- IN THIS ISSUE:
- * Relationship with the End-User Is a Gold Mine
- * In Search for a New Operator Business Model
- * RTOS Space Is Hot
- * Games Are Becoming Hot
- * Improvement Opportunities at Ericsson
- * Innovative Business Models
The top news item of this week? The Australian operator OneTel, backed by investment from News Corp (do we know Rupert Murdoch?), made a deal with Lucent to enter the 3G market in Europe with a strong focus on applications. Just think if NTT DoCoMo would do the same…
Well, anyway: Happy Thanksgiving! http://www.americangreetings.com/aspickup.pd?rr=y&i=10602006&r=tapio.antt
- RELATIONSHIP WITH THE END-USER IS A GOLD MINE
Internet technologies enable a direct relationship with the end-user and this will enable mobile phone vendors to acquire, retain and monetize customers in a new way and with new economics attached to it. If Ericsson will not pursue this, our competitors probably will. Our distribution channels will have to adapt their role to this change and the sooner they will do it, the better for them.
Thanks for becoming an Ericsson customer! How about buying some more? We understand your son just started college, have you considered the Ericsson CollegeClub offer as a gift to him? Internet technologies will enable Ericsson to devise business models which boost customer loyalty. Direct interaction with the customer will enable us actively e-merchandise products and services to the customer. It also facilitates demand forecasting. As an example, applying auctions (running an Ericsson auction site) could facilitate pulling older phones away from a market we need to be ready for a new high-end model. Acquired phones could then be auctioned on a less developed market. This requires a direct relationship to the end-user but the distribution channel can play a role there as well.
Another issue is that Ericsson needs to establish a direct relationship to the potential Ericsson end-user customer. That is typically 1) a user of a competitor product or 2) an Internet user. In the first case Ericsson needs to have direct access to those segments of competitors’ customers which are (a) profitable, (b) fast-growing, (c) represent high end-user life-time ROI or (d) are of high image value. In the second category, web users, Ericsson has the opportunity to address an important group of mobile Internet early adopters, sell them mobile phones and develop their “mobile stickiness”, thus reducing their “desktop stickiness” (this is the main strategic reasoning behind the I-mode strategy if you think about it).
Thirdly, Ericsson needs to address the issue of how to sell phones and related intranet and extranet services to enterprises in the future. If the phone is going to be a pocketable extension of your intranet, will it be you who will buy the phone or your company? What if your phone cannot be ESOEed? Operators are certainly one channel, but of course not the only one. A direct relationship with the enterprise, particularly on the chosen vertical segments, is crucial.
Finally, developing a database of user information represents substantial market value, reflecting the expectation on the various ways how this asset can be monetised (compare with how American Express or Visa monetise their user base). These expectations form the basis for the $25 bn market value of Amazon today. In the mobile phone distribution business this type of value is being accumulated by mobile phone shopping portals such as Point.com and Cellmania.com.
- Should we build a chatboard for Nokia phones? It would be one lacking certain attractive functionalities of the Ericsson accessory. But it would make the youth segment of Nokia to register at the Ericsson portal. Makes sense to me…
IN SEARCH FOR A NEW OPERATOR BUSINESS MODEL
How can Ericsson sell more mobile infrastructure faster to the operators? By showing them how to improve the return on investment. And by showing them how the infrastructure generations introduced in rapid succession can be cost-effectively consummated by the (operator-)desired end-user segments.
The statement above implies that Ericsson has to know about how the end-user creates value – and how the operator creates value for (or with) the end-user. Therefore, Ericsson need to share the dialogue with the end-user with the other active constituencies, such as the operator.
Put yourself in the position of the operator for a moment. An operator is focussed on – surprise, surprise – customer acquisition, customer retention and customer monetization. The role of a vendor like Ericsson is to support this focus – all the three elements of it. Pursuing this focus in a rapidly changing business and technology environment involves risk for the operator and it devises strategic maneuvers to limit the risk, such as growing by acquisitions to be a global player and to have this way (in certain segments) an unfair advantage in relation to the competition. Again, in other words, the operator tries to define its competition (“eat your lunch or be lunch”).
The opportunity for Ericsson is to define a business model whereby we become business (development) partners of the most strategic operators (the global ones) and thereby strive for “oiling the infrastructure sales” by lowering prices, engaging in revenue sharing arrangements and offering services that speed up the deployment, market adoption and monetization of new infrastructure (Saraide, e-Mode). In order to prevent these actions to cause a dilution of our market value, we should use even the operator business partnerships to accumulate the Ericsson end-user data mining capability and the related asset. Needless to say, this way Ericsson would define its own competition and within that competition (Motorola/Cisco, Lucent, Nortel, Nokia) use its unfair advantage of a superior market presence and customer base to create a new business model and force it to become an industry standard.These two pieces above are just loose thoughts I would like to have your comments on. Even better if you do that at the IOW Forum: register at http://webboard.ericsson.se/~webacademy.
