The revolution in technology business thinking

The revolution in technology business thinking

The technology sector has always changed at a rapid pace, it’s a place where bedroom businesses can become multinationals almost overnight. Within that rapidly changing landscape there has been a set of large organisations that have maintained influential positions in the market. It used to be the aspiration of the start-up business to become the corporate giant, but now it’s the established brands that are looking to the new players for the way to run their businesses. The changes of philosophy are fundamental, and as they begin to take hold they look set to take mobile with it.           

As the mobile industry is barely 30 years old it seems a little ridiculous to discuss ‘traditional’ methods of business. Things have continued to develop in an unpredictable manner since the first mobile phone call was made on 1st January 1985. The mobile phone as pure communication tool was pretty revolutionary, but it was only when it was combined with another relatively young technological invention – the internet – that it really began to change the way people lived their lives.

As a result, the industry has been thrust into the arms of the most powerful internet companies. Although these firms influence almost every industry, it is in technology and communication that the new, predominantly Californian, forces rule. The power of these companies doesn’t come from stock or natural resource but from data, the information transmitted by millions every day through their computer systems. This flow of data between the everyday user and the Googles and the Facebooks has become the major revenue stream for mobile operators, but they also pose a threat to revenue models.

Google and Facebook are two examples of start-up technology businesses that have been transformed into world superpowers. So it is little wonder then that their methods are now being examined by the traditional technology elite.

IBM is one company that is taking inspiration from the working practices of the technology start-up. The organisation is pushing a concept known as ‘Design Thinking’ to its employees; it is aimed at changing the way its staff work so they take a creative, design-led approach, rather than following checklists methodically. All its staff are undergoing ‘design training’ and the company has rolled out a number of IBM Studios, which demonstrate this approach, around the world.

These environments bring staff from different departments together to work in a way that reflects the modern technology start-up. IBM brings clients to these spaces to demonstrate how new working practices can improve their businesses. At the launch of the London studio, Matt Candy, european leader, IBM Interactive Experience, said: ‘Through the IBM Studios we are transforming the client experience of our products and services and how the company engages with the world at large.’

Old categories

Another traditional technology power that is changing its approach is Microsoft. A brand that was famous for its ability to maximise profit from software has stated publicly that it will be offering its next software upgrade, Windows 10, for free.

At Mobile World Congress, Mobile spoke to Greg Sullivan, Microsoft’s Windows Phone director of public relations, who explained that the changes the organisation was making were reflective of the market: ‘Historically it’s been about the mobile device; we revel in mobility and the device aspect of that. But we’re thinking about the mobile experience and a shift to a more holistic perspective. We’re asking what the computer platform is; from wearables through phablets, tablets to televisions, games consoles and so on. The end user is concreting on the experience they are having and that’s what needs to be mobile. The device is part of it, but it’s not the main thing.’

The brand is looking to create the platform that is used by a huge number of users and generating revenue in different ways, Sullivan continues: ‘It’s a significant strategic move – there are 1.5 billion Windows users, that is a fact. We will try to make Windows 10 available to as many users as possible and for a limited time for free. Part of the big deal that has changed with Windows 10 is that is not a disconnected fragment. It’s one platform and one developer model that allows the developer to target the wide range of users. People don’t think about the devices in isolation, they think about what they can do with them, that’s what we’re working on with Windows 10.

‘If you look at how business models have evolved, the licensing model isn’t the only way to make money. There are other ways to generate revenue, and in all honesty the percentage of our business reliant on software upgrades isn’t huge. It’s important to bring a high number of people to the platform. We’ve talked about Windows as a service – that’s how we are thinking of Windows 10.’

This is a major shift in both attitude and perception – in the past, software and hardware were treated like a product. However, in both areas the idea of the expensive upgrade is becoming more outdated. Customers now expect a product that is constantly evolving, becoming more secure, faster and bug-free. Traditional technology firms such as Microsoft understand that they need to react to this or risk being left behind.

The other big change is interoperability, it’s no longer acceptable for walls to be put up for consumers and developers in consuming or making content. Gone are the days when a Microsoft Word document lacked compatibility with a Mac, or an application could go big on one form of operating system. Numbers are even more important and that’s the critical part of Microsoft’s plan: converting the 1.5bn users into a thriving, active operating system user community.  

 

The new world order

Mobile World Congress was also the venue for an interesting meeting between the communications old guard and the new powers, as Facebook chief Mark Zuckerberg (pictured) shared a platform with a number of network operators to discuss modern revenue models. The somewhat awkward debate demonstrated the difference that exists between the internet communication companies and the traditional elite.

There were two words consistently repeated by Zuckerberg when he was explaining the mobile operator’s role in the modern communications environment; ‘infrastructure’ and ‘data’. ‘Infrastructure’ related to what the mobile operators could do for them, while data was what the social network could offer the networks.

Facebook’s decision to purchase free messaging service WhatsApp is just another demonstration of how the new internet companies are moving into the operator environment. In buying WhatsApp, the social network acquired the phone numbers of 400 million users, taking control of a service that eats into SMS revenue. The interfaces people use to speak to each other are shifting from the mobile operator platforms to the internet communication services.

This is where you can understand Zuckerberg’s attitude towards ‘data’ and ‘infrastructure’ with greater clarity. The network’s infrastructure is still crucial as the method of communication, but more frequently it’s not their SMS or voice channels that are being used but the data channel as the place where phone usage predominantly occurs. This changes the way in which the operator and the customer interrelate, reducing the number of interactions and positioning the brand as a utility provider.

No company likes to feel as if it is handing over the regular customer interactions to another brand, and in the fiercely competitive operator market it is unlikely that the networks will be pleased with the thought of becoming a ‘provider’ brand. The consolidation and movement towards quad play in the operator market does little to arrest this, with fewer providers providing more services.

Facebook isn’t the only company that is looking to take control of the daily communications of the consumer – Google has been aggressively moving into the mobile space. The latest move from the company was to announce that it would be launching an MVNO at Mobile World Congress.

It seems inevitable that eventually the profile will replace the phone number, and there is a battle ensuing between the different technology brands about who will act as the dominant user interface. It’s not just internet companies such as Google and Facebook that are competing to provide this service, but also manufacturers such as Apple and Samsung. Apple has been the most successful hardware brand in encouraging the customer’s profile, with its video caller service FaceTime probably the most significant threat to the traditional communication providers. The Californian brand’s decision to push its connected home and payment services demonstrates its desire to really take control of the consumer profile.

How the mobile industry responds to these strategic shifts from the world’s most powerful technology companies will be fascinating to observe. There’s a number of different theories about how this market will change, but the movement from the big traditional technology firms shows what a critical point we are at right now.

 

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