Well this may not exactly come as news to many of you but this week really reinforces the conundrum facing mobile operators – and therefore all of us – in the quest for new service innovations to support their future business.
In the week that we have seen Facebook’s staggering $1bn acquisition of a non-revenue generating business we have also seen the recent results showing that revenues at the UK’s leading mobile operators have declined by 2.3% in 2011 as their customers are simply using their latest smartphones & data packages to communicate and entertain themselves in many other ways than the high margin voice business.
Clearly the mobile operators are not starting from scratch and some such as O2 have had a business innovation unit going for some time looking at creating new services in areas such as health, mobile payments and monetisation of mobile search and web.
However, this week clearly demonstrates the need for them to accelerate their innovation even faster and I just hope that they focus the resources and take the appropriate risks to make this happen.
Don’t forget if the operators don’t get this right and help find new profitable revenue streams they will be forced to continue ongoing cost-reduction measures.
And the worst income in this would be a continued reduction in their subsidy of the shiny smartphones and tablets we are all using to drive the innovation in the first place.
Of course another scenario is that the over-the-top services such as Apple, Amazon & Google continue to drive the innovation themselves. However, even though Amazon are reportedly subsidising the Kindle Fire to a tune of $50 per unit that’s an awful lot of incremental margin they need to make and even then it’s a much smaller subsidy than the mobile operators have typically been able to support on new devices.
So let’s hope that between them they can get this right – especially how the operators can better partner with the OTT service providers as they plan the build of their new 4G networks – so we can continue to enjoy the shiny new smartphones and tablets driving this fantastic innovation.