RTOS SPACE IS HOT
The real-time operating system (RTOS) market is now hot, nobody doubts that the Internet appliance market will take off. In fact, this is a much clearer trend for Wall Street analysts than mobile Internet. Wind River Systems (WIND) has surged in November from $20 to $34. I remember my Silicon Valley friends suggesting a year ago that Ericsson buy itself a market dominance in this emerging area - WIND was one of the companies… http://biz.yahoo.com/p/w/wind.html
GAMES ARE BECOMING HOT
Games are becoming hot: Electronic Arts cut a $81 million deal to become the exclusive supplier of games to AOL and Lycos acquired Gamesville.com for $207 million (Gamesville has the coolest company slogan I have seen: “Wasting your time since 1996″). Portal companies are buying access to new user segments and new types of user data. Ericsson should take games into account in our portal strategy and develop way to enhance “gaming dial tones” with the Ericsson ‘profile applications’. Game and portal companies would deliver to us the raw application dialtone so that we can enhance it and the operator can subscribe to this as a service.
There is now a net game related discussion underway at IOW Forum, moderated by Jeremy Hamill-Keays from the MUGA business cell. They are developing a game server. Go to the forum and Jeremy can tell you more. Register at http://webboard.ericsson.se/~webacademy.
IMPROVEMENT OPPORTUNITIES AT ERICSSON
BCT could help us “eat our own medicine” by offering a service to our employees which would make us the savviest Mobile Professionals on the planet. I cannot understand why it has not been done already. The site http://racom.ericsson.se has some signs of that thinking. We should develop a full-fledged Ericsson Mobile Professional University (EMPU) to act as a productivity enhancement portal towards our employees. People at Ericsson should be rewarded for their measured MPU (Mobile Productivity Unit) perfomance. The winners should be featured in our marketing externally and internally. I suggest you all go and suggest this to your managers so we get this done.
To continue the thought, we could then bring our MPU mobile productivity measurement tool to the attention of the mobile professional oriented trade press and industry bodies (e.g. Sales Force Automation Magazine) and make it into an “industry standard”).
INNOVATIVE BUSINESS MODELS
E-Pin is a personal information intermediary. They pay users for the use of their personal information and deliver their affiliate websites aggregated user information for targeting purposes (no website available)…
Combining instant discounts and viral marketing, the CogniToy Web site is offering $5 off your next purchase for each “future customer” e-mail address you provide for them…
QUICK TAKES - Nokia Ventures invested in Informative Inc., a real-time customer feedback technology company. I guess the future mobile e-merchadising solutions will benefit from a technology like this… Registrationvillage.com is a consumer product recall alert service, what a neat little idea to become a millionaire!… Paragon Software (sync software for mobile phones) raised a $14 m round with 3Com (Palm) as the lead investor. Paragon also seems to have a sync deal with Excite@Home and Lycos… Portal Software has been selected to build transaction and billing capabilities for “energy portal” ChoiceNet… Lycos invested in the “airborne ISP” inflightonline.com, e-commerce in the sky has arrived… More companies are entering the congested customer support space, see SafeHarbor and PeopleSupport as examples… eTime Capital analyzes and finances trade receivables, a supply chain booster… Listening web radio through any radio receiver in your house? Try Radio Webcaster! This type of functionality should be added to future GPRS terminals as well… SuperSig.com is an outsourced email signature hosting service, another viral innovation. How about wireless signatures?… Could we be in the business of running a service bureau for OSS for greenfield operators, like Step9? Would that give us an additional opportunity for user data acquisition?… A Canadian company AudeSi Technologies is developing embedded software technology for smart cards and information appliances, Motorola and Sun are backing this seed-stage company… Is my WAP-shop making me money? Keylime Software could build our e-mode service portal a real-time business behaviour analysis module… ThinKnowledge Networks should become a member of The GPRS Applications Alliance… - (To view the embedded hyperlinks, view this section online at http://webacademy.ericsson.se.)
- SELECTED THOUGHTFUL READING - US venture funding broke all the records during 3Q99 amounting to $9 bn. The Bay Area got $3.3 bn of it, New York was a good number three with $688 m… Sending email to Mars: will the technologies being developed for the interplanetary Internet offer solutions to wireless Internet technology on earth?… Nicholas Negroponte says there are likely to be more Barbie dolls connected to the internet in ten years than Americans… Community sites and online stores are starting to boost economies of various tribes at Indian reservations in the US, now hand-crafted goods from Papua New-Guinea are finding their way to online stores (REUTERS)… Reindeer herders in Finland are starting to use wearable computing from Reima and Nokia… - (go to http://webacademy.ericsson.se for links to stories)
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This is a weekly newsletter describing the non-confidential part of my work during the past week and how I see market evolution affecting Ericsson (as interpreted my me in my role working for LME/DMA in San Francisco as a business developer with a focus on Internet applications and enablers). The report will be published every Monday. For subscriptions go to http://webacademy.ericsson.se/elists.
