At an analyst briefing in Singapore on November 7, newly minted SingTel Group Enterprise CEO, Bill Chang, laid out his vision on how the group’s reorganization aims to build the foundation for SingTel to become the largest ICT services provider in Asia Pacific in an ambitious five years.
For Sourcing and Vendor Management professionals, here’s a quick summary:
SingTel Group Enterprise: SingTel Business Group, NCS, Enterprise Data and Managed Services (EDMS) and Optus Business (including Alphawest) are now one entity as of 1 Nov 2012.
Converged capabilities: This organizational transformation converges SingTel’s Telco and IT service competencies for a one-stop ICT experience, and simplifies delivery capabilities to enable large scale global deployments. In a nutshell: SingTel is aiming to create a repeatable and more scalable product set.
Carriers have lost a great deal of their relevance for end users. People of all shades, individuals, employees, information workers, etc, are looking for solutions that meet their demand, not connectivity per se.
In our view, four trends matter significantly for carriers since they strike at the heart of their customer facing relationships in the shape of changing end-user behaviour:
Applications have become the focal point for end-users. Phone or connectivity features are less interesting. The carrier brand is not seen as the destination to turn to for app-demand. Merely 18% of business users would turn to a carrier for apps compared to 49% who go directly to the classic app stores. Carriers ought to get closely involved in HTML5 development as it paves the way for OS-independent Web-based apps, thus potentially limiting the influence of operating systems like iOS or Android over the ecosystem. Carries must strive to accommodate where possible app developers to remain somewhat influential ecosystems players.
Users buy devices directly. There is an increasing push by device manufactures (traditional like Samsung and Apple and emerging such as Google, Amazon etc) to sell devices directly to the customer, both business and consumer, and outside the carrier channel. This robs carriers of their main service distribution channel and undermines their potential to monetise value added services.
Carrier-selection is becoming more ad-hoc and temporary. The emergence of embedded software SIMs “interrupts” the relationship between user and carrier. End-users will increasingly be able to select carriers after they purchase a device and for certain circumstances like content consumption or for international roaming. As a result price wars for basic connectivity will increase once again.
Retail is experiencing substantial change because consumers are now empowered by the web with information about price, availability, and merchandise features.
The retail industry is still served by solutions that are too fragmented to adequately balance the asymmetry introduced by radical price transparency. There are solutions for transactions, web site, stores, and so on but little to empower the cross-channel retailer to really meet the consumer’s needs.
I’ve recently been looking at IBM’s Smarter Commerce initiative and its portfolio that integrates:
1) Store applications. IBM has well-established high-volume store apps appropriate to high-volume, low-touch retailing but correctly identifies these as inappropriate for fast-growing specialty retail with low-volume “high touch.” This is why it acquired the “asset” of Open Genius.
2) Web metrics. IBM acquired Coremetrics in order to bring the discipline of measuring traffic, conversion, and average order to cross-channel retailing. It’s only by monitoring such metrics that retail can understand which marketing strategies are really successful and which market segments are most receptive.
3) Direct-to-consumer initiatives. IBM acquired Unica as a platform for integrating automated direct-to-consumer marketing with its cross-channel offering.
Apple reinvented the distribution of products and services on mobile phones, opening up direct-to-consumer opportunities for nontelecom companies. The numbers look impressive — more than 5 billion downloads and $1 billion paid to developers in the two years since the launch of the Apple App Store.
However, it also generated $429 million for Apple itself in two years. These revenues are not meaningful to Apple’s core revenues. Due to the limited number of paid apps and their significant concentration among games and navigation apps, it is likely that a significant number of independent developers have not recouped their investments via the current revenue-sharing model. The recent launch of iAd is a way for Apple to maintain the attractiveness of its platform, allowing third parties that provide free apps to develop sustainable business models.
But, despite all the hype around apps, only a minority of consumers download them monthly. A recent Forrester survey of more than 25,000 European adults shows that only 4% of all mobile users and 15% of smartphone users report downloading apps at least once per month. However, the fact that 21% of all European mobile users consider apps to be an important feature when choosing a new mobile handset highlights the large gap between today’s limited usage of apps and consumer awareness and interest.
The application store market is still nascent, but it is evolving quickly. However, in the longer run, few players will be able to address the key factors that will make them a success: