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.
In the computing trend that will change everything, MIT’s Technology Review is showing how power consumption for computer resources has improved at the same speeds as computer chips. Especially the analogy of a Macbook Air with the efficiency of a PC from 1991 would run through a fully charged battery in 2.5 seconds. The trend is to continue with wireless no-batteries sensors. Sensors that get their energy from harvesting existing radio waves. Find out more on powering the internet of things without batteries.
Imagine the possibilities if sensors did no longer have to have batteries. Everything from traffic, the weather, human health, retail, etc. can be revolutionized. Mobile sensors will start generating massive amounts of data, called nanodata. The sensors are unlikely to hold a SIM because of the importance of energy efficiency. Operators should look for M2M business models that go further than only connectivity and should think about low-cost and low-energy wireless mesh networks instead of 3G/4G/5G…
LTE roll-outs are taking place in America and Europe. Over-the-top-players are likely to start offering large-scale and free HD mobile VoIP over the next 6-18 months. Steeply declining ARPU will be the result. The telecom industry needs new revenue: telecom revenue 2.0. How can they do it?
1. Become a Telecom Venture Capitalist
Buying the number 2 o 3 player in a new market or creating a copy-cat solution has not worked. Think about Terra/Lycos/Vivendi portals, Keteque, etc. So the better option is to make sure innovative startups get partly funded by telecom operators. This assures that operators will be able to launch innovative solutions in the future. Just being a VC will not be enough. Also investment in quickly launching the new startup services and incorporating them into the existing product catalog are necessary.
2. SaaSification & Monetization
SaaS monetization is not reselling SaaS and keeping a 30-50% revenue share. SaaS monetization means offering others the development/hosting tools, sales channels, support facilities, etc. to quickly launch new SaaS solutions that are targeted at new niche or long tail segments. SaaSification means that existing license-based on-site applications can be quickly converted into subscription-based SaaS offerings. The operator is a SaaS enabler and brings together SaaS creators with SaaS customers.
3. Enterprise Mobilization, BPaaS and BYOD
There are millions of small, medium and large enterprises that have employees which bring smartphones and tablets to work [a.k.a. BYOD – bring-your-own-device]. Managing these solutions (security, provisioning, etc.) as well as mobilizing applications and internal processes [a.k.a. BPaaS – business processes as a service] will be a big opportunity. Corporate mobile app and mobile SaaS stores will be an important starting point. Solutions to quickly mobilize existing solutions, ideally without programming should come next.
4. M2M Monetization Solutions
At the moment M2M is not having big industry standards yet. Operators are ideally positioned to bring standards to quickly connect millions of devices and sensors to value added services. Most of these solutions will not be SIM-based so a pure-SIM strategy is likely to fail. Operators should think about enabling others to take advantage of the M2M revolution instead of building services themselves. Be the restaurant, tool shop and clothing store and not the gold digger during a gold rush.
5. Big Data and Data Intelligence as a Service
Operators are used to manage peta-bytes of data. However converting this data into information and knowledge is the next step towards monetizing data. At the moment big data solutions focus on storing, manipulating and reporting large volume of data. However the Big Data revolution is only just starting. We need big data apps, big data app stores, “big datafication” tools, etc.
6. All-you-can-eat HD Video-on-Demand
Global content distribution can be better done with the help of operators then without. Exporting Netflix-like business models to Europe, Asia, Africa, Latin-America, etc. is urgently necessary if Hollywood wants to avoid the next generation believing “content = free”. All-you-can-eat movies, series and music for €15/month is what should be aimed for.
7. NFC, micro-subscriptions, nano-payments, anonymous digital cash, etc.
Payment solutions are hot. Look at Paypal, Square, Dwolla, etc. Operators could play it nice and ask Visa, Mastercard, etc. how they can assist. However going a more disruptive route and helping Square and Dwolla serve a global marketplace are probably more lucrative. Except for NFC solutions also micro-subscriptions (e.g. €0.05/month) or nano-payments (e.g. €0.001/transaction) should be looked at.
