Mature market telecom operators can learn from many of their fellow service providers in emerging markets. Recognizing that contexts differ – and they certainly do – there is still a sharp contrast in approaches to their markets. Ellen Daley and I just returned from India where we met with Indian telecom operators and services firms, and conducted an interactive session with telecom product and service providers – Forrester TelecomNext 2010. Both were an opportunity for us to listen and learn as well as share our observations on the industry.
With well over 500 million subscribers and a growth rate of more than 11% a quarter in 2009, the Indian mobile market is certainly attractive. But, Indian telecom operators face a tough competitive environment with some “circles” having upwards of a half dozen or more service providers (there are 23 telecom regions in India, known as “circles”), and the overall market packed with thirteen competitors. ARPUs are low and shrinking, with an average of about $2/month in March 2010. And, the price tag for 3G licenses in India added additional pain, with some vendors paying almost $3 billion in the spectrum auction. High costs and low revenues do not make for an easy road ahead.
While I started my previous blog post with the observation that KACST was not a “city,” Caroline Spicer, Strategy and Market Development Leader for IBM Global Business Services, made the point later in the day that there is not “a city” but many models of cities depending on future vision. There are a couple of points to draw out here. There is not one model of a smart city. Cities can focus on particular initiatives based on their leaders’ (and their constituents’) priorities and vision for the future of the city. As Caroline pointed out these might be:
The well-planned city – focused on urban design and development
The healthy and safe city – focused on health
The sustainable eco-city – focused on the environment
The city of innovation – focused on science and technology, the knowledge base
The city of commerce – focused on trade and retail
The cultural or convention hub – focused on tourism
Here I sit finally getting a chance to reflect on my 30 hours in Saudi Arabia. Yes, just a little more than one day. But one day was enough to change any preconception that I might have had, and spark my interest to learn more. My “day” started with the VIP treatment through passport control – which I must say was much appreciated. The airport in Riyadh is certainly not Dubai International – far from it. But if there were any disappointment at the inauspicious first impression, it stopped there. Although to set the stage, I was invited to Saudi Arabia by IBM to participate in an analyst event showcasing “Smarter Cities” initiatives in the Kingdom. So admittedly, I was only presented the “smart” side of Riyadh. I am eager to see more.
International orders grew 34% for HP . . . not this year but actually back in 1964 when non-US orders accounted for 23 percent of HP’s revenues. While the growth of non-US tech revenues is in the news today, HP’s international orders first exceeded domestic orders not recently but as far back as 1975.
In my research on market entry and market opportunity assessment (MOA), I recently spoke to strategists at HP about how they evaluate markets. As I was leaving the building, I stopped in to the HP museum and spent some time with the HP archivist. The highlights of the visit include seeing the first HP device built in the now famous Palo Alto garage and a calculator that brought back memories of my father in his overstuffed chair “figuring out how to pay for college.” I was not only impressed by the history embodied in that room but also with the value that HP places on recording and memorializing its “life” as an organization. Not to sound too sappy but it really brings the company and the industry to life.
I’ve spent the last few weeks reading through some documents on the history of HP’s entry into international markets. There are valuable lessons to be gleaned from their experiences. I’ve written about many of those lessons in reports and blog posts but thought I'd draw out a few of them here.
Forrester’s survey of over 1,000 IT decision makers in North American and European enterprises, only 12% of firms officially support or manage Palm devices. In comparison, 70% of enterprises support BlackBerry smartphones, and 29% support Apple iPhones. Android devices, the newest entrants in the mobile OS wars, have strong momentum and are officially supported by 13% of firms.
Well, that got me wondering how Palm had fared in emerging markets. We know that device preferences are different globally. So, I thought, maybe there are some Palm fans outside of North America and Europe. I checked Forrester’s Global Technology Adoption data from last summer (new survey expected back from the field very soon) in which we surveyed 1,412 IT executives and technology decision-makers across 15 countries. Here is what I found out about PalmOS support across enterprises in a few of the countries:
Last December I wrote about Building B2B Technology Markets, looking at how to penetrate a market with almost none of the traditional characteristics of a mature technology market? As technology vendors increasingly look to emerging markets as a significant opportunity and source of growth, this question becomes more pressing. The report explored some of the elements of Cisco’s Country Transformation initiatives in order to identify steps in the process of building market infrastructure:
For example, the report looked at partnering with governments to encourage market-friendly policies and investment in the necessary technology infrastructure to support market development and overall economic growth. And, from a sales perspective, trade associations provided an alternative channel to reach small and medium businesses in markets where distributors and resellers weren't available.
