Getting to grips with Telco API business and Developer Community

Presentation1Since 2008, mobile software and applications have moved from the sphere of cryptic engineering lingo to vital part of the essential marketing playbook for mobile industry vendors. In stock market terms, developer mindshare is one of the hottest “commodities” in the mobile business, one whose “stock price” has ballooned in the last few years. Platform vendors, handset OEMs, network operators, hardware vendors, and infrastructure providers all want to contribute to mobile apps innovation. All the Telco value chain players are now vying to win software developer mindshare, in order to add value on top of their devices and networks. Mobile application development and integration are at the forefront of the modern SOA story.

Key mobile trends in 2012 included the emergence of app stores, the HTML5-native debate, mobile back ends, RESTful services and open APIs. Widespread adoption of mobile applications is at the root of these changes in development, and it shows no signs of decline with the consumerization of IT. In general, mobile web development within an HTML5 browser or web runtime is promising when it comes to market penetration, ease-of-use and cross platform support. Industry analyst Gartner Inc. predicts that more than 73 billion mobile applications will be downloaded in 2013, and that that number will nearly quadruple to 287.9 billion by 2016. Cloud mobile back-end services stand to become a key component of the application development ecosystem. By 2015, 80% of all mobile applications developed will be hybrid or mobile-Web-oriented .But how is the landscape of mobile developer mindshare looking today?

The recent report “ Mobile Developer Economics & “ contains new insights into the motivations of mobile developers . For instance , developers still consider fun and coding speed as very important even if developer mindshare is turning towards the appeal of monetization and reaching a large audience. The technical reasons for selecting a platform seem to be gradually becoming a less important selection criterion. For today’s mobile developer, market penetration and revenue potential are the two most important reasons for selecting a platform. The most successful developers are those that extend apps to new markets, either to new geographies or different verticals. To some extent, these strategies rely on copying the recipe of an already established and successful business: these are apps that have been tried and proven in at least one market and are generally less risky options for developers.

Application developers are also increasing their demand for app store platforms, which provide a centralized place to buy, sell and manage their apps. More applications are designed with open APIs to enable application-to-application integration. As a result, the relationship between business and developer is shifting to give external developers more sway. However, the study shows several pain-points with mobile web technologies compared to native applications, namely issues with development environments, device API support and UI creation.

The goal of Telco API programs is to allow developers to take Telco services into new niches and use cases, and scale from hundreds to thousands of partners. Some of these new use cases will result in supplemental Telco revenue streams, some will facilitate customer acquisition, while others will subsidise ecosystem creation costs. APIs need the flexibility to allow developers to experiment with new use cases, and thus discover and satisfy unmet user needs. If Telcos allow and encourage developers to create locally-relevant differentiation on behalf of their subscribers, their fragmentation disadvantage could transform into the advantage of local presence.

Since there is no such thing as an “average developer”, Telco API business models need to be designed to target one or more specific developer segments. To reduce friction and help developers discover new user needs and opportunities, Telco API business models need to subsidize experimentation and be designed for the ability to fail and retry cheaply. More specifically, if developers are charged based on Telco API usage, the app’s business model must have a stable, usage-based income stream. By allowing free, small-scale usage of the API, Telcos permit developers to experiment with multiple business models, including free, until a sustainable, workable business model can be found.

Telco APIs will always be at a disadvantage versus players with global reach, if positioned in direct competition to native platforms or Internet companies. To be successful in API initiatives, Telcos need to consider developers as value-added resellers, and therefore design their API propositions for win-win outcomes. In other words, the business models of Telco APIs need to be aligned with the business models of developers. It is important to note that the same ecosystem economics that work for Telco APIs and app developers can be applied to other types of partners and service providers, such as Mobile Virtual Network Operators (MVNO) or machine to-machine (M2M) initiatives. MVNOs can build ecosystems around the distribution business layer. App developers can build ecosystems around the service layer. And M2M companies, meanwhile, can build ecosystems around the connectivity business.

But be warned : The Mobile App economy displays one of the key tenets of The Disruptive Technologies Model : which postulates that…. the pace of technological progress generated by established players inevitably outstrips customers’ ability to absorb it, creating opportunity for up-starts to displace. This new theory provides a useful gauge for measuring not only where competition will arise but also where, in an industry’s shifting value chain, the money will be made in the future. In the 4G world the dominant firm-level MNO value chain is ripe for unbundling in response to acclerated product/services evolution. Future success within the industry will go only to those Telco players with strategic foresight to “skate to where the money will be” : solo or via partnerships !!!

Sadiq Malik ( Telco Strategist )

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