Sunday, March 29, 2009

Top 10 telecom predictions for 2009: Deloitte

Deloitte recently came out with its TMT (telecom, media and technology) predictions for 2009. Here are some bits from the telecom predictions for 2009. May I also take this opportunity to thank V. Srikumar, partner, Deloitte Haskins & Sells, for sharing this study. Thank you, sir!

1. Smart phones: how to stay clever in the downturn.
Mobile phone manufacturers should focus on developing smart phones features consumers want to use and are willing to pay for. They should work closely with operators to create easy-to-use services based on specific functionality that users value, says Deloitte. Smart phone manufacturers could also consider selling devices as price-competitive replacements for laptops. For some workers a smart phone may address all their communications, connectivity and applications requirements.

2. Data ascends from the basement to the boardroom.
Indeed! Data on customer information has been residing with telcos since ages. It is time now for the telcos to recognize that the data or information assets could become as significant to value creation as physical assets. Deloitte recommends that this customer information be integrated, and not appended or archived. It suggests that telcos should consider how to structure their activities to utilize their full spectrum of information. Having a CIO on the top management team and further, implementing a data governance framework, may become essential.

3. Digital communication loses its message.
In 2009, employees are likely to communicate digitally with each other in more ways, and in greater volumes, than ever before, says Deloitte. However, email may become obscure. The success of instant messaging was based on its greater immediacy and lesser formality. Growth of services like text messaging, has been driven by similar benefits. Companies should consider discouraging email for one day a week. Even not making indiscriminate use of the ‘reply-all’ function could save them time and money. Also, social networks may find that the best approach is to offer ‘white-label’ solutions to corporations, advises Deloitte.

4. The joys of disintermediation: why operators should embrace the application store.
According to Deloitte, in 2009, mobile phone users are likely to download over 10 billion applications to their mobile phones. A majority of applications are likely to be sourced from sites managed by mobile device manufacturers, consumer electronics firms and software houses. Although some operators may launch their own application stores38, the majority are likely to see no alternative to allowing their customers to access third parties’ stores. As the consumer awareness of mobile applications increases, the number of voice subscribers that add data subscriptions may well rise, boosting revenues. Applications could be used to drive operator loyalty and reduce retention costs.

5. Integration unleashes mobile phone convergence, finally.
Deloitte advises that while mobile handset manufacturers are getting better at convergence, they would still need to proceed with care. They should not assume that the mere addition of more features would guarantee success. Operators should study the consumers’ use of converged products in detail. It may help them identify revenue opportunities relating to converged functionality. The mobile phone may soon come to be regarded as the most successful converged product of all time.

6. Farewell mobile phone, welcome the wireless device.
All players in the mobile industry should understand how they are affected, for better or worse, by the emergence of the low-cost, multiple-standard chipset. The business case for the integration of wireless technology into a range of devices may be stronger. Mobile operators should consider their positioning -- whether to remain focused on the provision of long-range cellular mobile standards, or to become the aggregators of multiple wireless standards. Similarly, companies in other sectors should consider what low-cost integrated chipsets could enable.

7. The mobile broadband accident in slow motion.
As per Deloitte's study, data now exceeds voice volume on some mobile networks68, and with data traffic growing by several hundred percent on others, the cost of carrying data traffic could rapidly erode margins. Where possible, operators should try to divert heavy data traffic from cellular networks, and route it via other networks, such as WiFi-hotspots or home-broadband connections, at structured data tariffs. The operators need to focus marketing attention on managing customer expectations. They should examine the business model for mobile broadband carefully as well. With PC manufacturers increasingly integrating mobile broadband connectivity into their devices, diversification may soon be necessary.

8. The third screen goes dark: mobile television loses its reception
Deloite's study points out that everyone involved in the mobile TV industry -- an operator, a handset developer or a creative -- should take a long, hard, look at the demand for mobile television so far. The downturn could be a perfect opportunity to call time on a format that has too many fundamental challenges to work. It does not mean there's no space for mobile TV! Mobile telephony could provide an efficient payment mechanism for VoD -– delivered to the home set-top box, particularly for smaller VoD players. They can also be used to control the DVR. TV broadcasters can use mobile as part of their CRM strategies. Lots can be done, actually!

9. One for all and all for one: fiber networks change the shape of competition.
Shared ownership may reduce fiber's cost and risk, but may also require a new, unfamiliar approach to competition. Telcos and other companies should determine which skills they may need to hire to be able to compete on basis of services, or service levels, alone. Also, fiber-to-the-node (FTTN) or street-side cabinets may provide more than enough capacity for consumer and small business broadband, at a quarter of the cost of fiber-to-the-home (FTTH). Further, governments should complement their commitment to fiber deployment with campaigns to encourage adoption.

10. Mobile termination rates in Europe: a cut too far or a cut too fast?
Mobile operators in Europe, especially, have acknowledged that mobile termination rates (MTRs) must decline. However, 2009 is likely to see them push for a less drastic descent than the EC proposes. Consumer groups should monitor progress very carefully. Operators' knee-jerk reactions to sudden cuts could disadvantage millions of consumers, particularly those on low incomes. It may be better to call for a more moderate approach, from both operators and regulators. The local regulators should consider developing MTR glide paths that respect operators’ costs and market conditions.

