, it is useful to present a few facts about the automotive industry.

The automotive industry (approximately $1T in annual sales today) is dominated by a group of 14 very large automotive OEMs, with their several dozen brands, shown in Figure 1.

Figure 1

Figure 1: The largest automotive OEMs and their brands

Over the years OEMs have transitioned from being vertically integrated companies and have become integrators of components in car platforms they define and own.  While initially these were hardware-only platforms, today’s cars can be thought of consisting of a software platform, of mostly embedded and proprietary software that controls major functions of the car, and a hardware platform.  According to a report published by the Center of Automotive Research the automotive industry spends $100B/year on R&D, which equates to $1,200 per vehicle produced.  As is shown in Figure 2, most of this investment is made on the car’s hardware platform and on the elements that control this platform, make it safer, more efficient, etc.

Figure 2

Figure 2: Typical automaker’s R&D areas of focus

The components that are integrated into the car platforms are primarily provided by a very large number of hierarchically organized suppliers, the upstream part of the automotive value chain show in Figure 3.  The downstream of this value chain includes the thousands of car dealers and logistics companies that are responsible for moving the parts and bringing the cars closer to the consumer.

Figure 3

Figure 3: The automotive value chain

Four Companies At the Core of Automotive Disruption

As Figure 4 shows, the automotive value chain is starting to get disrupted in a variety of ways. These disruptions are coming primarily from software, Internet and big data application companies outside the traditional automotive ecosystem.  Many of these companies are venture-backed startups and several are based in Silicon Valley.  These companies are disrupting by combining technological with other forms of innovation, e.g., business model, sales model, marketing model.

Figure 4

Figure 4: Companies disrupting the automotive value chain

Four of these companies are at the core of the disruption: Tesla, Zipcar, Google and Uber.

  • Tesla.  Tesla’s disruptive innovations go beyond the electric vehicle, its components, e.g., batteries, its charging stations and the company’s manufacturing process.  The company’s innovations include its direct to consumer sales and service model, personalized user experience inside and outside the vehicle, and automatic software updates.  The company will also offer a fully autonomous car with certain levels of autonomy being available as early as this summer.  The majority of these innovations are driven by software and big data analytics.  So much so that Tesla is considered as much a big data and software company as it is an automotive company. For example, the telemetry being gathered from each car can be used to analyze the entire fleet’s usage patterns (that in turn can be used to improve capabilities, such as the vehicle’s battery range, introduce new features, etc.), detect crashes, identify need for maintenance that can improve vehicle performance, and find lost cars.
  • Zipcar.  Zipcar’s innovations were created to support the car-sharing model.  Zipcar’s membership-based, car-sharing disruptive business model was combined with its innovative, data-driven software platform and novel user experience.  In the short term Zipcar disrupted the car rental industry and that’s why Avis acquired the company. Zipcar now uses the data it collects to identify new locations to place cars, i.e., having a more distributed rental network, better re-balance its fleet (fleet re-balancing based on usage is a big issue since one-way rentals represents 12% of North American car sharing membership), offer one-way rentals at more competitive prices than full service companies, and offer lower prices/hour of usage.
  • Google. Google is disrupting with two software platforms.  Today its Android mobile platform can control the car‘s dashboard, including the navigation system.  The data collected from this platform is combined with Google’s data analysis capabilities to provide an increasingly personalized in-vehicle experience, as well as an in-context experience when entering the vehicle. Longer term, the experimental software used by Google’s autonomous cars could be offered as a car software platform.  Automotive  manufacturers could build vehicles, i.e., the hardware platform, around such a software platform.  This would be similar to the approach Google took with the Android operating system which it offers for free to smartphone manufacturers so that they can build devices around it. As it is doing with mobile devices Google would want to own the data generated by this car software platform and have the exclusive right to monetize this platform through data-driven advertising.  In addition, Google could develop a transportation network of self-driving cars that will use this software platform and will be based on a reference hardware platform that would be manufactured by an automotive OEM.  By using big data analytics on this network Google could develop applications that offer dynamic ride pricing to optimize the network’s usage, optimize the number of vehicles that will be needed to serve a population, and other such applications.
  • Uber. Uber’s innovation is a hybrid of Zipcar and increasingly of Google.  In addition to its business model (and here), Uber’s innovations also include its mobile application which allows for the presentation of routing information and transparency for the arrival time, ability to rate drivers thus establishing driver reputation, and demand-based dynamic pricing.  More recently the company started work on an autonomous car and is expanding globally with blinding speed as it aims to build barriers to entry in addition to what its first mover advantage provides.  While it initially disrupted the taxi and limousine industries, Uber’s model is now starting to disrupt the automotive value chain, as well as the on-demand delivery industry.

While still a rumor, Apple can emerge as a fifth major disruptor of the automotive industry.  Apple can disrupt in two significant ways.

  1. Apple is all about the user experience.  If it decides to enter the automotive market it could disrupt not only the car’s software and hardware platforms, but also the overall car-buying experience, car-servicing experience, etc. very much like it did with its mobile devices (iPod, iPhone, iPad). Since it already owns retail stores around the world, Apple will be able to follow Tesla’s model and offer cars directly to consumers without relying on dealers.
  2. Because when it enters a market Apple takes control of the entire supply chain, as it demonstrated with the mobile devices, it has the potential of re-imagining and thus disrupting the automotive supply chain, an area that automakers consider their core competence.  To achieve this, Apple will need to identify a manufacturing partner to play for the “Apple car” the role Foxconn plays today for Apple’s mobile devices.  It will also need one or more support partners with knowledge of the automotive regulatory environment to play the role wireless carriers, and particularly AT&T, played when Apple introduced the iPhone.

These four, or five, disruptors have access to abundant private and public capital, as was most recently demonstrated in the case of Tesla, Google and Uber.  In addition to their balance sheets, Google, Tesla and Apple can also use their high market capitalization to fuel their automotive goals.

