Consolidation in mobile has brought with it a level of uncertainty, and dealers are under increasing pressure to find new ways to boost margins.
For many, this is achieved by offering services alongside mobile. From cloud to utilities, unified comms dealers are seeking new growth areas as traditional mobile revenues such as voice and data take a hit.Annodata has made significant strides to diversify from its managed print business.
This a decision that CEO Rod Tonna-Barthet believes was critical to survive in the changing UK market. ‘Clients want to rationalise down the number of suppliers who now need to provide a much wider range of services,’ he tells Mobile. ‘If, as a supplier you don’t do that, you have to either be extraordinarily good or extra cheap – and even if you are that good the margins are still thin.’
Dealing with diversification
For Annodata head of communications Stuart McAlpine, diversifying outside traditional mobile is a no-brainer. ‘Customers are becoming more and more aware of diversification,’ he says. ‘That’s where we see growth. Because of this we are broadening the services we provide; moving away from our print background and rapidly developing a cloud-hosted managed print solution and evolving into hosted content services so we’re making sure we have the right skill sets.’
For Excalibur, the decision to invest in a broad range of add-on services has been a profitable decision for the business. The brand has focused on securing a number partnerships with breweries andfootball clubs. MD James Phipps tells Mobile that ‘most of our revenue growth comes from our non-mobile services.‘IT and fixed make up the bulk,’ he continues.
‘Traditionally, we had a history in mobile but now customers are seeing us as much more unified comms, and the mobile part of the conversation is now the smallest part. Mobile is quite boring – that whole billing, savings, device piece is a bit done to death.’
A number of dealers are setting their sights on utilities as a way to source additional revenues. For Base Telecom, electricity and gas is a way to retain its mobile customer base. MD Sharon Morgan says it has become increasingly difficult to obtain new customers, so instead the dealer is finding new ways to form new relationships with existing users.
She says: ‘Energy is a big area of growth. We’ve got an existing mobile base and it’s growing, but the growth is coming more so from our other services. If I’m honest, the fact that we can offer other products helps us to retain our mobile customers. Mobile is always growing but it’s not as much as it used to be – it does become more difficult to get new customers.
Her comments are echoed by Welcomm Communications financial director Chris Ruddle, who sees utilities as an opportunity to get closer to users. He explains that the broader range of services a dealer holds with its customers, the lower churn the business is likely to have.
He says: ‘We saw an opportunity to save customers money, and moving into utilities strengthens our relationship with customers. We focus on gas and electric and we get bills from customers, so we can see where they are in their contract and what savings they can make. It’s an additional source of revenue that some of our peers in the industry are starting to grow into.
'Core ARPU will always be driven by business wanting to see savings, so revenues have got to be made up from somewhere else and it can come from add-ons.’
Choosing the cloud
One major service now emerging as fundamental to a dealer’s service portfolio is cloud. What started out as online storage has now evolved into a fully managed proposition and a profitable revenue stream. According to Azzurri Communications, businesses no longer want on-premise servers as remote working grows in popularity.CEO Chris Jagusz tells Mobile: ‘Businesses now want to use the cloud; very few want to hold equipment in their own premises. These days, most customers place a premium on quite old-fashioned values around IT such as robustness, security and reliability.
'We’re seeing customers who are moving core business processes into the cloud and we’re happy to sit down and talk them through resilience options – that’s one of the attractions of cloud services.’
For Connect Telecom, this shift is evidence of how much the industry has changed. ‘What you have now is companies that are entirely in the cloud and that was unheard of a few years ago,’ MD Matthew Brown says. ‘Now, the fact that they can deliver everything on the cloud is proof of how much change has taken place. The pace of cloud adoption is quickening up and it’s just the way things have moved on.
'People are looking at purchasing the services they need in a much different way; a lot of dealers now recognise that cloud is important. Some dealers have some great services and others are more reactive, and we’re trying to be more proactive in terms of the services we provide. We’ve started to roll out cloud services solutions; it’s a new offering and our customer base asked us for it.’
Setting the software bar
The value in software lies in its ability to provide constant monthly revenue streams for dealers. Welcomm Communications financial director Chris Ruddle says: ‘The market still remains hardware driven but software isn’t like the old days anymore where you would go and buy a software package, it’s now a monthly subscription and that model is becoming more prevalent and it’s a way to get a constant revenue stream.
'This is being pushed by the networks, to increase or replace revenues that are traditionally falling. Network revenues are going down too, so new areas need to be brought in, and this new technology is one of the areas that works well with mobile.’
