Everybody is hearing Cloud Computing on the television now. Operators will store your contacts in the Cloud. Hosting companies will host your website in the Cloud. Others will store your photos in the Cloud.
However how do you make money with the Cloud?
The first thing is to forget about infrastructure and virtualization. If you are thinking that in 2013, the world needs more IaaS providers then you haven’t seen what is currently on offer (Amazon, Microsoft, Google, Rackspace, Joyent, Verizon/Terramark, IBM, HP, etc.).
So what are alternative strategies:
1) Rocket Internet SaaS Cloning
Your best hope is SaaS and PaaS. The best markets are non-English speaking markets. We have seen an explosion of SaaS in the USA but most have not made it to the rest of the world yet. Only some bigger SaaS solutions (Webex, GoToMeeting, Office 365, etc.) and PaaS platforms (Salesforce, Workday, etc.) are available outside of the US and the UK. However most SaaS and PaaS solutions are currently still English-only. So the quickest solution to make some money is to just copy, translate and paste some successful English-only SaaS product. If you do not know how to copy dotcoms, take a look at how the Rocket Internet team is doing it. Of course you should always be open for those annoying problems everybody has that could use a new innovative solution and as such create your own SaaS.
During the gold rush, be the restaurant, hotel or tool shop. While everybody is looking for the SaaS gold, offer solutions that will save gold diggers time and money. SaaSification allows others to focus on building their SaaS business, not on reinventing for the millionth time a web page, web store, email server, search, CRM, monthly subscription billing, reporting, BI, etc. Instead of a “Use Shopify to create your online store”, it should be “Use <YOUR PRODUCT> to create a SaaS Business”.
3) Mobile & Cloud
Everybody is having, or at least thinking about buying, a Smartphone. However there are very few really good mobile services that fully exploit the Cloud. Yet I can get a shopping list app but most are just glorified to-do lists. None is recommending me where to go and buy based on current promotions and comparison with other buyers. None is helping me find products inside a large supermarket. None is learning from my shopping habits and suggesting items on the list. None is allowing me to take a number at the seafood queue. These are just examples for one mobile + cloud app. Think about any other field and you are sure to find great ideas.
4) Specialized IaaS
I mentioned it before, IaaS is already overcrowded but there is one exception: specialized IaaS. You can focus on specialized hardware, e.g. virtualized GPU, DSP, mobile ARM processors. On network virtualization like SDN and Openflow. Mobile and tablet virtualization. Embedded device virtualization. Machine Learning IaaS. Car Software virtualization.
5) Disruptive Innovations + Cloud
Selling disruptive innovations and offering them as Cloud services. Examples could be 3D printing services, wireless sensor networks / M2M, Big Data, Wearable Tech, Open Source Hardware, etc. The Cloud will lower your costs and give you a global elastically scalable solution.
None of the incumbant telecom providers has put into place any Blue Ocean Strategies. Blue Ocean Strategies have made the Circus, Wine, Gaming, Airline, etc. industries exciting again, so why not apply it to the telecom market. The only telecom players, I know of, that implemented some blue ocean strategies are Free in France, GiffGaff in the UK and Freedompop in the USA. So why not do a Blue Ocean Strategy exercise in this blog post.
Here is my strategy canvas:
Traditional operators focus on charging heavily for calls and SMS although lately more and more packages with free minutes are available. International calls however are still charged extremely expensive. Mobile phones are subsidized up to 24 months and as such you need to stay with them for at least this period. Operators spend a lot of their money investing in the roll out and maintenance of their networks. They also have very complex pricing plans and as such need heavy investments in BSS.
MVNOs try to compete on price and most often do not subsidize mobiles. They do not have their own network as such they do not need to invest in it. They offer less tariff plan options. You are often free to change whenever you want. To make up for not subsidizing mobiles, you can get mobile loans which means you have some sort of permanence.
So how would Blue Ocean Mobile do it differently?
