Martin Creaner's Blog

Time for Service Providers to take apps seriously

Martin Creaner — Thu, 05 Nov 2009 12:01:00 GMT

One of the media obsessions that irks me is the obsession with how many iPhone apps are available in the various appstores. Latest number I heard was 87,000 or so (and it may well be 100,000 by today) with around 2bn downloads. Meanwhile the Android counter-attack with droid applications has been flooding the market with the fact that it is catching up and now has 15,000 or so apps.

What matters from a business perspective is the number of apps that are being downloaded and paid-for. The vast majority of the apps in these various appstores are free. The estimate is that somewhere between 1 in 15 or 1 in 40 of all downloaded apps is a paid-for app. So while it is interesting to see that users now have access to a wide array of free toys to play with on their phone, it doesn't do much for the economic argument under-pinning all the network and device investment. This reference is a couple of months old but it estimates that the total revenue from the first billion downloads of iPhone apps is perhaps somewhere between $70m to $160m. While this is a nice chunk of change it is a drop in the ocean when divided between the 30,000 or so apps developers and, more importantly, looked at in perspective with the $1.5Trillion industry it is trying to change and rejuvenate. So we are still at the very early stages of this new business model and it is all still to play for.

The key metric for Service Provider success in the apps industry is how many apps are being downloaded and paid for. Real revenue can be generated by just a few hundred excellent, fit-for-purpose apps that meet a real consumer need, and which consumers are willing to pay for. Service providers can rapidly become major players in this game, and have it within their power to turn apps into a real revenue generating business. But apart from a few notable exceptions, they are not taking the threat or the opportunity seriously yet. And by the time they wake up to the potential, Apple and Android may have stolen the game.

LTE still on track to impress us in 2010

Martin Creaner — Thu, 22 Oct 2009 13:43:00 GMT

Interesting to see how well the LTE segment is holding up under the pressure of a global recession. I blogged a few months back about the rollout plans for LTE, and how a lot of the major operators are committing to major rollouts in the second half of 2010. However, at this stage I was expecting to hear a few of them slipping their plans back by 6 months or so. But that doesn’t seem to be happening. A recent Infonetics report states that fourteen operators have committed to LTE rollouts next year, up from 10 in March. It also predicts “the LTE network equipment market will be worth more than $5 billion by 2013.

However, I find it interesting that it is only predicting that there will be 72 million users by 2013. In a world of 4.6 billion phone users this is a drop in the ocean and probably gives a good indication that the market is going to be very, very selective for a number of years. It also highlights that the fear or ambition that LTE will be a fixed broadband killer is a little premature. In a recent ITU report it highlights that there are around 450m fixed broadband subscribers, so replacing these with LTE / Wimax is going to take some time.

Notwithstanding my slight disappointment about the speed of growth being predicted I’m still impresed that it is going ahead so rapidly.

How Singapore is Taking on the Really Big Challenges

Martin Creaner — Mon, 19 Oct 2009 09:15:00 GMT

A quite innovative communications business model is emerging in Singapore. At an industry event last week I saw some very interesting presentations on the government led initiative to provide an open access, common communications infrastructure that could be used by multiple service providers. Two independent companies are being set up - one call Netco will be responsible for putting in place a core transport network, while the other called Nucleus Connect will be responsible for setting up the full operations infrastructure. This whole thing is funded by the Singapore government to the tune of around S$4bn investment and will provide open interfaces to any service provider who wants to leverage that infrastructure to provide their own customer facing services.

This is interesting for two reasons. Firstly, there is a strong argument that innovation in communications services is constrained due to the fact that only the network operator has full access to all the core network and back office systems interfaces. By making these truly open to the thousands or tens of thousands of niche service providers we should see an explosion of innovation and a staggering array of new innovative services. Doing this from a green field scenario is obviously alot simpler than reverse-engineering it into an established network operator (which is something that a number of the leading incumbents are trying to do!)

Secondly, this very neatly gets around the whole net neutrality argument. If the government is willing to take over responsibility for investing in the core infrastructure, then all the net neutrality arguments evaporate. Of course, doing this in a relatively small country like Singapore is a completely different proposition than doing it in a country like the USA. However, it does show that there may be a commercially sensible way through the net neutrality minefield and I suspect that the model will be closely watched and if it works will be rapidly replicated in a number of smaller countries.

