the effect of software people on telco

vJAMES PARTON, DIRECTOR OF TWILIO EUROPE

ALL CONTENT COPYRIGHT (c) TWILIO INC. 2013

THE EFFECT OF SOFTWARE PEOPLE ON TELCO

A LITTLE ABOUT ME

ALL CONTENT COPYRIGHT (c) TWILIO INC. 2013

INTERSECTION OF TELCO AND SOFTWARE

WHAT IS A SOFTWARE PERSON?

ALL CONTENT COPYRIGHT (c) TWILIO INC. 2013

WHAT IS A SOFTWARE PERSON?

• You don’t have to write code to be a software person

• Anyone that sees the world through the lens of software

• Anyone that asks “How can this problem be solved by software?”

• Anyone that believes any problem can be solved by software

ALL CONTENT COPYRIGHT (c) TWILIO INC. 2013

WHAT IS A SOFTWARE PERSON?

Not Software People Software People

ALL CONTENT COPYRIGHT (c) TWILIO INC. 2013

WHAT IS A SOFTWARE PERSON?

Not Software People Software People

ALL CONTENT COPYRIGHT (c) TWILIO INC. 2013

WHAT IS A SOFTWARE PERSON?

Software PeopleNot Software People

ALL CONTENT COPYRIGHT (c) TWILIO INC. 2013

WHAT IS A SOFTWARE PERSON?

Not Software People Software People

WHY SHOULD YOU CARE?

ALL CONTENT COPYRIGHT (c) TWILIO INC. 2013

COMMUNICATION REMAINS VITAL, AND COMMUNICATION IS MOBILE

5.9 billion people use SMS

x6

x3

x2.5

In the UK we placed 240 billion call minutes in 201251.6% on mobile (flipped from landline in 2011)

Source: OfCom and Tomi Ahonen, May & September 2012

SO WHAT’S THE PROBLEM?

ALL CONTENT COPYRIGHT (c) TWILIO INC. 2013

THE TELCO BUSINESS MODEL IS BROKEN

Voice is God’s gift to humanity. It’s what differentiates us from the animals. And we position voice at zero — you don’t have to pay for voice. Voice is dead.”

“

Hakam KanafaniGroup CEO of Turk Telekom

Mobile World Congress 2013

ALL CONTENT COPYRIGHT (c) TWILIO INC. 2013

TELCO REVENUE DECLINING FOR FIRST TIME

Source: ETNO

UK 4G spectrum auction generated £2.3bn2000 UK 3G action made £22.5bn

ALL CONTENT COPYRIGHT (c) TWILIO INC. 2013

..BUT TELCO’S REMAIN CASH GENERATION MACHINES

Source: Company websites

$0

$33

$65

$98

$130

AT&T China Mobile Telefonica Deutsche Telekom Vodafone FT

59.360.9

76.481.884.1

126.4

2012 Revenue (USD Billions)

ALL CONTENT COPYRIGHT (c) TWILIO INC. 2013

CROSS INDUSTRY COMPARISON

Source: Company websites, Wikipedia, Business Week, BBC

$0

$50

$100

$150

$200

Samsung Apple AT&T IBM Sony Unilever Luxembourg Coca Cola Nike Heinz

11.624.1

4858.3

67.479.1

107

126.4

156.6173.9

2012 Revenue (USD Billions)

ALL CONTENT COPYRIGHT (c) TWILIO INC. 2013

ITS ALL ABOUT THE FUEL: GAS & FOOD

Source: Company websites, Wikipedia, Business Week, BBC

$0

$125

$250

$375

$500

Exxon Mobil Wallmart Toyota AT&T

126.4

226

443.9482

2012 Revenue (USD Billions)

ALL CONTENT COPYRIGHT (c) TWILIO INC. 2013

Source: Company websites

$0

$33

$65

$98

$130

AT&T China Mobile Telefonica Deutsche Telekom Vodafone FT

59.360.9

76.481.884.1

126.4

2012 Revenue (USD Billions)

SO WHAT ABOUT THE DISRUPTORS...?

ALL CONTENT COPYRIGHT (c) TWILIO INC. 2013

SO WHAT ABOUT THE DISRUPTORS....