Saturday, March 28, 2009

Top 10 technology predictions for 2009: Deloitte

Deloitte recently came out with its TMT (telecom, media and technology) predictions for 2009. Here are some bits from the technology predictions for 2009. May I take this opportunity to thank V. Srikumar, partner, Deloitte Haskins & Sells, for sharing this study.

1. Making every electron count: the rise of the SmartGrid.
Major manufacturers and utilities should explore partnerships with, and consider acquisitions of smart energy companies, advises Deloitte. SmartGrid technologies have the potential to reduce up to 30 percent of electricity consumption and dramatically reduce the need to construct new power plants or operate environmentally harmful sources of generation. They also bring computer intelligence and networking to the electrical network. SmartGrid also allows for more efficient use of the existing infrastructure. Is there room for nuclear power? Possibly, yes!

2. Gadgets for free* (*subject to contract)
According to Deloitte, bundling products and services together may prove essential in 2009 to stimulate an otherwise nervous, stalled market. This approach may well become pervasive in 2009, and likely be extended to a wide range of devices, including TV (bundled with subscriptions), music equipment (bundled with music), and high-end computers (bundled with everything -- from technical support to remote back-up services).

3. Disrupting the PC: the rise of the netbook.
Even since the introduction of the Intel Atom processos, netbooks and mobile Internet devices have gained momentum -- at least, in print and web. Sony's pocket device only adds to the glamour. According to Deloitte, the appeal of netbooks has been categorized as making 'great second computers for normal people, third computers for techies, and the first computer for children.' Even carriers should consider adding netbook subsidies into their current cash-flow estimates. They should also analyze the impact of wireless data usage on their networks -- driven by netbooks.

4. Moore's Law and risk.
A corollary to the famous law is applied to the falling prices for digital storage and the rise in the types and speeds of communication networks. However, these have combined to add to the corresponding risk associated with information leakage and data theft. Even a small memory stick can hold volumes of data! Companies could probably never realize that their data has gone missing or that intruders were regularly accessing their networks. Loss of analog data and need to secure analog copies should not be overlooked as well.

5. The common sense of green and lean IT.
Green IT, perhaps, the most misused IT term of this year and the past! Nevertheless, the Deloitte study, in 2009, the aggregate volume of the world’s data centers is likely to continue to grow, albeit possibly at a slower pace than in previous years. The efficiency of data centers is, however, likely to vary considerably. The latest, purpose-built data-centers should attain a power-unit effectiveness (PUE) rating of 1.2 or better. A typical enterprise data-center is likely to achieve a PUE of 2.0 or worse. Energy consumption for IT should be linked to the overall approach to energy for a company. All departments can have a role to play in making technology more efficient, by applying some common sense.

6. Downsizing the digital attic.
The ever growing danger of digital storage is the fact that users continue to assume that storage space is infinite (just as we do with our possessions). Companies should assess whether their total cost of storage is growing faster than revenues, and if so, whether this is beneficial to them and enterprises should review all aspects of digital data use and management, advises Deloitte. An option could be off-site storage. However, companies would also need to monitor both costs and regulatory implications.

7. Generic becomes the 'IT' brand.
In 2009, we could well find companies and consumers actively seeking out unbranded or relatively unknown technology brands on the basis that they are good enough and, more importantly, significantly cheaper! For the established brands, dropping prices may increase sales in the short-term, but might cheapen a brand’s image in the long term. How good would these alternative suppliers be? Deloitte feels that using alternative suppliers is likely to require users to become familiar with a new interface, perhaps causing a drag on productivity. Enterprises should look at approaches of minimizing this disruption, for example through the use of digital skins that mimic interfaces and appearances that users are more familiar with.

8. The digital ambulance chaser gets supercharged.
According to Deloitte, digital litigation may prove recession proof, or even counter-cyclical, in 2009. All companies involved with digital products and services should be wary of unwittingly being caught out by the legislation related to digital infractions -- whether committed against a consumer, an employee, an acquisition, a partner or another business. Even technology companies should constantly monitor how consumers actually use their digital products and services and whether this may create legal issues, advises Deloitte.

9. Social networks in the enterprise: Facebook for the Fortune 500.
Again, on social networks and the enterprise. According to Deloitte, it seems as though 2009 could be the breakout year for social networks in the enterprise. Internal and external spending on social networking solutions from IT providers and carriers may approach $500 million. Social networks are likely to be considered an inexpensive solution in what is likely to be a financially constrained IT spending environment. Perhaps, telcos and IT solutions providers also need to invest in ESN and develop the expertise and credibility to deploy these solutions if or when they become more broadly adopted, and start becoming a more significant source of revenues.

10. Sinners become saints.
This is an interesting observation, where Deloitte looks at genetically modified (GM) foods. The need to feed people, coupled with the need to conserve water, is likely to prompt a re-evaluation of GM foods. Nevertheless, it advises that governments should take a lead on investigating, understanding and communicating the various solutions available for addressing the world’s key sustainability challenges. "In 2009 it may even be considered virtuous to create dishes comprising GM ingredients, packaged in plastic, in kitchens powered by nuclear fuel," adds Deloitte.