WebRTC helping service silos
There are many ways to measure success of companies and project their future. Since this blog is for people in the technology sector we usually take the technological prism.
In this post I want to start with a financial view.
Unless you have been living under a rock in the last several years you are probably aware to the fact that interest rates are low… really low.
In some countries it even goes below 0 which means it is better to keep your money under that rock than in the bank.
The result of this is cheap money, high corporate debt and money going into the stock markets and real-estate due to lack of alternatives. This cheap money is taking the market to a Crexit with over 100 defaults in H1/2016 and counting.
Michael Lewitt from Sure Money published this list of top 50 US companies rated based on the cash they have. The problem is not with these 50 companies but rather with the other 99% of companies that are low on cash and high on debt.
These 50 companies hold $1.14 trillion cash out of $1.68 trillion which is the total cash in the hands of Moody’s rated non-financial US corporations.
The flip side of this is the growth in corporate debt from $2.62 trillion at the end of 2007 to $5.03 trillion at the end of 2015.
I don’t want you to view the above as any recommendation to buy/sell any stocks, it is not what this blog is all about, read Michell’s post if you are looking for that. I do want you to take a look at this list, see who is on it and more importantly, see who is not there.
A few things I have noticed:
- Technology is at the top of the list (first 5)
- Game changes are there (Apple, Google, Amazon, Facebook, eBay). Those who ate other people’s lunch (service provider and retail’s lunch)
- Game changer enablers (Qualcomm, Intel)
- Those who’s lunch was eaten have low presence
- Geographical silos are moving out
A closer look at communications
A good part of the technology companies on the list have some services that deal with communications. Apple, Facebook, Google and Microsoft are all service providers in some shape and form taking the operators’ revenue through asymmetric business models. They are eating the operators’ lunch. Apple already replaced AT&T on the S&P about a year ago and if this list of the richest 50 corporations was to be published 10 years ago we would have probably had a few more operators on it.
There are 4 elements we can identify in these companies.
Global vs. silos
Operators work in geographical silos. Even those that have global presence execute the core of their business in geographical silos.
The lunch eaters are operating globally. They do have support for specific languages, and in some cases local sales offices but as OTTs they have a single service and global data centers to support global connectivity.
Operators are trying to move in this direction but their core business is not such.
Access to eyeballs vs billing account
The lunch eaters have access to users’ eyeballs globally. This is through the device itself, the OS and the productivity applications. When users’ eyeballs are on the screen they control they can offer free or paid services based on their user behavior analysis and serve revenue generating ads based on their policy.
The operators have a monthly billing interaction with the user but have less opportunities to market new services to their users.
Asymmetric business models
The idea of asymmetric business models is that revenue for a service is not generated specifically by charging customers for that service but rather through other means. The simplest example is search by Google and revenue generated through ads. But this is not the only example, Microsoft has also managed to offer a large enough portfolio of products and services, some offered at a low price or for free and utilized to increase stickiness of users to the Microsoft environment.
Operators on the other hand are still selling their core business in a symmetric model of pay per use or all you can eat fixed fees. Some are making their way to new business models but that is mainly for user stickiness rather than pure asymmetric models as the lunch eaters are following.
Quick adoption of new technologies
Providing the services from the cloud and being able to force SW upgrade on server and even client sides combined with an agile DNA, lunch eaters quickly adopt new technologies and launch services based on them leaving the operators behind the curve.
How WebRTC empowers global service providers
WebRTC is just one technology in a long list of new technologies that created the shift of wealth from the incumbent operators to the new global service providers.
From business perspective, WebRTC is much more than just a media engine in a browser. There are several things that make it great for OTT global service providers.
It’s in the browser on the desktop side and usually in the app on the mobile which means that it plugs into the users’ preferred interface for consuming services.
WebRTC services are typically client server type of applications which plays nicely with the service silos in which these companies offer their services (mobile application or Web application and the server side of it).
Removes complexity of real-time communications; anyone who dealt with a media engine in the past knows the technological and legal complexities associated with it. It makes the development of new services and adding real-time communications to services dramatically easier.
This also makes it possible for Web developers to add real-time communication to their Web services without being required to be media experts.
The rich get richer
As Michael Lewitt mentions in his post, the rich get richer but looking at it from a technology and business standpoint rather than from a financial one we see that those who adapt to globalization, technology cycles and user behavioral changes are at the top of the list. It is true in communications and also in retail.
What are the next markets to be disrupted?
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