Source: Company websites, insideris.com

$0

$38

$75

$113

$150

AT&T Telefonica Vodafone Google Skype0.30.75

50.159.360.9

76.481.884.1

126.4

2012 Revenue (USD Billions)

ALL CONTENT COPYRIGHT (c) TWILIO INC. 2013

THE DECLINE IS PREDICTED TO CONTINUE

Source: Telco 2.0

NEW KIDS ON THE BLOCK

ALL CONTENT COPYRIGHT (c) TWILIO INC. 2013

THE RISE OF MESSAGING APPS

Total of $23 billion in texting revenue lost as of the end of 2012 to OTT messaging services

Source: WhatsApp and LATimes.com

ALL CONTENT COPYRIGHT (c) TWILIO INC. 2013

THE RISE OF MESSAGING APPS

Source: Acision

96% of users use SMS, but 50% prefer OTT messaging services

BBM

SMS

Whats App

iMessage

Facebook

0 27.5 55 82.5 110

64

64

74

75

110

UK messages p/ week

ALL CONTENT COPYRIGHT (c) TWILIO INC. 2013

CASE STUDY: TRANSATLANTIC CALLS

Avg. cost of a 3 minute transatlantic call:

1927: $75 (today’s equivalent $1,000)1964: $12 (today’s equivalent $90)2010: $0.21

Volume of transatlantic call minutes:

1964: 20 million2010: 114 billion

Source: TeleGeography

ALL CONTENT COPYRIGHT (c) TWILIO INC. 2013

RISE OF SKYPE

Source: TeleGeography

ALL CONTENT COPYRIGHT (c) TWILIO INC. 2013

AND THE CHALLENGES KEEP COMING

2 billion iMessages per day

Source: Apple, LATimes.com

Facetime video since 2010Audio only announced at WWDC 2013

ALL CONTENT COPYRIGHT (c) TWILIO INC. 2013

AND THE CHALLENGES KEEP COMING

ALL CONTENT COPYRIGHT (c) TWILIO INC. 2013

THE NEW LANDSCAPE

Landline

Provide landlines (inc. WiFi)

Mobile

Provide mobile lines(inc. WiFi)

Over The Top (OTT)

Use other peoples networks to deliver

their services(Digital Cuckoo!)

Network Software

Cloud

Virtualize Telco capabilities in the cloud and directly

connect into networks

ALL CONTENT COPYRIGHT (c) TWILIO INC. 2013

NETWORK PEOPLE AND SOFTWARE PEOPLE SITTING IN A TREE....

SOFTWARE PEOPLE CREATE BETTER USER

EXPERIENCES

ALL CONTENT COPYRIGHT (c) TWILIO INC. 2013

BETTER COMMUNICATION USER EXPERIENCES

Source: OfCom

...and these experiences are being built by software people

ALL CONTENT COPYRIGHT (c) TWILIO INC. 2013

CASE STUDY: INSTAGRAM

Source: ReadWriteWeb

mobile picture messaging user experience done right...

ALL CONTENT COPYRIGHT (c) TWILIO INC. 2013

SOFTWARE PEOPLE DRIVING MOBILE DATA DEMAND

Source: OfCom

Avg. UK mobile data use: 71Mb p/month Jan 2010 rising to 154Mb in Jan 20123UK contract customers avg. was 800Mb (Feb 2012)

SOFTWARE PEOPLE GO FASTER!

Innovation

INTERNET

Copper

Switching

WWW

TELECOM

Copper

Switching

ALL CONTENT COPYRIGHT (c) TWILIO INC. 2013

LETS PUT THIS IN HISTORICAL CONTEXT

~3,000 BC to 1838 we communicated via cave painting, smoke

signals, story telling, carving, writing

ALL CONTENT COPYRIGHT (c) TWILIO INC. 2013

1838 - THE TELEGRAPH

~ 4,800 years to point of innovation

ALL CONTENT COPYRIGHT (c) TWILIO INC. 2013

1876 - THE TELEPHONE

+ 38 years to point of innovation

ALL CONTENT COPYRIGHT (c) TWILIO INC. 2013

1984 - THE MOBILE PHONE

+ 108 years to point of innovation

ALL CONTENT COPYRIGHT (c) TWILIO INC. 2013

SOFTWARE PEOPLE TIME

+106 years on software comms arrive

3G data launched in 2003

2003 + 0 years

2006 + 3 years

2007 + 4 years

2008 + 5 years

2009 + 6 years

CONTROL = #FAIL

ALL CONTENT COPYRIGHT (c) TWILIO INC. 2013

YE OLDE MOBILE INTERNET

ALL CONTENT COPYRIGHT (c) TWILIO INC. 2013

WHY TELCO’S WANTED TO BE THE GATEKEEPERS

• The gatekeepers “own” the customer experience, billing relationship and channel

• The stagecoach, the postal service

• The telegraph company

• The phone company

• The mobile company

• The social network?