Six Trends Driving the Disruption

The disruptors were the first to start capitalizing on six trends:

  1. The changing car ownership model. For generations owning a car has been a primary aspiration.  In the developed and developing economies the car had been placed at the center of every person’s life.  As a result of the central role cars have been playing in our lives, automobile safety and fuel economy became important issues defining car and innovation around cars.  However, consumers in these economies are moving from the notion that puts ownership at the center to one that puts access at the center.  Google’s transportation vision is very consistent with this shift.  The car is starting to be viewed as only one of the means that can move us through our daily life rather than something that defines us.  In addition, consumers are starting to become negative about many aspects of car ownership: purchasing, servicing, driving on congested roads, parking, and insuring.  Based on surveys conducted by Arthur D. Little, the division between car sharing, rental, leasing and owning a car is diminishing for both consumer and corporate vehicles. Companies capitalizing on this trend: Zipcar, Google and Uber.
  2. A car that is electric, autonomous and connected is a computer platform on wheels. In recent years the car had started becoming a multiprocessing distributed computing system.  By further increasing its computing power to enable autonomous driving and provide always-on, broadband, IP-based connectivity the traditional notion of a car as an electromechanical platform is changing irreversibly.  The addition of electric propulsion requires the further reliance on on-board computers and associated software.  This new platform will run on infrastructure and application software that is based on open standards and delivered as a service, much like every other enterprise and consumer application is.  The car as a computer on wheels is disruptive and enables the emergence of a completely new ecosystem and value chain.  It will also require a brand new set of safety regulations, actuarial considerations and financial underwriting considerations, as well as data privacy laws.  Companies capitalizing on this trend: Tesla, Google and Uber.
  3. Use of software, Internet and big data enable new on-board experience.  Software-, Internet- and big data-driven capabilities combined with the right consumer electronics enable the provision of many services that improve the overall driver and passenger experience (see Figure 5). Companies capitalizing on this trend: Tesla, Zipcar, Google and Uber. 
    Figure 5: Services enabled through always-on Internet connectivityFigure 5: Services enabled through always-on Internet connectivity
  4. Cars generate and consume big data.  Like every other computing device, the car/computer platform on wheels not only generates but will also consumes big data.  The big data that is being generated from the car and through car-related services and interactions (sales, maintenance, insurance), can be analyzed to understand consumer and vehicle behavior, provide personalized passenger and driver experience, optimize vehicle performance, and improve the economics of the car’s usage, Figure 6.  Companies capitalizing on this trend: Tesla, Zipcar, Google and Uber.
    Figure 6: Big data uses in the automotive value chainFigure 6: Big data uses in the automotive value chain
  5. The driver and passenger experiences inside and outside the vehicle are changing.  If the car becomes just one of the means for moving through daily life then passenger and driver would want the car to be able to take into account their life prior to entering the vehicle in order to personalize and improve their experience and productivity while in the vehicle.  For example, with the increasing importance of a continuous experience for driver and passenger and the centricity of mobile devices to our lives, the automotive OEM is starting to lose control of defining and controlling the dashboard specification.  This role now goes to Google and Apple since theirs are the dominant mobile platforms. With fully autonomous vehicles, like Google’s demonstrators, and car-sharing services, like Uber’s, the passenger experience starts to matter more than that of the driver.  Big data analytics will play a big role in understanding context and personalizing the in-vehicle experience.  Companies capitalizing on this trend: Tesla, Uber and Google.
  6. Use of the Internet removes the middleman (car dealer, rental agent, taxi/limo dispatcher) and in the process improves the consumer experience, also in Figure 5.  Companies capitalizing on this trend: Tesla, Zipcar, and Uber.

We therefore see that, a is happening in so many other industries, software, the Internet and big data with associated analytics are main ingredients for the automotive disruption that is taking place.

The Automotive Industry’s Response

Automakers and their suppliers have not been sitting still as they started becoming aware of these trends.  They have been investing heavily in R&D and during the last three years have been increasing these investments.   Figure 7 shows the top 20 R&D spenders in 2014, based on data compiled by PwC, where we see (in red) that six of the top 20 companies are automotive OEMs.

1 Volkswagen 11 GM
2 Samsung 12 Daimler
3 Intel 13 Pfizer
4 Microsoft 14 Amazon
5 Roche 15 Ford
6 Norartis 16 Sanofi
7 Toyota Motors 17 Honda
8 J&J 18 IBM
9 Google 29 GSK
10 Merck 20 Cisco Systems

Figure 7: Top 20 corporate R&D spenders in 2014

Though the R&D investments of automotive OEMs are high, these investments focus on a) sustaining innovations, e.g., improving manufacturing processes through the use of robotics, b) innovations that are necessary to comply with government regulations, e.g., increasing the use of plastic, carbon and aluminum components along with novel bonding methods to make cars lighter and thus increase their gas mileage, and c) making defensive moves, e.g., introducing electric vehicles and development of cars with increasing levels of autonomy.

Figure 8 shows the results of a survey, also conducted by PwC, where executives from a variety of industries were asked to identify the top 10 most innovative companies of 2014. Notice that Tesla Motors is the only automotive company included in the ranking.

Innovator ranking


Figure 8: PwC survey results of the top 20 most innovative companies in 2014

Figure 9 shows the results of a similar survey conducted by BCG where in addition to Tesla Motors, the top 10 list also includes Toyota Motors.

1 Apple 11 HP 21 Volkswagen 31 P&G 41 Fast Retailing
2 Google 12 GE 22 3M 32 Fiat 42 Wal-Mart
3 Samsung 13 Intel 23 Lenovo Group 33 Airbus 43 Tata Group
4 Microsoft 14 Cisco Systems 24 Nike 34 Boeing 44 Nestle
5 IBM 15 Siemens 25 Daimler 35 Xiaomi 45 Bayer
6 Amazon 16 Coca-Cola 26 GM 36 Yahoo 46 Starbucks
7 Tesla Motors 17 LG Electronics 27 Shell 37 Hitachi 47 Tencent
8 Toyota Motors 18 BMW 28 Audi 38 McDonald’s 48 BASF
9 Facebook 19 Ford 39 Philips 39 Oracle 49 Unilever
10 Sony 20 Dell 30 Softbank 40 Salesforce 50 Huawei

Figure 9: BCG survey results of the top 50 most innovative companies in 2014

The results of these two surveys lead us to conclude that industry executives do not view automotive companies as top innovators despite their high R&D investments.  This may be because the the automotive industry by culture prefers to be a fast follower, rather than a first mover.  In addition, software, the Internet, data and data analytics are not in the automotive industry’s DNA.

Because Silicon Valley is at the forefront of software-, Internet- and big data-driven disruption, several automotive OEMs and suppliers have started interacting Silicon Valley’s ecosystem.  In many cases these interactions take the form of visits by corporate delegations.  However, increasingly automotive companies are starting to establish a presence in Silicon Valley (Figure 10).