Keep your eye on this one!

Beyond the Cloud Computing Hype

Martin Creaner — Wed, 14 Oct 2009 10:08:00 GMT

With interest in cloud computing at an all-time high, we have to wonder if this concept is truly revolutionary or simply the logical next step of trends that started decades ago.

As someone who’s been in the industry for awhile, I can remember a time when even a technology-dependent institution like NASA simply didn’t have the processing power it required for all the complex calculations needed for the early days of the U.S. space program. It had to borrow this processing power from local universities and other institutions.

Fast forward to today, and we’re still finding ourselves wanting to have greater accessand availability of IT resources at lower operating costs. Only now, wedon’t just need these resources to launch rockets; rather they are being used for everyday operations by everyday users.

So while there is an enormous amount of hype surrounding cloud computing,certainly more than for any technology in a long time, it’s hardly a flash in the pan, and I do think cloud services will become more and more prevalent in the future.

Reaching for the Clouds
Many of us are already using cloud services and don’t even realize it.Customers of Salesforce.com’s CRM platform already know the benefits of a “virtual software” approach, and other companies using outsourced applications have already reached for the clouds. But cloud has the potential to provide so much more if we can get past the hype and look at the real issues, challenges and potential problems that need to be addressed before it can truly be a ubiquitous and beneficial computing tool.

The beauty of cloud is you don’t have to be NASA or another huge enterprise to take advantage of what it offers. Cloud allows businesses of any size to have the flexibility to scale up on the fly, which is hugely important for smaller companies that simply don’t have the money to invest heavily in IT resources. Instead of the investment model that says you have to double your costs to achieve the next level of scalability, with cloud it’s much more linear. So you can invest maybe$10 for one computing unit, or $1,000 for 100 units, and so on.

It means you can start small without any huge fuss, and as your business grows you can add more computing power or storage to accommodate your increased requirements.

While the threshold for entry is set quite low, making cloud services affordable and accessible to all, I imagine many larger enterprises will embrace the virtualized world of the cloud but play it closer to the vest. The notion of private cloud stakes the general concept of cloud computing but limiting accessibility to within the company. So a huge company might want to set up a centralized data center with all software, processing power and storage in a single location and IT departments from across the enterprise could get whatever resources they needed without having to worry about security.

Securing and Managing the Cloud
It should come as no surprise that security is the 800-pound gorilla in the room of cloud services for the larger companies, hence the great interest in private clouds. For smaller firms, security may not be as big an issue because a cloud provider – be it Amazon, BT, Google, IBM or someone else – will more than likely be able to provide at least as much security as what the customer could provide themselves.

But for the larger companies – especially those in sensitive areas such as government, defense, financial services or even health care – security will be the primary reason why they shell out to create their own private cloud infrastructure.

Along with security, there are loads of other reasons why large companies would look closely at private clouds: governance, management and data application portability for starters. Those lucky enough to be able to roll their own clouds won’t have to be as bogged down in these critical issues as the small and mid-size firms that will contract with a third party for cloud services.

For example, if you decide to throw your lot into the cloud and your business blossoms, and along the way you find your cloud provider simply isn’t living up to your expectations, how easy will it be to get your data out and then have it transferred to another provider or brought in-house? Other serious questions revolve around how cloud services will be run and managed and how those services will be metered or monitored.

These are not small concerns, but rather genuine fears that a lot of enterprises are voicing as cloud services become more popular.

Keeping Our Head in the Clouds
As you can imagine, when any new technology concept comes down the pike, TM Forum stands ready to engage it, and if required do what ever we can to make the technology truly usable for our members and for the community at large.

With cloud computing promising to be the biggest thing in the technology world since the invention of the word processor, you can bet we are going to be front and center in areas where we excel, such as managing cloud services; developing and adopting standards; bringing together all players in the value chain; creating a viable marketplace; removing the barriers to growth; creating a platform where buyers and sellers of cloud services can cooperate; accelerating agreements on cloud service components and processes and achieving transparency of product features, service levels, metrics and benchmarks.

