So-called OTT players will struggle along with telecoms operators to sustain success in the long term unless they can think bigger about the full impact of digital disruption.
That was the warning shot fired by ‘futurist’ Michael Walsh (pictured) during his keynote at Amdocs’ APAC summit in Singapore last week.
But the common denominator for both, insisted Walsh, will be finding a new level of customer engagement as the next wave of OTT companies puts pressure on the “incumbents”.
As companies consider embarking on a digital transformation, the least important part of the journey is digital, he argued. “Because what digital transformation really begins and ends with is a deep understanding of the human, who tomorrow’s customer is, what motivates them, what it takes to engage them, and what it takes to keep them.”
Walsh outlined three questions that operators need to address for success in the 21st century. The first is, how to innovate around customer experience? “We’re heard a lot about it, but I think we are still at very early days when it comes to re-imagining what a telco could be for customers.”
The second is, how to enable enterprises to reinvent themselves using tools and communications? And the third is, how to build a truly distributed computing infrastructure platform?
The problem, he pointed out, is that it is very difficult to be good at all three of these things. “But there are companies that are going to be very good at engaging customers, very good at helping enterprises and very good at building infrastructure. But they won’t just be doing it in one market, they will be doing it globally.”
Next move for OTT guys
The traditional OTT app players also are starting to think about the future in a different way. Based on what upstarts like Uber — which just hired the entire robotics team from Carnegie Mellon University — are doing, the first wave of OTT players are falling behind, he claimed.
“In some ways early success in the consumer market is just table stakes; it buys into the game. But the smart applications are playing for a much deeper strategy, as they know to stick around they actually have to go deeper into the core infrastructure that is going to power the future web. And they have got to do that because they are in a race against time.”
For example, market leader Netflix is on target to spend $4.4 billion by 2017 buying content, and 70 per cent of every dollar Spotify earns is paid out to the music labels.
The OTT guys will struggle for the long-term sustainability of their model unless they can think bigger, he said. “The long gain is not about the rise of the OTT apps and whether they are taking away from your voice and messaging revenues. The real gain is whether they can leverage their initial success to dominate the web’s future infrastructure.”
Beyond voice & SMS
A few weeks ago Facebook launched Hello, which he said is an attempt to marry a user’s social graph with their traditional voice system. “It’s caller ID, so when someone calls and you know them on Facebook, it shows all the details from Facebook. But it goes beyond that and allows the user to create special block lists. It adds a layer of intelligence to traditional voice services by leveraging the social graph.”
But Facebook is not doing this because they want to be in voice services, he explained. “It doesn’t see voice as a revenue item, it sees it as an engagement strategy. So it’s important to remember that these new competitors entering your space have a very different motivation and a very different agenda.”
Google’s MVNO in the US is another case. Project Fi is said to be easy to use since its advanced switching technology can dynamically move between T-Mobile and Sprint or WiFi depending on which signal is better.
Walsh asked, is Google doing this because it wants to be in the mobile business or is it for something completely different? “My theory is that what is really driving Google Fi is that Google wants to do for mobile operations what it did with hardware for Android. It wants to build a platform that developers can build on top of to unbundle voice from telephony and messaging from the hardware platform.”
In another example, he said Twilio provides the in-app messaging for services like Airbnb and Uber and has about half a million developers building on top of its platform to bring communication services into apps.
“This is an early glimpse of a world where potentially operators can build networks that can have programmatic access to voice, SMS and instant messaging. The scary thing is that the people doing it have never worked in the telco space previously,” he said.