In line with Free’s example, call costs should be eliminated, including international costs. Mobiles should not be subsidized but cheap mobile loans should be offered for those that do not bring their own device [BYOD]. Blue Ocean Mobile should focus on LTE and try to win LTE licenses. However instead of doing heavy investments in installing antennas everywhere, Blue Ocean Mobile should only install antenna’s in those areas where few people live but connectivity is required, e.g. major highways. This is in line with Free’s strategy. However unlike Free, the operator’s network should not be built with unreliable WiFi hotspots. Instead specially designed “Personal Antennas” should be sold to everybody who wants one. What is a personal antenna? A personal antenna is a nanocell LTE antenna. A personal LTE antenna in your home that not only gives service to you but also to neighbours and people close to your home. The idea is that you become a sort of mini-LTE ISP to which others can connect. For every KB that gets transferred through your personal LTE antenna, you will get a revenue share. So it is in people’s interest to put the personal antenna in a place where it can service a lot of people and to have a good backbone Internet connection. People should be able to win back their investment in the Personal Antenna in a few months and make money afterwards. This should allow Blue Ocean Mobile to seriously lower their investment in rolling out an LTE network and to get free mouth-to-mouth advertising. Via a software-defined network [SDN] management system all nanocell LTE antennas are controlled by Blue Ocean Mobile.
Since Blue Ocean Mobile is focusing only on data traffic, it should work together with “over-the-top players” to offer a compelling list of services. Ideally Android Phones and the iPhone will use the data network for calling others instead of a circuit network. Customers should have a full range of BYOD management options so small and medium-sized businesses can easily manage the phones of their employees as well as push enterprise applications towards them.
Blue Ocean Mobile should also try to avoid investment in BSS. Tariff plans should be easy with the customer defining how many free megabytes they want to purchase for a fixed monthly fee and a simple extra charge for overage. So instead of operator defined tariff plans, everybody has a personalized tariff plan that they can adjust every day. Calls and SMS are charged based on data traffic not on per minute charges. VoIP solutions is the standard. Blue Ocean Mobile does not have a circuit network or SS7.
Blue Ocean Mobile is also copying the long tail support from Giff Gaff in which customers give support to other customers and are responsible for marketing. Unlike Giff Gaff not only prepaid but also subscriptions are supported. Like Giff Gaff customers get a revenue share when they participate in support or marketing.
Blue Ocean Mobile’s strategy is just very high-level and still needs in-depth analysis but it is an open invitation for innovative people to start applying Blue Ocean strategies to anything they feel in need of disruption.
Maarten Ectors is a senior executive who is an expert in applying cutting edge technologies (like Cloud, Big Data, M2M, Open Hardware, SDN, etc.) and business innovations to generate new revenues. He is currently looking for new challenges. You can contact him at maarten at telruptive dot com.
Amazon is taking another step at disrupting an existing market. This time they have their sight set on the Datawarehouse market. Amazon is currently running a limited preview of a new service called Redshift. Redshift promised a Datawarehouse starting from $1000/Terrabyte/Year. To get to this price point you have to go for the XL reserved instance which comes with a minimum of 2TB, so you actually pay $2000. If you want to pay per use then you pay $0.85/hour which comes to $7500 for 2TB per year. You can also scale up to a hundred of 8XL instances which will give you 1.6 petabyte of compressed data. Amazon will do the management (software patching, scaling, restarting failed instances, etc.) as well as backups for you. The initial partners are Jaspersoft and Microstrategy but more solution providers are being promised. You can connect to your datawarehouse via PostgreSQL JDBC or ODBC. The limited service is only available in the US EAST region but looking at the historic performance of Amazon this should change quickly.
As always Amazon is one step ahead of the competition and is able to offer Datawarehouse (DW) solutions to companies that were traditionally too small to pay the total cost of ownership associated with an on-site datawarehouse deployment. However as with any disruptive innovation, if Amazon is able to extend their offering to also include all the tools business analysts and data scientists need, then over time Redshift could be disrupting even the high-end DW market. For sure, to be continued…
In this post I want to show a technique that is an alternative for creating a business case: “Lean Canvas”. Lean Canvas has been proposed by the book: “Running Lean“, that itself is based on “Lean Startup“.
The idea of Lean Canvas is to put what would go into the executive summary of a business case on one page and to forget about writing the rest of the business case. The justification is that writing a business case takes 2 to 3 months and CxOs normally only read the executive summary. So instead of spending 2 to 3 months, you spend hours or days and get it in front of customers to get feedback. With the feedback you can then refine your idea and create a Minimum Valuable Product in the same 2 to 3 months. So instead of having a nice paper report nobody reads, you can start earning money.