Activ Technology MD Ian Gillespie explains that software is a lucrative market for dealers to cash in on as networks look to fill the gaps as traditional revenues drop. This includes offering services such as McAfee, Microsoft 365 and Box.‘There’s a big push for software and that makes customers sticky,’ he says. ‘The mobile market was getting to a point where it became a commodity and people were competing on price rather than service or solution – and that’s changed.
'We’re changing into a one-stop-shop, becoming more technical and more than telecoms. We’re offering IT, fixed, on premise cloud-based products, and now have a team of Microsoft-qualified engineers doing maintained agreements so we’re growing business with different revenue streams.
‘A mobile customer might argue that they can get their bill price cheaper elsewhere but if you’ve sold them the software solution and app then it is harder to leave and risk their workforce. We’re providing a solution to make their lives easier and get a better work-life balance. A good starting point is to understand their problems rather than just going in and doing a mobile sale.
‘The market needs to change; some of the dealers are more serious about what’s going on. Data revenues are going up and you need to have a bigger slice of the wallet of the customer. When it comes to convergence there’s a lot of talk and there’s a lot of companies doing it, but some are more advanced than others, and we would like to think we’re ahead of the game.’
The Internet of Things (IoT) offers the market a new way to make money from data, with retailers and networks investing in smart homes and connected products. In this market, dealers have the advantage. While consumers are still getting used to the idea of connecting their fridge to their smartphone, the b2b opportunities are growing rapidly.
As One Connectivity CEO Paul Stevenson tells Mobile, ‘the push into IoT will come from dealers’.He says: ‘The networks are more than happy to support us, so they’re happier to work with us to get into the connected space rather than work against and compete against us. You tend to find that networks can’t accommodate it because of the structure of their network.
‘However, we have the opportunity to deliver SIMs across networks and ones that can roam between networks. It opens a lot of opportunities to customers – it opens a door for our partners to speak to companies, whereas before they would have gone direct to the networks.’A number of dealers are not only adopting IoT but also machine-to-machine solutions. While this is more commonly associated with connected cars, vehicle tracking is fast becoming a value add-on service.
For Rainbow Comms, again the buck stops with the dealer market.Head of mobile Paul Lawther explains that when it comes to M2M and IoT there is a great deal of vagueness in the market and it’s up to unified comms dealer to simplify it. ‘M2M is very vague,’ he says. ‘There’s a marketability aspect around it and a lack of understanding with a lot of SME and mid-market organisations . It’s our job as a UC provider to get these organisations on the benefits of M2M. With regards to openness and transparency it’s the responsibility of all unified comms providers to equip and educate the customer as best as they can.’
For Vivio, the push into IoT and M2M is new but highly profitable. MD James Wright says the business has already sold more connected services in Q1 of 2016 than in the whole of 2015.‘There are some dealers who have stuck with every single product on mobile, but we have embraced the whole digital product and services piece, and it’s gathering momentum. We’ve sold more M2M and IoT in Q1 than in the whole of 2015, so we’re ramping up that side of the business.
‘It’s very important that this industry keeps on reinventing itself with a whole IoT and M2M piece, and that gives us a new opportunity to go into. We’re now pursuing this market and the pull is coming from our customer. The good thing is that it opens up conversations about areas we wouldn’t have traditionally moved into.'
Tapping into NFC
Apple Pay and Android Pay have rapidly boosted the adoption of mobile payments, now used on everything from the London Underground to Starbucks. This consumer uptake is something The One Point is looking to take advantage of through near far communications (NFC), technology often associated with mobile payments.
According to MD Martin Lauer, there is a huge opportunity to introduce the technology alongside mobile. He explains the tech is more likely to appeal to business users when it's something they already feel comfortable using in their personal lives.‘I don’t think people realise just how important NFC is and how mobile is becoming central to every transaction. We’re getting to grips with it and have invested heavily in understanding NFC and the security behind it.
'Just in the past four weeks we’ve gained 500 new business connections, all of which came from NFC. From a consumer perspective it is understood in terms of mobile payments.‘We provide mobile devices with NFC features built in,’ he says. ‘And then work with third-party software companies to take a record on the smartphone when the NFC device is blipped against a corresponding tag.
'This can be for a parcel delivery or to check on patients, and we’re providing real-time communications between the device and software. Dealers need to be able to add value and that’s the challenge. Adding value doesn’t have to be always price led, it could be giving advice, adding security or even finding new ways of getting that new bit of innovation into a certain business or market.’