According to Reuters, Telefonica just bought Jajah, the VOIP service provider, for 200 Millions dollars. Jajah currently has around 15 million subscribers that can make cheaper phone calls on their landline and mobile phones via its site. There are seven key points for understanding Telefonica´s strategic move.
The world has achieved 4 Billion mobile phone users according to latest report from WCIS. With more than 60% mobile penetration, service providers are looking on how to onboard the next billion subscribers that will come mainly from emerging markets like China and India. According to UND studies, this segment lives on less than $2USD a day.
Therefore, operators wanting to seize this opportunity must find ways to reach less affluent markets in cost-effective and profitable ways. Doing business with the world’s 2 billion poorest people – 1/3rds of the world’s population – will require radical innovations in technology and business models.
But for companies with the resources and persistence to compete at for these customer segments, the prospective rewards include growth, profits and incalculable contributions to mankind.
Apple has changed the game for mobile content by revamping the concept of applications stores. A little bit ironic, Operators who started with the application stores many years back need to embrace this paradigm shift and find ways to successfully redefine their content business in an increasingly competitive app store market.
With Apple as the star of the show, Application store business has experienced a dramatic growth during the past year. Apple has an impressive 85,000 applications in its store and more than 2.5 billion downloads since launch. Other App Store has been launched by Google, Microsoft, Nokia, BlackBerry, Samsung, Sony Ericsson, Palm, LG and other handsets or OS providers as a way to get a piece of this market.
Operators have been watching the rise of device vendor application stores with mix feelings; in one hand they see this trend as a clear threat for their content revenues and in the other, they have new hopes for redefining their content business, moreover with the increasingly popularity of this app stores among consumers, which in the past has been a slow growth area besides ringbacktones, wallpaper and few other applications
If there is something that keep CEO’s at night in today’s mobile telecom industry is the scary thought of becoming a “Dumb pipe”. At least this is what most Telco analyst has predicted as the worst future scenario for mobile operator’s fate.
In a open an booming web 2.0 landscape, Telco’s have little or no control on several aspects of the eco system. The control rests either with the internet/web 2.0 disruptive innovators like Google, Yahoo, FaceBook, Twitter or lies with the OS system holder Nokia, Apple, Google, Palm, Microsoft among others.
The operator has been squeezed in to the value chain making their money through connectivity and that’s it. It is exercising less and less control over Content, Consumer or the Devices.
With voice moving towards zero tariffs (Skype, Google and others) and mobile broadband commoditizing fast, the margins of the operators who have been the unchallenged players in the Telecom eco-system is under huge pressure. In Summary, the operator is at a threat of being used simply to transfer bytes to and from the customer’s device and not being able to increase their position or add any additional services besides simple network access. The scary dumb pipe scenario is coming to chase mobile operators as it happened with ISPs some years back.
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