The Lean Canvas contains the major customer problems you want to solve. These customer problems need to be important [A painkiller, not a vitamin], shared by many and not have an easy workaround. Customers need to validate them before you start thinking about solutions. Customers are the ideal party to tell you about their problems but not necessarily the best to give you ideas about a solution. Think about Henry Ford’s words: “If I had asked what people wanted they would have said faster horses…”. Most startups focus excessively on the solution and forget that they need to validate a lot more things. After the problem, the second most important part of the Lean Canvas is the customer segment and channel. Who do you want to offer a product to and how to do reach them. Also the unique value proposition is key. The other elements of the Lean Canvas are the unfair advantage [how can I avoid others to just copy my business?], key metrics [how can I measure success?] and last but not least the cost structure [what does it cost to acquire a customer, build a minimum valuable product, etc.?] and revenue streams [how much am I going to charge and what other revenue sources are there]. You can create a Lean Canvas on paper or use a SaaS-version.
So far the theory, now let’s review an example…
The customer problems:
Door keys are a nuisance. You can lose them. You have to give copies to family and friends if you want them to go to your house if you are not there. Do you really want to give the cleaning lady or man a copy? Is my lock safe from burglars?
The mailman or delivery guy comes to my home but often packages do not fit my mailbox.
When people ring my bell, they know when I am not home. That is unsafe.
So what is the solution?
My proposed solution is the iDoor. The iDoor is an intelligent door which you control remotely to decide who accesses, who delivers and who is shut-out. Via a camara and full-duplex audio system, you are able to see who is standing in front of your door and communicate with them. Your smartphone will be your remote door manager. Advanced models could have face recognition and share data with other intelligent doors in the neighbourhood, hence if you are sleeping a siesta and those annoying door to door vendors approach your door they will automatically hear a message to go away and your bell will not function. If a burglar is detected, then the police can be warned. If the postman has a big package then remotely you can open a compartment so they can store the package. If your family comes they can go into the house without problems. Your cleaning lady can as well, as long as it is her normal working hours and she comes alone.
Unique value proposition?
As if you were home 24×7. Busy people will never miss an Amazon package again. Burglars will not know if you are in the garden or not home at all.
Mid-high class house owners.
An existing door manufacturer that targets upper markets should be partnered with. An example could be Hörnmann.
Door sales and door usage.
A complete costing has to be done. TBD.
Door sales and door installation/maintenance services are the primary revenue stream. However door apps and selling anonymous aggregated data could be additional sources.
You can find a quick summary in the following slides as well as some details about the technology components. This example needs customer validation and several areas need quite some more work [e.g. cost, revenue, unfair advantage, etc.]. However I hope the idea is clear.
Maarten Ectors is a senior executive specialised in value innovation: creating new products and generating new revenues based on cutting-edge technologies like Big Data, Cloud, etc. He is currently looking for new challenges. You can contact him at: maarten at telruptive dot com.
I was expecting the announcement a lot sooner. I made some slides about a similar concept some months ago (I called it the iCar) and presented them to one of the largest car parts manufacturer. Unfortunately car manufacturers have been very slow in adopting new innovations. At least one car manufacturer has entered the 21st century. Ford has created OpenXC, an Open Source hardware and software solution to interact with your car. OpenCX = Arduino + Android + Car Interface. Developers will be able to use their Android to read information from the car. You can read the angle of the steering wheel, vehicle speed, location, accelerator pedal position, brake pedal position, engine speed, odo meter (distance travelled), fuel consumed, fuel level, head lamp status, high beam status, ignition status, parking brake status, transmission gear position, turn signal status, etc.
At the moment you are not able to interact with your car unfortunately. It would be good if OpenCX could offer real interaction. Think about the possibilities of:
1) Parental control apps – my teenage child will not be able to drive more than 120km on the highway and 50km in the city center and I can tell them not to go to certain neighbourhoods.
2) Personalization – my car adapts to me. If I am alone in the car the car radio blasts out hits from the 90s, the motor goes into sportive, inside temperature goes to 21, etc. If my family is present, children music, comfort driving, temperature 22.5, etc.
3) Predictive Maintenance – my car tells me that there is a problem, finds the garage that has the spare parts in stock and schedules an appointment based on my calendar’s availability.
These are just one of many ideas. The main thing is that entertainment, personalization and third-party services will get an enormous boost if open hardware, open software and creativity are allowed to enter your car…
Maarten is currently looking for new challenges as a senior executive, expert in value innovation and using cutting edge technologies to generate new revenues. Contact him at maarten at telruptive dot com.
On Quora there was a question about how much CAPEX and OPEX you can save by moving to the Cloud. My short answer is: you might not save any.
My longer answer:
If you compare owning your own data center to owning a car, than hosting is like renting and the Cloud is a taxi. If you have a lot of hardware and software that has been written off or highly utilized in your existing data center then moving your solutions to the Cloud might well increase your monthly bill. Just like a travelling salesman will see a higher transport cost when switching from a car to the use of taxis. In this case virtualization is the best solution.
