It costs an average of £50 to send a unit to a repair centre

In times of economic constraint, it is vital for businesses to find ways of reducing their costs and effectively managing their resources, whilst simultaneously ensuring that customers are satisfied with the service they are receiving. This can often be difficult, with many overlapping factors to be considered. For mobile operators, achieving such a fine balance can be crucial to their success in confronting increasingly aggressive competition.

Faced with a multitude of complicated issues, whether it be dealing with the an ever-widening range of available handsets, or trying to find the best way of promoting the sale of new apps, mobile operators are searching for innovative solutions to help them maintain a respectable bottom line.

One method that operators could consider to reduce costs and optimize resources in the high street store, would be by adopting sophisticated point-of-sale (POS) solutions that can resolve customer issues immediately without the need to incur high expenses by sending the phone to a repair shop for what often turns out to be a minor fault.

It costs an average of £50 to send a unit to a repair centre. Such costs can be dramatically reduced by the fast identification and resolution of faults at the POS. The recently launched Vodafone RED Box – a house-branded version of the Cellebrite Touch – and Vodafone’s in-store tech teams are perfect examples of how major operators are recognising the benefits of innovative POS solutions.

Fixing faults at POS

A mobile phone fault provides a prime illustration of an operating cost that could be significantly reduced with the use of this POS tool. With the average cost per device referral running at around £50.00,  Android device returns alone cost operators $2B per year, according to WDS.

When a suspected faulty phone is brought to the retail store, counter staff and engineers commence a time- and resource-consuming work cycle: providing the customer with a replacement phone; sending the suspected faulty unit to the repair centre; having technicians identify the fault, fix the device, send it back to the store, while the replacement phone is retrieved and recycled back into the store’s inventory.

But an operator can automatically analyse a mobile device at the POS, diagnose hardware and software problems and lead service agents through a simple and effective fault isolation and resolution process for common problems. Most significantly, customers with faulty phones can have them diagnosed and immediately repaired in-store within minutes without any hassle or the need to use temporary “swap” phones for a period of time. This results in increased customer satisfaction and reduced operating costs for the retailer.

Furthermore, the diagnostic process enables sales agents to explain basic smartphone usage to owners who may not yet be totally familiar with all the features and applications contained in today’s advanced devices and are thereby using them incorrectly. For example, if the battery is running low faster than normal it may be because users have too many applications running at the same time or they are using their video function too often or for too long rather than an actual operating problem.

This new diagnostic tool meets a growing demand on an issue that regularly concerns mobile operators:  reducing costs, but maintaining – and even enhancing – the customer experience with the attendant results of better customer retention and higher satisfaction.

Value Added Services: improving the customer experience

The ability to offer POS solutions does not need to be constrained to the fixing of mobile device problems; operators can also make it possible for customers to access value added services in their local high street store.

Phone transfer, personal data backup and restore, apps and content delivery all add up to a better in-store experience. Users can now be sure of having their personal content – contacts, SMS messages, video, photos and more – immediately transferred and ready to use on their new device.

Sales agents can offer a wide range of new application and content packages, ideally suited to their profiles, phone type and preferences, for instant delivery via an application loader on-line platform for managing and distributing mobile apps to the POS. Customers can be offered additional mobile apps and new content – perfectly matched to their phone model – without having to search on their own through the hundreds of thousands of applications available in the marketplace. Apps and content are installed before they leave the store thus dramatically improving the adoption and penetration of promoted applications and as a result, increasing revenues.

Significant benefits for retailers from these added value-services include being able to mount more in-store promotions, increased revenues from new device sales, upgrades and other advanced services, the opportunity to sell backup media such as CDs, USB drives etc. and reduced operating costs. Furthermore, they will offer a better POS experience, higher customer retention and retain a competitive edge in the market.

As a complementary service, retailers are now being offered the option of installing a Self-Service Point in-store, at which customers can easily perform most of the advanced services themselves – diagnostics, transfer and backup, uploading new apps and content – without any help from a sales assistant. Reduced waiting times will further increase customer satisfaction and improve the in-store experience.