ALL CONTENT COPYRIGHT (c) TWILIO INC. 2013

OWNERSHIP OF USER IDENTITY

• Carriers always (still?) believed they owned the primary address for everyone on the planet. The phone number

• But where has the innovation been with the customer experience?

• Which is more user friendly?

+44 20 xxxxxxxx or @jamesparton

ALL CONTENT COPYRIGHT (c) TWILIO INC. 2013

THIS IS WHY SOFTWARE IS EATING TELECOMMUNICATIONS

• Marc Andreessen was right about software eating the world, especially when it comes to Telecommunications...

- The innovation void is being filled by software people, not Telco’s

- Software people think web first. This style of thinking is inherently open

- Software people think collaboratively - APIs, collaborative working, open source

- Software people think about building communities & ecosystems

Why software is eating the world: http://parton.ly/17u5g5z Andreessen photo: http://www.flickr.com/photos/36521958135@N01/2443764501

SO WHATS NEXT?

ALL CONTENT COPYRIGHT (c) TWILIO INC. 2013

HOW TO AVOID THE KODAK MOMENT

ALL CONTENT COPYRIGHT (c) TWILIO INC. 2013

WHAT IS THE STRATEGY?

ALL CONTENT COPYRIGHT (c) TWILIO INC. 2013

CAPEX IS RISING, BUT NPD IS BROKEN....

Source: PwC & ETNO

Between 2001 - 2010 avg. ROI was just 6% = NDP Brokenbut note Telco’s are investing less than 20% of revenue

ALL CONTENT COPYRIGHT (c) TWILIO INC. 2013

NEW BUSINESS MODEL

Consumer Retail Store Producer

Packaged Goods!

Internet Services!

Consumer Developer Provider App

Source: http://www.slideshare.net/samramji/darwins-finches-20th-century-business-and-apis

ALL CONTENT COPYRIGHT (c) TWILIO INC. 2013

MIXED RESPONSE FROM TELCO

Source: Informa

ALL CONTENT COPYRIGHT (c) TWILIO INC. 2013

THE SAME OLD THINKING IS STILL THERE

Source: Informa

ALL CONTENT COPYRIGHT (c) TWILIO INC. 2013

APIS FOR MUGGLES

ALL CONTENT COPYRIGHT (c) TWILIO INC. 2013

PARTNER TO REACH DEVELOPERS

ALL CONTENT COPYRIGHT (c) TWILIO INC. 2013

CREATING A VIBRANT DEVELOPER ORIENTATED ECOSYSTEM

Connectivity

Start Ups

Channel

ISVSI

Customers

Enterprise

Direction of money flow

Hackers{SingleAPI

Abstraction

ALL CONTENT COPYRIGHT (c) TWILIO INC. 2013

REMEMBER THIS QUOTE?

Voice is God’s gift to humanity. It’s what differentiates us from the animals. And we position voice at zero — you don’t have to pay for voice. Voice is dead.”

“

Hakam KanafaniGroup CEO of Turk Telekom

Mobile World Congress 2013

ALL CONTENT COPYRIGHT (c) TWILIO INC. 2013

MAKING HACKNEY SPARKLE

http://vimeo.com/56125403

ALL CONTENT COPYRIGHT (c) TWILIO INC. 2013

SOME CLOSING THOUGHTS

1. Stop building product

2. Partner to provide the right developer tools

3. Partner to reach software people that will drive traffic on your networks to counter OTT threat

4. Big guns are designed to hit large targets - help software people sell into Enterprise

ALL CONTENT COPYRIGHT (c) TWILIO INC. 2013

FURTHER READING

Alan Quaylehttp://www.alanquayle.com/blog

Tomi Ahonenhttp://communities-dominate.blogs.com/brands/

Disruptive Wirelesshttp://disruptivewireless.blogspot.co.uk/

Martin Geddeshttp://www.martingeddes.com/

Benedict Evanshttp://ben-evans.com

Telco 2.0http://www.telco2.net/blog/

THANK YOU.@JAMESPARTON

WWW.IBEGYOURPARTON.COM/SOFTWAREANDTELCO/