Apples and Googles

Went to a very interesting conference last week in London. Called Telco 2.0, its aim was to look at the next generation positioning for the telecom industry and how it can prosper in the rapidly converging information, communications and entertainment worlds. This is a subject of hot interest inside TM Forum of course, because as we need to worry about how these services are created, delivered and paid for in a very different business and technical scenario than today.

The problem is, nobody can be sure what that scenario will be, what the services will look like and who will pay for them. Will advertising based services be the norm, as we have seen for Web 1.0 or will people still be prepared to pay for premium , high quality services without the bother of adverts? Right now, we have to assume that instead of the markets we see today changing into something else; we are much more likely to see a mushrooming of different types of services with different business models and with different players in different roles –all at the same time.

Those of you on the way to the Dallas Management World will see the fruits of expanding the Forum’s thinking on the basis required to manage all of this. As the value chains expand, the end-end management issues grow and so you will see the Content Encounter – a practical, hands-on demo of managing content and location based services; the launch of a new program aimed at a universal approach to managing devices; keynotes from both the cable industry (Mike LaJoie from Time Warner) and the device world (Robin Bienfait, Blackberry) and lots of other interesting stuff.

The device companies and advertising based approaches seem to me to be two of the biggest ‘jokers in the pack’ on where the converging media, telecom and web industries go. Apple has shown that its possible for a company to have a device as the ‘tip of an iceberg’ and build a growing service-based business behind. The iPod has driven Apple into being a very significant player in retailing music and now video through iTunes, so it’s much more than just an MP3 player business. They are extending this with the iPhone, where the customer activation and preferences for mobile service are also through iTunes – a natural portal to sell downloadable content to the growing base of iPhone customers. Oh and a slice of the call revenues too. So coming from no background at all in telecoms, Apple have the potential to become a major league player in converged services.

Same with on-line advertising. Advertising inverts the telecom model in that you don’t sell to users; you sell the user to an advertiser. Advertisers call the ‘eyeballs’ that a particular route to market has ‘inventory’. The more inventory you have and the more you know about the buying and behavioural aspects of that inventory, the more its worth. Hence Google just breaking the $600/ share value barrier – they’re now worth more than IBM. But even churning over 60 billion searches a month and 60% of the search market, it’s still a relatively small inventory compared to the nearly 3 billion people who have mobile phones.  That’s a lot of inventory, especially if you know things like who they call, who their friends are, when they are awake and where they are. So expect a big assault on telecom from the online advertising industry over coming months and expect Google to be in the vanguard.

How will that all play out?  How will the market reshape? Who knows but one thing is for sure. Users (or advertisers) will want services that work reliably, give them value for money and are easy to use. They will want to be sure that their information and identity is secure, that any of their money flying around is properly managed and if things go wrong, they get fixed quickly and without hassle. That’s the management business and that’s what TM Forum does.

Life is getting very interesting.