But, another element critical to successful market development is the ecosystem of partners developing solutions specific to the particular market, or even just contributing local innovation for new approaches to broader global issues. Building B2B Technology Markets discussed finding local organizations to act as partners in the market, and even investing in educational initiatives, but missed the next step of how to help create these new local ecosystem partners.
The word for “crisis” in Chinese apparently comes from two roots meaning “risk” and “opportunity” – there is both a downside, and the potential for an upside. That’s how César Alierta, Telefónica Chairman and CEO, began the opening keynote of their 2010 Leadership Conference in Miami (where I spent several days last week). For Telefónica, that definition has played out with the global economic crisis. While results in Spain have been their downside, Latin America has been the opportunity. Telefónica has a presence in 15 countries in Latin America (and 42 countries worldwide), with offerings in mobile and fixed telephony and in IT services. Not all offerings are available in all markets but in many countries Telefónica has leveraged a strong position in one offering to expand into the others becoming the first integrated operator in the region.
According to José Maria Pallete, CEO of Telefónica Latinoamérica, Latin America represents 65-70% of their total customer base, 40% of revenues and about 40% of the operating income. In the enterprise space (as opposed to consumer services), 37% of Telefónica revenue comes from Latin America. That corporate segment (including public sector) marked double digit growth in Latin America in 2009, with its biggest markets in Brazil and Mexico.
This post is the third in a three part series on Smart Cities. Best to start with Part I.
Two Approaches to Making Smart Cities
As with most things in life, there are a number of ways to approach smart cities. One way is to start from the ground up. A new city is born - a clean slate - to be made smart with the necessary infrastructure for its connected systems to communicate and collaborate to create an efficiently running city. A recent article in Fast Company, highlighted a number of smart cities projects that essentially started from the ground up - or, in one case, from the mud flats up. The most widely written about start-up city is Songdo. The concept was launched as a vision of the South Korean government and eventually, through the work of a real-estate developer and Cisco as the IT infrastructure provider, has become a reality - although the city is not expected to be complete until 2015. Songdo and other start-up cities have become one answer to the nagging concern about increasing urbanization.
Reconciling the rapid urbanization in China with the observation of one World Bank official that "Cities are expensive to retrofit and modify once they are built," start-up cities just might be one answer to China's urban needs.
This is the second in a three part series on Smart Cities. Best to start with Part I.
Urbanization in China Sets the Stage by Defining the Need
According to the World Bank, China's urban population was 191 million in 1980. By 2007, it was 594 million, excluding migrants. About half of China's population now lives in cities, and that trend looks likely to continue particularly as the government relaxes restrictions on internal movement institutionalized in the strict hukou system of residential registration.
And, bigger cities face bigger challenges to meet the needs of their burgeoning populations:
Infrastructure and jobs. Between now and 2025, it's likely that another 200 to 250 million people will migrate to China's cities, adding to an existing mobile or migrant population of about 155 million. Providing infrastructure - housing, roads, hospitals etc. - and jobs for this anticipated inflow of people poses major challenges. With new changes to the hukou system, this migration into cities could be even greater.
Energy. Urban residents use 3.6 times as much energy as rural residents; suggesting that energy use is far from its peak. In China, energy intensity (consumption of energy per unit of GDP) is 7 times that of Japan and 3.5 times that of the United States, and over 70% of electricity use is coal-produced.
This is actually not a tale of two specific cities but of two types of cities, or “smart cities” as the new moniker goes. It will appear in three parts.
Defining Smart Cities
“Smart” has become the adjective of choice among tech vendors to describe solutions that capture, synthesize and analyze the vast amounts of data being produced by computing and networking systems. Forrester defines Smart Computing as:
a new generation of integrated hardware, software, and network technologies that provide IT systems with real-time awareness of the real world and advanced analytics to help people make more intelligent decisions about alternatives and actions that will optimize business processes and business balance sheet results.
What does that mean in layman’s terms? Every system can be smarter if it can learn from and act on the data it produces.
A city is a “system of systems” making the potential for efficiency exponential as all of its systems interact. Therefore, a smart city is:
A city that uses technology to transform its core systems – city administration, education, healthcare, transportation, public safety, real estate, utilities and business — enabling them to capture, analyze and act on the data they produce.
As a result, a smart city’s systems can optimize the use of and return from largely finite resources. It can, in other words, “do more with less.” Using resources in this smarter way also boosts innovation, a key factor underpinning competitiveness and economic growth.