Figure 10


Figure 10: Automotive company presence in Silicon Valley

This presence is in the form of:

Figure 11 organizes these efforts by type.  (Along with every incubator we include the incubation model being used). Today these corporations employ about 550 people in Silicon Valley.

Corporate Venture Capital Research Lab Incubator Business Office
GM GM Ford (Model 1) Johnson Controls
Volvo Daimler VW (Model 1) Faurecia
Nissan (via WiL) Ford Chrysler (Model 2)
Delphi VW Bosch (Model 2)
Bosch Delphi
Nokia (Connected Car) Bosch
Hyundai Honda

Figure 11: Automotive companies with CVCs, incubators and research labs

Analyzing the Automotive Industry’s Efforts To Date

Based on the data in Figure 11 it would appear that, at least some, automotive companies are taking the right steps to avoid being disrupted.  However, upon closer examination of these efforts one can conclude that:

  1. Oftentimes these efforts appear to be putting the “cart before the horse.”  Before determining the form of their presence in a particular innovation cluster, such as Silicon Valley, automotive companies must a) establish their innovation goals, e.g., transform their business model, provide the leading connected car platform, adapt their supply chain to accommodate the electric-autonomous-connect car, b) identify the cluster with critical mass of innovators to address the selected innovation goal(s), c) decide whether the corporation wants to work with early stage startups (and thus be prepared to tolerate the risk they present) or with more mature companies, as Mercedes and Toyota did with Tesla before it went public, d) select the best way to connect with the ecosystem in the selected cluster(s), e.g., venture investments only, specialized research lab, incubator, etc. Few of the automotive companies I spoke to thus far have done this four-step analysis.
  2. The data in Figures 10 and 11 and the relatively small number of people these companies employ in Silicon Valley lead us to conclude that only a few companies understand the impact of the pending disruption to their industry and business.  These groups are just too small to have a transformational impact to their parent corporations in light of this disruption.
  3. The arrival of the electric-autonomous-connected car will require the automotive industry to modify its notion of what companies are part of the value chain.  The new value chain will need to include at least electric utility companies, financial services companies, and insurers.  Such companies will need to start working together in the same way that automotive OEMs work today with their suppliers.
  4. Even the companies that have established venture investment groups they have not been very active investing. For example, see the portfolio of BMW’s iVentures.
  5. The corporations in Figures 10 and 11 are not all acquiring, investing, or incubating in the sectors at the core of the disruption (application and platform software that is based on open standards, big data analytics, mobility, user experience technologies, Internet of Things, and digital business, and the disruptive business models that are service-centric and subscription-based (here and here).  For example, compare the portfolio of BMW’s iVentures with the portfolio of GM Ventures.  Moreover, their efforts focus on technology innovation rather than other types of innovation, e.g., business model, sales model, etc.
  6. The efforts between the groups working within the innovation ecosystems, the central R&D organizations of the parent companies and the business units are not well coordinated.  Part of this misalignment is due to reporting relations.  For example, BMW’s iVentures reports to the executive responsible for car maintenance and dealer management. Another part is due to clarity of mission.  For example, some of the Silicon Valley-based automotive research labs, are actually acting as research scouts, rather than labs conducting research and report directly to corporate research.  Others are part of a business development function.   Finally, it can be due to the fact that the business unit executives are focusing only on short-term objectives, e.g., car sales per quarter, or the attainment of the quarterly profit margin goal, rather than the coming disruptions because success on such objectives brings them corporate advancement and financial rewards.

Through the four disruptors mentioned in this post, and many others being developed innovative companies not mentioned, it is becoming evident that disruption in the automotive value chain has started and can soon reach a tipping point, particularly as the electric-autonomous-connected car becomes a reality.  Automotive companies are starting to re-think how they must innovate in order to avoid being disrupted.  Part of their re-thinking involves how they interact, collaborate with, invest in and even acquire startups in innovation clusters like Silicon Valley.  The industry’s efforts to date have remained small and are doing little to reduce the disruption risk the automotive companies are facing.



Telecommunications: Insights for 2015

11 Nov

Throughout the past few years, we’ve personally witnessed significant changes in the global telecoms marketplace. According to several studies, mobile technology and smart devices are expected to continue leading the way for the telecoms industry well into 2015, especially considering the fact that the number of mobile subscribers is estimated to outnumber the global population. What else can we expect for the future of global business telecommunications?




Guest Blog Image #1 – Rise of the Cloud: Usage of offsite data storage continues to climb and more businesses will gain internal space by stowing their information in the cloud. This will also increase global connectivity, efficiency, reliability and speed.

#2 – Same Thing, Different Place: Mobile icons are just as recognizable as numbers and letters nowadays, but you will start to see them in different locations. Smartphone apps are appearing in cars and on new wearable devices making them more mobile than ever before.

#3 – More Connectivity: Aside from the 550,000 miles of undersea cabling that connects the internet globally, the 4G networks will continue to be embraced by even more oversea countries. This will increase the number of “hot-spots” all over the world.

#4 – Traffic Forecasts: With more wireless connectivity will come more online traffic. Luckily, Wi-Fi speed has increased keeping pace with the releases of new mobile devices.

Guest Blog Image 2

#5 – Rise of the Machine to Machine (M2M): Along with our hand-held devices increasing their speed and connectivity, the machines are also keeping pace. Global M2M numbers in 2014 were estimated at 45 billion dollars and expected to reach almost 200 billion by 2020.

#6 – The Global Telecom Consumer in 2020: One example of the wireless, global customer in 2020, will be interaction with their “smart home” being more commonplace and connectable from almost anyplace on the planet. With the greater affordability of ICT (Information and Communications Technology) low-income families shouldn’t be left out in the cold.

#7 – The Exploding App Market: Another global communication technology set for record growth is the online App marketplace. The number of downloads in 2015 is expected to reach almost 180 million and continue to explode to over 260 million by 2017.

#8 – Communication Integration: Expect to see more integration with different forms of communication technologies such as VoIP and ISP. Much of this will be used to support the expanding BYOD (Bring Your Own Device) concept.

#9 – Big Data: This technological infrastructure is also set to expand exponentially in the next few years and have a positive impact on everything from cloud storage to the M2M market. For example, in 2013, executives in the US were most commonly using M2M to communicate more effectively with their customers.

#10 – Even Bigger Future Beyond 2015: While in 2013, there were 2.7 billion people were using the internet, by 2020 that number is forecasted to reach 24 billion.

We never know what the future truly has in store for us, but one thing is for certain, there will be a greater global reach for businesses through this kind of technology.

Please note the image source:


What’s More Important – Strategy or Execution, Invention or Innovation?

17 Feb



Strategy Versus Execution

Think of strategy as doing the right things, and execution as doing things right. Both are important, and you start with a strategy to define where you want to go and how you plan to get there. From a customer-centric viewpoint, your strategy determines who you want to serve and how you plan to create value for them (and you). Once you have your strategy in motion (with clarity and coherence), it goes hand-in-hand with execution (with accountability and actions), both feeding and guiding each other. Remember, execution is where real action happens relating to your customer discovery, problems, solutions, outcomes and value creation. You leverage the key insights from execution to shape or reshape your strategy. It is a continuous cycle; a repeated process of learning, planning and doing.

Strategy is not what you do but what you don’t do. Execution is really what you do. Strategy requires a clear sense of purpose since you cannot be all things to all people. In essence, strategy is the culmination of two key decisions on “where-to-play” and “way-to-play.” Where to play defines your target customer, and way to play is a combination of two things: 1) your unique value proposition to that customer and 2) your core capabilities necessary to deliver that value proposition. Execution is essentially the process of creating and delivering the value to your target customer in the context of the two decisions above.



Karl Moore recently wrote an interesting article, “Strategy Without Execution Is Hallucination!” I’d add the viewpoint that “Execution Without Strategy is Dissipation!” In essence, strategy and execution are the front and rear wheels of a bike, and you cannot deliver a great outcome to your customer with just one wheel.

Invention Versus Innovation

Invention is making a new thing. Innovation is making a new thing that people want to buy. Innovation is a practical translation of ideas or inventions into value-creating offerings for customers. Strong and sustained value creation is the essence of innovation. Ideas can be old or new, and we don’t always have to invent something new to achieve innovation.

In summary, Innovation = Exploration (big customer problem) + Experimentation (minimal viable product/solution) + Execution (customer value creation).

Invention may play a critical part during any stage, i.e., exploration, experimentation and/or execution. However, successful invention does not translate to successful innovation, and you can have a successful innovation without any invention. Generally people have a tendency to imply that anything new is innovation. The notion of something “new” or “groundbreaking” is a relative concept. What may be “new” or “radical” to one person may be totally “routine” for others. Hence the only way to gauge innovation is to look at it from an end-customer’s point of view.

You can call your new offering (i.e., new product, service, solution, system, process, method, experience or business model) innovation if:

  1. It matters to someone i.e., it solves a real problem for a real customer at a real price.
  2. It provides a step-change improvement (i.e., 5X, 10X or higher) in how customers get their jobs done today.
  3. You are the only company that can execute and deliver such a value proposition.

The innovations with incremental customer value (i.e., evolution types) are more of table stakes now. Incrementalism is innovation’s worst enemy. So to drive and thrive in today’s dynamic environment, companies need innovations with step-change customer value (i.e., revolution types). One way to think about step-change value creation is the rule of 10X. Can you provide a unique value proposition to your customer that is at least 10X better than the current alternatives in terms of time, costs, revenues, returns and/or risks? If you are not constantly challenging your team with this type of thinking, you risk becoming a “me-too” company that does not inspire anyone (i.e., employees, customers or shareholders).

  • True – Are you basing your innovation assumptions, insights and actions based on factual data? Who have you approached to verify and validate the truth?
  • Helpful – What is the big problem and who are you helping and how? Can you qualify and quantify the benefits of solving this problem?
  • Inspiring – Are you creating innovations that inspire people both within and outside of your company? What is your unique value proposition to realize transformational ROI for your customers (e.g., a gain/pain ratio of 10X or more)?
  • Necessary – What are the capabilities (i.e., people, process, technology) necessary for you to execute? How are you going to build these capabilities (e.g., build, buy, partner, acquire) to over-deliver on the value promise?
  • Kind – Are you defining the success based on your customers’ success? Do you have a deeper purpose to positively impact customers’ lives and give something back to the community?

In summary, the future belongs to companies that are consistently delivering step-change value to their customers through perfect orchestration of strategy and execution and invention and innovation. These companies are driven by a clear purpose and deeper meaning around their existence, and they are bold and brilliant at the same time.


Companies Pursue Cross Sector Growth as Digital Technologies Dissolve Traditional Industry Boundaries

23 Jan
New digitally enabled markets to achieve higher growth rates than the traditional sectors they replace

As the global economy continues to recover, a majority of companies intend to pursue growth opportunities outside their own industry sectors as digital technologies help create new higher growth markets, according to new research by Accenture (NYSE: ACN). The research also shows that most top executives believe the ability of new digital technologies to dissolve industry boundaries is the most important structural shift businesses will face over the next five years.

The report, “Remaking Customer Markets: Unlocking Growth with Digital,” includes a survey of 500 C- level executives in 10 countries, which reveals that while 64 percent say their companies will continue to focus on growth within their current industry, 60 percent plan to pursue growth in, or in collaboration with, other industries in the next five years. The report examines six ‘digitally contestable markets’ in which established and new players from multiple sectors are using digital technology to reshape traditional industries and create higher rates of growth: Healthcare, education, financial services, manufacturing, retail and transportation. Among the findings:

  • While the core healthcare sector in the United States is expected to grow at 2.5 percent annually between 2012 and 2018, the impact of digital technology (e.g. remote diagnostics, electronic records management) will help drive annual growth of 3.3 percent in the broader market for staying healthy.
  • The UK’s core financial services sector is projected to  grow at 2.0 percent per year between 2012 and 2018, but the wider digitally contested ‘paying’ market will experience annual growth of 2.9 percent, thanks to digitally enabled trends such as crowd funding, peer-to-peer lending services and virtual wallet applications.
  • Germany’s retail sector is expected to grow 1.6 percent annually between 2012 and 2018, but the wider digitally contestable ‘shopping’ market will enjoy growth of 2.6 percent per year, due to trends such as real-time pricing, e-commerce platforms that enable consumers to become retailers and online sharing and bartering services.

According to the report, the aggregate value of three digitally contestable markets in 2018, alone – shopping, paying and staying healthy – will be US$5.9 trillion to the U.S. economy, €747 billion to the German economy and GBP£519 billion to the economy of the UK.