Don’t forget that people will still want to buy things in a digital world which they do not want others to know about or from people or companies they do not trust. Anonymous digital cash solutions are needed when physical cash is no longer available. Unless of course you expect people to buy books about getting a divorce with the family’s credit card…
8. Build your own VAS for consumers and enterprises – iVAS.
Conference calls, PBX, etc. were the most advanced communication solutions offered by operators until recently. However creating visual drag-and-drop environments in which non-technical users can combine telecom and web assets to create new value-added-services can result in a new generation of VAS: iVAS. The VAS in which personal solutions are resolved by the people who suffer them. Especially in emerging countries where wide-spread smartphones and LTE are still some years off, iVAS can still have some good 3-5 years ahead. Examples would be personalized numbering schemas for my family & friends, distorting voices when I call somebody, etc. Let consumers and small enterprises be the creators by offering them visual do-it-yourself tools. Combine solutions like Invox, OpenVBX, Google’s App Inventor, etc.
9. Software-defined networking solutions & Network as a Service
Networks are changing from hardware to software. This means network virtualization, outsourcing of network solutions (e.g. virtualized firewalls), etc. Operators are in a good position to offer a new generation of complex network solutions that can be very easily managed via a browser. Enterprises could substitute expensive on-site hardware for cheap monthly subscriptions of virtualized network solutions.
10. Long-Tail Solutions
Operators could be offering a large catalog of long-tail solutions that are targeted at specific industries or problem domains. Thousands of companies are building multi-device solutions. Mobile & SmartTV virtualization and automated testing solutions would be of interest to them. Low-latency solutions could be of interest to the financial sector, e.g. automated trading. Call center and customer support services on-demand and via a subscription model. Many possible services in the collective intelligence, crowd-sourcing, gamification, computer vision, natural language processing, etc. domains.
Basically operators should create new departments that are financially and structurally independent from the main business and that look at new disruptive technologies/business ideas and how either directly or via partners new revenue can be generated with them.
What not to do?
Waste any more time. Do not focus on small or late-to-market solutions, e.g. reselling Microsoft 365, RCS like Joyn, etc. Focus on industry-changers, disruptive innovations, etc.
Yes LTE roll-out is important but without any solutions for telecom revenue 2.0, LTE will just kill ARPU. So action is required now. Action needs to be quick [forget about RFQs], agile [forget about standards – the iPhone / AppStore is a proprietary solution], well subsidized [no supplier will invest big R&D budgets to get a 15% revenue share] and independent [of red tape and corporate control so risk taking is rewarded, unless of course you predicted 5 years ago that Facebook and Angry Bird would be changing industries]…
MIT is running an article about a new technology that allows printing electronics on commercial scale.
A 30 cents sticker can contain electronics to measure temperature. Imagine the possibilities of combining printing electronics with RFID/NFC or even longer distance transmission. Being able to transmit information from thousands of stickers to close by routers about temperature, electricity usage, identification, speed, etc. can revolutionize a lot of markets: energy monitoring, transport/logistics, gaming, sports, security, clothing, etc. Just like 3D printing this is a technology that needs to be followed because of its disruptive character…
Arrayent caught my eye the other day. They are a small startup that invented a very low cost way to connect sensors to a gateway and on to the cloud. Each device would need a $2 module extension in order for it to talk to the gateway. The gateway costs $5 and hooks up to an ethernet access point. The nice thing about the Arrayent solution is that the sensors are like mini webservers that can be controlled from the Cloud via simple REST APIs. Data can flow from the sensors to the Cloud as well. Via a mobile phone or tablet you are able to control remotely the sensors or understand the data that is provided by them. Developers can easily create applications.
Wireline operators should see this as an opportunity to offer M2M Cloud services without SIMs. Via a M2M PaaS, developers could create applications and sell them to consumers and businesses. Home automation could be a great example, however not the typical thousands of Euros example in which you need to rewire your house to get your blinds to go down automatically.
Instead who would say no to a bunch of low-cost flood, heat, gas, freeze, electricity, etc. sensors that automatically connect to your operator’s router and send information to the Cloud. The moment you have a water flooding, fire, gas leak, freezer that stopped working, power outage, etc. you get a call on your mobile via an automated IVR. With a two-year contract, your house is 24×7 protected for a small monthly fee without upfront investment.
Combining a SIM with the gateway would make it a viable solution for wireless operators that want to offer Cloud-based industrial sensor networks in remote locations…
Google’s Goggles is impressive but what is more impressive is that a lot of the computer vision technology on which it is built, is available to everybody. The below example shows how Microsoft’s Kinect (Computer Vision for Xbox) can be used together with open source computer vision, text-to-speech and speech recognition to learn how to recognize objects and their names:
Application of this type of technology can be in wireless domains (like Goggles) but could also be in IPTV widgets, remote security solutions, industrial (M2M), etc. Definitely something to follow-up on…