So why is everybody talking about the Cloud then?
The Cloud is great for three scenarios:
1) If you are starting something new
2) If you have unpredictable load
3) Pay per use services
Starting something new
Startups benefit most from the Cloud since they have to find a sustainable revenue stream before they run out of cash. Time is money. Not having to invest upfront in hardware and growing your hardware together with your needs is very attractive to them.
Also any other type of innovation or unproven business within existing companies should be using the Cloud for the exact same reason.
If you are lucky to be in a situation where your load grows extremely fast and grows together with your revenues, then the Cloud is ideal as well.
Also the case where you have this one day a year where your load is a 100-times larger than the second top day. Or if your load is unevenly spread during some hours of the day and falls to almost nothing during the rest of the day. All these spikes could be moved to the Cloud via a hybrid solution.
Pay per use
Instead of focusing on all that software and hardware that is fully utilized in your data center, you should focus on the software and hardware that is not. Those promising projects that went nowhere. The software that only needs to be used once a month or was hardly ever used.
Software-as-a-Service (SaaS) is the main cost saver for using the Cloud. Substitute infrequently used software by SaaS solutions and pay only for usage. No upfront investment in hardware, licenses, set-up, etc. Pay only for what you use. If you start using this type of software heavily then you can always do a business case to bring it back to your data center. There are thousands of examples ranging from general solutions like CRM, ERP, recruiting, project management, etc. to specialized industry specific SaaS. Look at SaaS marketplaces to understand the full offering.
Convert your CAPEX into Revenues
The last advise is to think about your current solutions. In case you have built a custom solution for some industry problem, then converting it into a SaaS offering for others might be the best way to save you from future CAPEX approval problems. The reason is that when a solution is converted from a cost item into a revenue generator, management all of a sudden will start looking at it with a totally new perspective…
Maarten Ectors is a senior executive whose is an expert in generating new revenues from new technologies like the Cloud, Big Data, Machine Learning, Mobile, etc. He is currently looking for new challenges. You can contact him at maarten at telruptive dot com.
If you just invested a lot of money in a Big Data solution from any of the traditional BI vendors (Teradata, IBM, Oracle, SAS, EMC, HP, etc.) then you are likely to see a sub-optimal ROI in 2013.
Several innovations will come in 2013 that will change the value of Big Data exponentially. Other technology innovations are just waiting for smart start-ups to put them into good use.
The first major innovation will be Google’s Dremel-like solutions coming of age like Impala, Drill, etc. They will allow real-time queries on Big Data and be open source. So you will get a superior offering compared to what is currently available for free.
Cloud-Based Big Data Solutions
The absolute market leader is Amazon with EMR. Elastic Map Reduce is not so much about being able to run a Map Reduce operation in the Cloud but about paying for what you use and not more. The traditional BI vendors are still getting their head around a usage-based licensing for the Cloud. Except a lot of smart startups to come up with really innovative Big Data and Cloud solutions.
Big Data Appliances
You can buy some really expensive Big Data Appliances but also here disruptive players are likely to change the market. GPUs are relatively cheap. Stack them into servers and use something like Virtual OpenCL to make your own GPU virtualization cluster solution. These type of home-made GPU clusters are already being used for security Big Data related work.
Finally Parallella will put a 16-core supercomputer into everybody’s hands for $99. Their 2013 supercomputer challenge is definitely something to keep your eyes on. Their roadmap talks about 64 and 1000 core versions. If Adapteva can keep their promises and flood the market with Parallella’s then expect Parallella Clusters to be 2013 Big Data Appliance.
Distributed Machine Learning
Mahout is a cool project but Map Reduce might not be the best possible architecture to run iterative distributed backpropagation or any other machine learning algorithms. Jubatus looks promising. Also algorithm innovations like HogWild could really change the dynamics for efficient distributed machine learning. This space is definitely ready for more ground-breaking innovations in 2013.
Easier Big Data Tools
This is still a big white spot in the Open Source field. Having Open Source and easy to use drag-and-drop tools for Big Data Analytics would really excel the adoption. We already have some good commercial examples (Radoop = RapidMiner + Mahout, Tableau, Datameer, etc.) but we are missing good Open Source tools.
I am currently looking for new challenges so if you are active in the Big Data space and are looking for a knowledgable senior executive be sure to contact me at maarten at telruptive dot com.