Despite recognizing the fundamental shifts taking place within their own industries, only 38 percent of the executives surveyed said that these shifts would be the primary driver of their company’s strategy, while 60 percent said their strategy will be influenced most by broader economic conditions.

“Digital technology has been with us for years but is now dramatically disrupting and reshaping traditional industry sectors,” said Mike Sutcliff, group chief executive – Accenture Digital, which offers solutions and services across digital marketing, mobility and analytics to help companies unleash the power of digital to drive growth. “Although companies recognize the potential of digital transformation, many are not yet aligning their growth strategies accordingly. Revenue growth will increasingly depend on their ability to embrace digital business models to redefine their own sectors, transform the way they operate and create entirely new products and services.”

Working with new partners
The report also reveals how companies plan to participate in digitally contestable markets in the next five years. Collaboration, rather than acquisition, is the preference, according to the research. Of those companies seeking growth beyond their current sector, 63 percent will create strategic alliances and 46 percent will enter into joint ventures. Only 39 percent plan to expand into non-traditional industry sectors through mergers and acquisitions.

Asked what capabilities will be needed for success, executives surveyed pointed to a blend of digital and “analog” requirements. Digital technologies were identified as critical enablers, including data analytics (cited by 50 percent of respondents), mobile computing and/or app development (48 percent) and social media (46 percent). But, consistent with the need for greater collaboration, the most important enabler identified by business leaders is in fact personal relationships and networks, cited by 58 percent of executives.

The report shows that there is a gap between companies’ intentions and their readiness to pursue new business models, however. Among survey respondents who classified their companies as being above-average performers, 80 percent said their businesses were well positioned to understand trends outside their traditional industry, compared to just 52 percent of respondents representing low-performing companies. Additionally, 84 percent of respondents from self-classified high-performing companies said they were well positioned to collaborate with outside entities to grow in non-traditional business sectors, compared to only 39 percent of low performers.

“Customers’ experiences increasingly rely on services jointly provided by companies from multiple sectors as banks, retailers and travel companies work together, for instance,” saidMark Spelman, managing director, Accenture, and co-author of the report. “Incumbents must be open to entirely new ventures and partnerships that disrupt their existing business in order to secure future growth. And while sharing data and deploying mobile or analytics technologies is important, companies must develop new capabilities and more flexible strategies to form those more open and collaborative networks that are at the heart of digitally contestable markets.”

Steps to success
According to the report, companies that hope to expand into digitally contestable markets and achieve competitive success must master three key capabilities:

  • Use Digital to Anticipate Customers’ Needs: For example, a leading British luxury retailer uses a data system that makes customer histories available as soon as those customers enter the store, allowing shop assistants to offer a more relevant and individual service.
  • Be Prepared to Take on Different Roles with Partners: For example, a Spanish telecoms provider entered new markets by working with a leading bank to support e-wallet and peer-to-peer payment apps and with an Italian insurance company to provide “pay-as-I-drive” car insurance services.
  • Use Digital to Speed up Decision Making and Product Development. For example, a U.S. yacht manufacturer partnered with a software company to prototype its designs through 3D printing, enabling it to make modifications up to 40 times faster.

“In digitally contestable markets, customers care less and less about which company or sector provides services, as long as those services meet their needs,” said Mark Spelman. “That creates commercial threats and opportunities, of course. Policy makers and regulators also need to respond to the blurring of industry boundaries if they are to keep up with customer demands and if they are to ensure regulation supports rather than restricts dynamic new forms of economic growth.”

View the full report at


Top 10 Predictions for 2014

6 Dec

Cybersecurity in 2014: A roundup of predictions: ZDNet might have picked up that I have done this for the past two years and Charles McLellan put together his own collection.  This is a good place to start with lists from SymantecWebsenseFireEye,Fortinet and others.  Mobile malware, zero-days, encryption, ‘Internet of Things,’ and a personal favorite, The Importance of DNS are amongst many predictions.

Eyes on the cloud: Six predictions for 2014: Kent Landry – Senior Consultant at Windstream focuses on Cloud futures in this Help Net Security piece.  Hybrid cloud, mobility and that pesky Internet of Everything make the list.

5 key information security predictions for 2014: InformationWeek has Tarun Kaura, Director, Technology Sales, Symantec discuss the coming enterprise threats for 2014.  Social Networking, targeted attacks, cloud and yet again, The Internet of Things finds a spot.

Top 10 Security Threat Predictions for 2014: This is essentially a slide show of Fortinet’s predictions on Channel Partners Telecom but good to review.  Android malware, increased encryption, and a couple botnet predictions are included.

2014 Cyber Security Forecast: Significant healthcare trends: HealthITSecurity drops some security trends for healthcare IT security professionals in 2014.  Interesting take on areas like standards, audit committees, malicious insiders and supply chain are detailed.

14 IT security predictions for 2014: RealBusiness covers 10 major security threats along with four ways in which defenses will evolve.  Botnets, BYOD, infrastructure attacks and of course, the Internet of Things.

4 Predictions for 2014 Networks: From EETimes, this short list looks at the carrier network concerns.   Mobile AAA, NFV, 5G and once again, the Internet of Things gets exposure.

8 cyber security predictions for 2014: InformationAge goes full cybercriminal with exploits, data destruction, weakest links along with some ‘offensive’ or retaliatory attack information.

Verizon’s 2014 tech predictions for the enterprise: Another ZDNet article covering the key trends Verizon believes will brand technology.  Interest includes the customer experience, IT decentralization, cloud and machine-to-machine solutions.

Research: 41 percent increasing IT security budget in 2014: While not a list of predictions, this article covers a recent Tech Pro Research survey findings focused on IT security.  The report, IT Security: Concerns, budgets, trends and plans, noted that 41 percent of survey respondents said they will increase their IT security budget next year.  Probably to counter all the dire predictions.

A lot to consider as you toast the new year with the Internet of Things making many lists.  The key is to examine your own business and determine your own risks for 2014 and tackle those first.


A question about IT change management: does the DNA of the company fit your IT vendor?

4 Nov


When delivering my final dissertation of the MBA program (here the link of a short presentation), along the research I’ve encountered the topic of IT Change Management.