But none of this will come easy. We, as well as our members and industry partners,will need to seriously roll up our sleeves if cloud services are to get off the hype meter and join the mainstream.

At Management World Americas in Orlando this December, we’re hosting an executive round table on cloud, and cloud will be a hot topic among our conference sessions. Join us to learn all about this industry-changing technology and be part of the effort to make cloud services live up to their potential and not be just another fad that quickly fades from the scene.

Challenging the Status Quo

Martin Creaner — Tue, 06 Oct 2009 16:22:00 GMT

It was interesting this week to see the launch of Google Wave. I sat through the video (way too long!) introducing the beta service and managed to last for about 35 mins. But I came away impressed. They seem to have a game-changing offering that will change the way we collaborate in business and personal life - if it works as advertised! But even if it doesn't I suspect that it will act as a catalyst to spur giants such as microsoft and skype etc.. to revisit the status quo in how we e-commuicate. Incidentally, the whole beta launch of wave is a masterclass on how to manage expectations and enhance your brand, rather than damage it.

Challenging the status quo is to be applauded. I said last week that I was impressed with the launch of Vodafone 360 service. Not because it is definitely going to work, but because it is audacious and game changing. Even when these ideas don't work, they tend to stir things up sufficiently that overall the market moves forward. In the TM Forum we are continually looking for these game-changing plays that will shake up the full industry. At the moment areas like Cloud, AppStores, 4G are some of these potentially game-changing plays, and we have programs underway exploring each of these. Whether these have longevity or not is still uncertain, but just investigating their possibilities gets the mental juices flowing!

How Operators Can Compete In the Apps Store Business

Martin Creaner — Fri, 02 Oct 2009 07:37:00 GMT

Making money from content is difficult. One of the other hats I wear is being non-exec Chairman of one of the leading mobile games and apps store service providers - Selatra Limited (www.selatra.com) . In this capacity I have front seat visibility of the some of the challenges on the coal-face of making money out of content. Questions are often raised as to why Apple can make such a success from their app store, while every other mobile operator is struggling to make content pay. But to me it is a clear case of Complexity and Investment.

Challenge 1: Complexity Versus Simplicity
iPhone apps are not inherently any better or smarter than Java based apps, or other smartphone apps, but they have the advantage that iPhone developers have a very clearly defined problem space. They are only developing for a single device, with high inherent functional capabilities and well understood interfaces. And they are only managing a business relationship with one customer. Whereas java app developers are developing for a bewilering away of hundreds of popular devices, each with a distinct screen size, key layout and inherent hardware capabilities. They are also trying to sell to hundreds of different operators, each with different terms and conditions and business models. Finally, the overhead of re-spinning a java application for hundreds of phones is significant, and this doesn't even include the challenges of testing your app on each phone (most of which you will probably not have access to!).

Challenge 2: Investment
No service is going to be successful without focused intelligent investment. While Apple may have a starting advantage with the inherent simplicity of the model described above, they have also put their money where their mouth is. Massive worldwide investment in Apps as the raison d'etre of the iPhone is yielding results. Compared with this, most SP's have invested practically nothing in making content a real contributor to their bottom line. For all the bold statements made in annual reports, most SP's invest pennies in a long-term apps driven strategy. And nothing good comes without serious, consistent investment

So operators need to completely revisit their apps strategy if they are going to avoid being completely eclipsed by Apple. And its all about tightening up the value chain to make it more efficient and effective. Step 1 is to build much tighter partnerships with the device owners to ensure user access to apps is seamless and painless. Step 2 is to build a consistent approach to delivering app stores across multiple operators, so users don't have to relearn the process every time, and content providers don't have to work to a different business model with each operator. Step 3 is to invest in consistent marketing of Operator Apps, so the user base begins to believe that Apps can credibly come from a non-iPhone source.

Thats the challenge!

How Secure is the Cloud?

Martin Creaner — Wed, 30 Sep 2009 09:59:00 GMT

It should come as no surprise that security is the 800-pound gorilla in the room of cloud services for the larger companies. I wrote a few months ago (Cloud Computing: Taking an Holistic View) that the only way I could see public cloud failing is if there was a big security scare. True to form, at the recent Black Hat USA conference in Las Vegas, a number of security researchers demonstrated new ways of attacking cloud computing services. Claims were made about how to hack through Amazon's cloud infrastructure, Apple's MobileMe service, and Salesforce.com's cloud platform.