As a matter of fact, whenever a company decides to implement IT innovations most likely new collaborations or partnerships with IT Vendors, consultants or third parties are needed. Usually, in selection process the IT suppliers are evaluated accordingly to theirs know how and proven expertise. However, what about other aspects such as the agility to change, the ability to innovate and corporates’ cultures? Is there a potential fit or a misfit between the company and the selected IT vendor?

The company’s DNA

In order to avoid failures, it’s fundamental to set a pace for IT innovations that is affordable to the company according to its DNA. According to R. Ray Wang (@rwang0) there are two kind of attitudes when defining a DNA of a company: proactive vs. reactive and incremental vstransformational attitudes.

Cautious Adopters: proactive & incremental (about 30%). Such companies are looking for new technologies without waiting what other competitors do. However, they are willing to implement only the technologies that might play a key role in the future as well as they are not keen to consider the opportunity to change their business model even if such technology is extremely innovative.

Market Leaders proactive & transformational (about 5%). A market leader has the abilities to sustain high paces of IT innovations as well as an organizational flexibility to change also its business model.

Laggards: reactive & incremental (30%). Such a company avoid any kind of risk of a self-disruptive innovation and integrates new technology only when other competitor succeed without transforming its business model.

Fast Followers: reactive & transformational (15%). This of kind of DNA is able to mitigate the risk of adopting new technology by relying on the ability to change quickly the business model and organization as a way to survive against disruptive innovation threats.

(More: “The Building Blocks of Successful Corporate IT“, HBR Blog)

IT Vendor’s DNA

What about the DNA of an IT Vendor? Gartner is well-known for providing a “magic” quadrant for everything and also for evaluating an IT vendor, of course: completeness of vision and ability to change are the two main attitudes to consider.

Leaders: high completeness of vision & high ability to execute. As IT vendors, they are able not only to provide innovative services that works today but also to influence the market that theirs innovations are the best for the future. For these reason, such IT vendors might fit best a company with a leadership that wants to invest in new infrastructures\technology early and avoiding any risk due to technology (obsolescence, maintenance, etc.). However, also a cautious adopter (DNA) company that wants to become leader should prefer IT leaders by relying on their ability to execute and play a key role as an influencer within a change management process.

Niche Players: low completeness of vision & low ability to execute. Is the case of IT vendors specialized in few functionalities and with low ability to execute due, for example, to a lack of resources (financial, operating) and power (network). However, such IT vendors might be useful for companies that need small technologies changes without stringent delivery deadlines. For these reason IT niche players might be extremely useful for Laggard (DNA) companies.

Visionaries: high completeness of vision & low ability to execute. Is the kind of IT vendor that fit best a Cautious Adopter company’s DNA. Anyhow,  a Fast Follower (DNA) company that wants to innovate proactively rather than reactively, might get some useful insights from Visionaries third parties.

Challengers: low completeness of vision & high ability to execute. Is what Fast Follower companies usually need. However, a Cautious Adopter company that wants to improve its change management process should look for Challengers as IT vendors.

(More: “How Gartner Evaluates Vendors and Markets in Magic Quadrants and MarketScopes“, Gartner)

So, which IT Vendor to chose? Thinking about a possible threat due to cultural and organizational divergence between the company and th IT vendor DNAs will ensure the implementation of the strategy as well as it will avoid market\operational risks and a waste of resources: why to invest on IT Vendor Leaders? Does the company really need it?

As a moral of this story, selecting the IT Vendors that fis best the company DNA is not so different as chosing relationships and friends. Trusted and better relationships are guaranteed only by knowing ourselves as well as the others.


The 7 habits of highly effective mobile fundraisers

14 Oct

The 7 habits of highly effective mobile fundraisers

It’s no secret that mobile Internet is disrupting technology markets, and according to McKinsey it could drive trillions of economic value within a decade. Gartner forecasts that mobile apps revenue will grow 5 from $15 billion in 2012 to more than $70 billion in 2016. So “thar’s gold in them thar hills.”

This is a huge opportunity, but it’s also a huge challenge. Even mobile app companies with millions of downloads can struggle to raise money in the current market (particularly mobile games, which currently generate ~3/4 of all mobile app revenues). Angels, accelerators, incubators and crowdfunding are great to get you started, but aren’t the solution for the “difficult” second album – Series A funding. The much talked about “Series A Crunch” (unfortunately not a breakfast cereal) means that there are >5x the number of unfunded early stage companies across industries today compared to 2008, and those make for tough odds even in a hot market.

So how do early stage mobile companies escape the Series A Crunch?

At Digi-Capital our deal flow is around 1,000 deals annually across America, Asia (China, Japan, South Korea) and Europe. Much of that comes from early stage mobile apps, mobile games and mobile technology companies, so we like to think we have a feel for the market. Our experience and pattern matching have guided us to focus on the 7 habits of highly effective mobile fundraisers:

1. Product meta-design

What do you need to demonstrate beyond beautiful graphics and great functionality/gameplay? Investors can look at a range of factors, including user interface/experience, user progression/conversion, user segmentation and app balancing, social co-operation, smartphone/tablet specific functionality, post-release content updates, sales events tied to content promotion, testing (user, black/white box), analytics, rapid low-cost development cycles, agile development, business model (including free vs paid), monetization balancing, app discovery, distribution (both local and global), localization, community management, virality/organic user acquisition, cross-platform approach, tech differentiation (hard to copy quickly) etc.

2. Product portfolio approach/roadmap

Are you a single product company, with a big investment in one product (i.e., more like Evernote)? Are you a platform developing multiple products, with low capital intensity per product launched (i.e., more like Supercell)? Is there something in your approach which can produce more than a single product success? Is your approach best for the types of investors you are targeting (VCs often prefer platforms/portfolios, industry investors can be more comfortable with one-way bets on products they deeply understand)? How can you persuade investors that the risk they might take on you is worth the potential reward?

3. Mobile sector/genre growth dynamics

Are you aiming at a sector/genre within the market that is growing or shrinking? Are you opening a new part of the market, or flying into the teeth of bigger, better funded competitors? Are you focused on iOS, Android or both? What about OTT (KakaoTalk, Line, WeChat, WhatsApp)?

4. Team track record and dynamics

Have you succeeded before? Have you failed before and survived? (Spoiler alert: that’s a good thing) Do you have everyone you need on the team to succeed? Beyond designers and engineers, who is your money person? Who in your team knows how to acquire users organically? Who on your team knows the snakes and ladders for your sector/genre (could be in the core team, or a mentor)?