Of course external hacking is only one of the 'security' concerns. Other concerns related to fears about

· all your eggs being in one basket and the provider internal processes being either inadequate or suffering a catastrophic failure which damages or loses your data irreparably

· Putting too much trust in the applications already created within existing cloud infrastructures – many of which have been created by unrelated third parties.

· Lack of encryption in some of the cloud environments. Seemingly encryption in a virtual environment is somehow more difficult than encryption in a dedicated environment – I’ll leave that up to the mathematicians to explain!

Whether any of these concerns stand up to serious scrutiny is unknown, but the key point as far as I’m concerned is that perception is reality in this sort of new trust based industry. If people believe public cloud to be insecure, then ..... watch this space !

Joining the Dots to Create Compelling New Services

Martin Creaner — Thu, 24 Sep 2009 11:21:00 GMT

I always think that one of the tricks in being successful is to be able to join the dots between seemingly disparate phenomena to create a new truly compelling offering. I read today about the new Vodafone 360 offering which links up the hugely sexy topics of AppStores, Social Networking & Smart Phones. Its not clear where Vodafone plan to take this new beast, but it seems clear that if you can integrate our insatiable appetite for social networking, along with our growing appetite for personal and business apps then you have a winner. Add to this the rapid growth in availability of smart phones that have large screen real-estate, and it could kick off the next phase of the love affair between consumers and their mobile phones. The first news on this talks about aggregating all your social networking info through one mobile application, but I'm envisioning a stage 2 of downloadable apps that can integrate seamlessly with the social network expereince and enhance it using capabilities such as location etc..

It doesn't mean that this is going to be a winner, as that will all come down to how well Vodafone manage their portfolio of apps (breadth, licencing, etc..) and how clever they are in providing a seamless, intergrated solution to their users. But I'm enthusiastic about this, as it is an example of how an SP can take their destiny into their own hands rather than sit and hope that they can maintain their position by simply offering voice, data and 'also-ran' services. Vodafone seem to be aiming to fight the 'over the top' threat by offering interesting and equally compelling services - and I applaud that!

Change is the only constant in this industry

Martin Creaner — Wed, 09 Sep 2009 08:06:00 GMT

I read to my amazement this morning that LTE is now going to be too slow!! It is still years away, and will be radically faster than anything we can get today from 3G, but it is already being superceded by something called Advanced LTE which will deliver downlink data rates of around 1Gb/s and uplink data rates of around 500Mb/s. Seemingly, LTE in the way that it is defined today does not meet the criteria for 4G and should only be considered a form of 3G on steroids. Meanwhile in the same publication I noticed that Japanese cellco eMobile is predicting that LTE will supercede not only ADSL but also FTTH.

Its not clear how much of this to take seriously as we have yet to see LTE hit the streets in anger, and will likely have to wait another 12 months for that. But I like the ambition in both articles. The only thing that is clear to me is that the industry will never stop changing. There always seems to be another hill to climb!

Lets stop talking about Over-The-Top Services as if they are somehow different

Martin Creaner — Tue, 08 Sep 2009 11:50:00 GMT

It dawned on me this morning that talking about over-the-top services (OTT) as if they are different from the services provided by our incumbent carriers, is a little bit insulting. They are simply service providers who are using new channels to market that have evolved in recent times.

When we say OTT we somehow imply that these guys are a little bit sneaky, and that they are using bandwidth that they shouldn't be using. But that's simply not true. They tend to be businesses who are very focused on the needs of their customers and less focused on the capabilities of the pipes running to their customers. They use whatever network and payment capabilities they can get their hands on, to get to their customers in an efficient fashion. The successful OTT services surrounding video, music, games and gambling all have one thing in common - they adapt rapidly to customer consumption habits and change with ruthless efficiency. And their rapid market uptake seems to indicate that this may well be a successful model that the incumbents should start adopting.

So rather than pushing OTT away, perhaps SP's should embrace OTT and try to implement an internal OTT mentality. Give some of your product managers free rein to adopt an OTT style in developing iteresting and compelling services, and see what happens!