5. Mobile money metrics/analytics

What are the mobile money metrics that could take you into the top 1% of mobile app companies by revenue? Digi-Capital ranks apps using its proprietary data set in terms of lifetime value, 7 day retention rate, ARPDAU, sessions per day, 3 day retention rate, ARPDPU, % of paid conversion in first 30 days, sessions in first 7 days/following 7 days, % of paid conversion in first 90 days, second session conversion rate, % of paid conversion in first 7 Days, sessions per week, average session length (minutes), and % of organic to paid users. Where do you rank against the best?

6. Company upside potential and downside protection

What is your company’s upside potential where investors could help (e.g., realize growth potential, partnerships, team augmentation, analytics, mentoring, outsourcing)? Where is the downside protection for investors in your company (e.g., underlying asset value, team, IP, user base, brand, marketshare, switching costs, commercial relationships, predictable revenue)?

7. Fundraising and exit relationships

Who are the VCs and industry investors investing in mobile apps today? Which mobile app categories are they investing in? What advantages and challenges do you face with each of them? Why could they want to invest (or not want to invest) in you? How do you get them to come to you, rather than you going to them? (Spoiler alert: that’s a really good thing). If they won’t come to you, how do you get to them? How do you pitch like an expert, not a newbie? Who might buy your company after you’re a hit, and how are you building relationships with them (VCs want an exit, IPOs are rare, industry investors want to own you)?

A lot to think about, but hopefully this might give you a better idea of how to increase your chances of raising Series A funding for your early stage mobile company. Get it right and you could do well, get it wrong and you risk being disrupted out of existence.



Future of Telcos – why business models broken. Telecom mobile customer trends

7 Feb

Future of telecom companies and smartphones, mobile devices and why the telecom business model is broken.  Patrick Dixon conference keynote speaker on telco issues and customer experience. Where will future telecom revenues come from and risks to future strategy.  Future customers will be even more impatient about waiting for — web pages to load, calls to be answered, software to update, mobile devices to reset.  Future of customer services and customer relationship management. Technology convergence or divergence and why all innovation is divergent.  Ethical issues when companies sell hardware or software that they know contains significant bugs eg failure to reliably synchronise PC and phone data.  Why risky to believe results of market research as guide to future trends — because customers change rapidly.  Converging on features, quality and price results in spiral to bottom on profits and return on equity.  Cloud-based computing and impact of cloud software on enterprise system design.  New revenue models for telecom companies — enterprise solutions, cloud-based data management, mobile payments and financial services.  90% of all Microsoft R&D is cloud-related in some way. Radical opportunities to provide free mobile devices, handsets, ipads etc, bandwidth, calls, SMS and online content, free storage of photos and movies in the cloud, in return for agreement to use mobile device almost exclusively for card transactions.  Paid for by commissions on mobile transactions charged to retailers, and also by charges for credit, loans, insurance and related financial products. Biometric mobile payments — using screen detection of fingerprints.  Most debates about future are about timing of predictable events — eg date by which costs of mobile devices falls so low that they can be provided for free by a financial institution.  Impact of regulation and compliance.  Why bandwidth use will be dominated by video — which already consumes more than 70% of all bandwidth in some European nations. Impact of YouTube and BBC iplayer in the UK.  Why telcos are being overtaken by video streaming as primary use of mobile and landline data. Dwarfing all voice calls, SMS, emails etc.  Geopositioning and multichannel marketing, impact of Big Data on smart direct marketing campaigns.  RFID tags in the internet of things.  Concerns about privacy from data harvesting of consumer information to produce accurate insights about future purchasing decisions.  Impact on mass market, fast moving consumer goods (FMCG).  Future of Google and other search engines and impact of social networks such as Facebook and Twitter on future search listings, and what appears on Google Pay per Click adverts.  How social network recommendations are winning trust over corporate websites, and why sites like TripAdvisor are dominating consumer decisions.  Winning trust, or restoring trust, is the most important challenge facing many corporations.  The only product or service a bank sells is trust and without trust you have no bank.  Without trust, it may be that you have no government either.  Why opinions of complete strangers are more influential over most consumers in some industries than official marketing information.  Why traditional marketing is dead in the third millennial, multi-dimensional online world.  Video recorded in 2012 for global leaders of enterprise technology and innovation for one of the world’s largest telecom companies.

The Mobile Innovator’s Dilemma

1 Feb

The mobile industry is never going to look the same. Mobile operators, having received blows from OTT players, now realise this and more and more are taking action.

Some of the ways they are fighting back include introducing bundled offers including (virtually) unlimited messaging, and most importantly, innovating their service portfolio by developing rich IP services such as RCS’s “joyn” initiative.

But some are still holding back. The commercial introduction of RCS, orchestrated on behalf of the mobile industry by the GSMA, frequently experiences delays due to the practices of standardisation, accreditation, establishing interoperability and testing. While in the long run, this is all to ensure and contribute to the biggest strength of RCS – “it just works, it is just there” – it just takes too much time!

And just yesterday, Deutsche Telekom said they are delaying their launch of joyn (already moved twice, from ‘1H12’, to October 2012, to December 2012), now ‘indefinitely’, as a result of blocking service stability issues.

Yet we never see such announcements from WhatsApp or Skype. And yes, we all know about the quality issues associated with these OTT services, but this still hasn’t killed them and as time passes, they introduce improvements.

Clearly, two very different paradigms. Clayton Christensen described this phenomenon as ‘technological disruption,’ where market leaders fail because they, out of habit, are trying to compete on the wrong parameters with new entrants. The only feasible way for established players to be successful in such a scenario, according to Christensen, is to create or fund spin-offs that play by the rules brought by the new entrants, using a new set of processes and practices and then have the objective to cannibalise their mother’s established business.

In our example, that means that mobile operators must realise that the paradigm shift required from them is too big a change to expect their standing organisations to make it. Instead, they must set up divisions that operate completely stand-alone, start-up organisations that mimic and behave like OTT players. Telefonica Digital has been a fine example of this concept, with their TuMe and TuGo initiatives and now more operators are following suit. It was announced this week that in February, Telstra will launch its Global Applications and Platforms business to adapt to the agile pace of OTT players operating ‘… as a startup company drawing on the considerable assets of the broader organisation.’

So, who is next?

Related articles


What Carriers Must Do to Accelerate Innovation-Summary of Telecom Council TC3, Part 3

8 Oct

This summary focuses on an Informa analyst presentation suggesting what carriers must do to innovate (or die).  Consider that wireless carriers  are more than ever in danger of being reduced to purveyors of “dumb pipes,” with little or no financial participation in the mobile network value chain. We also provide a link to innovation priorities from selected carriers, i.e. what they are looking for from suppliers and vendors (especially start-ups).

Informa Telecoms & Media on Telco’s Growth and Innovation Strategies:

Andy Castongua, Informa Principal Analyst covered four areas in his presentation:

  • State of telecom operators’ (i.e., telcos) business
  • Telecom Operators Next Big Bets
  • Relationship with Over the Top (OTT) vendors & content providers
  • Getting the most out of a relationship with telecom operators

It’s no surprise that operators must innovate to prevent them from a future as a dumb pipe provider.  To prevent that outcome, operators have pursued several strategies:

  • Venture Capital divisions as part of an overall strategy of partnering and offering new services.
  • Partnering with Silicon Valley firms- even overseas telcos have set up subsidiaries in SV to do that.
  • Setting up “digital initiatives” across several divisions or in dedicated units, e.g. AT&T’s Emerging Devices Unit

A key point is that telco innovation initiatives are being distributed across the entire network operator reporting structure.

With few exceptions, operators face a challenging mobile market. One caused by stagnation of mobile revenues (especially in Europe) coupled with the phenomenal growth of mobile data traffic which has placed capacity constraints (often bottlenecks) on their 3G/4G mobile networks. Mobile operators are testing a broad range of approaches and strategies to better engage consumers.  They are looking at “non-telecom” benefits to differentiate their core network services. Examples include free tickets to concerts and sporting events from O2, Orange and Vodafone.

Fixed and mobile broadband access revenues are growing at 20+ % per year, with mobile data as a percent of overall wireless service revenues growing even faster, e.g. VZW LTE revenues grew by over 100% (albeit from a very small base) in 2012 year -to- date. Mobile operators are maintaining revenue growth and reducingchurn by adding many low to mid range applications for mobile devices they are selling. Examples include LTE Video Store and Shared Whiteboard (the actual operators offering those apps was not specified).

Machine to Machine (M2M) communications is seen as a huge new growth area for telcos. In the M2M evolution, operators plan to move from dumb connectivity to smart services. The challenge is how to connect the 50B M2M devices (that are predicted in coming years by Ericsson and others) and convert that into a profit producing revenue stream for operators. Informa believes operators are in the very early stage of driving M2M demand and helping consumers understand the significance of the “Internet of Things.”

2015 was said to be the time frame for telco smart services, which might include: business analytics, reports and alerts, business intelligence, communications service management, security & performance management, demand-response (smart grid energy model), and professional services (consulting, systems integration, and software development).

Informa says M2M and Cloud have huge potential but have been way over-hyped. The firm predicts telco cloud revenues will be $5.7B in 2012, while M2M revenues will reach $4.6B.

The market research firm says that operators are moving away from the consumer market to focus on B2B and B2B2C markets.  They are slowing starting to look at industry verticals across their enterprise divisions. Carrier billing is gaining momentum according to Informa. But while a lot of innovation is occurring on top of the mobile network, carriers aren’t controlling it or making money from it.

Informa says that video is a major headache for mobile operators, mainly due to all the OTT players who are making money from exploiting the carrier’s network.  Although some money may be made from new VoD and digital locker services, most streaming video will continue to be consumed for free.  Piracy will also siphon away potential revenues, especially in emerging market countries.  The firm sees carrier video offerings becoming irrelevant as OTT players offer more video streaming apps for smart phones and tablets. A key question is how can operators generate revenue and make money from OTT players and 3rd parties? They really haven’t been very successful selling mobile video services to date. They also haven’t offered network prioritization or guaranteed QoS (which is available in 3GPP LTE standards, but is not yet in general use in deployed LTE networks).

Informa says that network operators are desperate to become more innovative and suggests three ways companies can partner with them to make it happen.

  1. Create new revenue streams for services and applications.  Share revenues with the telco, e.g. Amazon Kindle 3G downloads.
  2. Enhance core services by slowing price erosion, improving customer loyalty and attracting new customers.
  3. Improve processes, network efficiency and retail distribution models.

Examples of companies that have successfully partnered with telcos include Ruckus Wireless, Blue Jeans Network, and Spotify.

As noted in earlier TC3 summaries, network operators have established a huge presence in the greater Silicon Valley area (including San Francisco) to work with companies located there.

Image Courtesy of Informa

The top five areas of telco VC focus are:

  1. Social networking, media and entertainment
  2. Advertising
  3. Cloud Services
  4. Mobile Apps
  5. M2M Communications

These are based on over 184 telco VC investments over the last 6 to 12 months. M2M was cited as being a particularly promising area, as it delivers excellent user experience without heavily taxing the network (M2M communications aren’t characterized by huge amounts of mobile data traffic).

Telcos were encouraged to partner or buy start-ups to get to market quicker with new services/applications, rather than design those by themselves. Network infrastructure, which takes a much longer time to test and deploy, was not encouraged (as we’ve repeatedly reported in many articles for Viodi View and elsewhere).

Informa thinks that Telco Digital Divisions or Departments, like Telefonica’s in London, are a very effective way to partner with start-up companies (or buy them) to offer innovative new services and applications.  In the TC3 part 2 summary, we said, “Telefonica has a venture office in Mt View that’s pursuing global partnerships with startups. The telco has reorganized the entire company to emphasize innovation.”

Some of the new services offered by carriers are OTT, like JaJah’s [1] long distance VoIP service running on Telefonica’s mobile data network, which also provides cellular voice services. This was cited as an example of “pre-emptive inclusion” by  TC3 chairman Derek Kerton.

[1]  JaJah was acquired by Telefonica in December 2009

Source: October 7, 2012 By Alan Weissberger (Disclaimer: We were originally going to highlight the WiFi Hotspot 2.0 Panel Session in this part 3 summary, but no comments or suggestions were received.  An assessment of this initiative to integrate WiFi hotspots with 3G/4G mobile networks, along with the associated standards from Wi-Fi Alliance (Hotspot 2.0 ) and the Wireless Broadband Alliance (Next Generation Hotspot) can be provided under a consulting contract. The consulting fee is negotiable.)

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