Working for a better customer experience

All this, with significantly reduced waiting times, no more hassles or frustrations in changing phones and transferring content; quick and easy delivery of new apps and content and of course, being able to obtain efficient after-sales service with diagnostics giving instant feedback and solutions to fixing common faults, will dramatically change the mobile retail in-store experience. Retailers will gain a wide range of benefits which will empower their in-store point-of-sales to achieve new heights.

Yossi Carmil is Co-CEO of Cellebrite

The mobile workforce is fast becoming a reality

Thanks to the explosion in smartphones and tablets, the mobile workforce is fast becoming a reality; according to IDC, over half of Europe’s workforce will be working remotely by 2013. The opportunities for better communication and more collaboration are vast and yet, even with the latest technology, without a clear unified communications strategy, organisations can find that more points of contact do not automatically lead to increased levels of productivity.

Whilst unified communications is not new, recent growth and interest has been fuelled by significant changes in the way that we communicate. Social media is one such change and is a natural progression partner for unified communications.

For global businesses, knowing where to start is in itself complicated. Understanding which platforms and applications exist within their communications estate and across different sites can be difficult. Even for enterprises that do have an awareness of their existing estate, embarking on a process of alignment may still be a struggle: multiple contracts, different suppliers and end dates can be enough to stall any potential progress. The key is recognising that, with the right solution, alignment can be phased and communications consolidated at a pace that suits the particular needs of an organisation.

Culture and human behaviour also have a significant impact: over the years, we have all become used to a certain way of working. However, those traditional working models are now being called into question through the growth of flexible working, social media as collaboration points and the consumerisation of IT. By understanding the benefits that unified communications delivers to the end user as well as an organisation as a whole, the approach can make working life easier, faster and more productive.

Getting started
An audit of an enterprise’s current communication estate often represents the most pragmatic and effective starting point for organisations to better understand and take control of their communications estate and expenditure. In fact, just by managing communications efficiently there are great cost savings to be had. One major Vodafone client saved around 10-15 per cent simply by conducting a simple fixed and mobile inventory audit.

A new way to work
As workforces become increasingly mobile, the idea of ‘one worker, one desk’ is disappearing fast. To ensure effective work flows managers need to be fully trained and comfortable with the processes as then teams will quickly embrace the new working model.

As a multinational organisation, Vodafone itself has evolved and moved towards a more flexible working culture. For example, when implementing video conferencing Vodafone overcame many challenges by taking simple yet effective measures. It turned offices into meeting rooms to ensure everyone has access to a video conference system, travel budgets have been reduced to ‘nudge’ and encourage usage of each system and meetings ‘hijacked’ to train management on the system.

Organisations are also under increasing pressure from staff wanting to use their own personal devices in the work place, raising security and other corporate concerns. However, the reality is that a hosted unified communications solution can actually enhance security providing the cloud platform is built and designed to recover specific data depending on customers’ requirements. For instance, it allows organisations the ability to block, recover and wipe data from stolen or lost devices, which is particularly helpful given the blurring boundaries between personal and corporate devices.

Getting social
Seven out of ten firms recently reported in a Vodafone survey that their customers expect a less than two hour response to any social media enquiry. Adopting social media as a part of a unified communications strategy is now essential, even for customer communications. By integrating traditional communications with social media, employees have a range of ways in which to instantly contact the customer, no matter how the original query arrived.

Using internal social networking tools such as Chatter, employees can share real-time resources, exchange knowledge and collaborate on projects more easily, all via a central and secure network. Working on social networking platforms across multinational organisations, it enables users to have instant access to the latest information and collaborate on live documents, which ensures key messages are consistent and prevents any version control issues. As a result, teams work together more cohesively, become more productive and build up stronger inter-team relationships.

Time to consolidate
Most enterprises maintain several contracts for communications, including fixed line, mobile voice service, mobile data and broadband, all with separate multiple service level agreements and support services. If each of these contracts starts and ends at different times, the very notion of consolidation can seem too arduous unless clear savings can be demonstrated.

A unified strategy not only resolves these problems but guarantees a level of service. Working with an established provider it becomes possible to phase in changes and consolidate under one supplier, via a hosted opex-based solution – important for businesses working on tight budgets.

Business-wide benefits
Social media is becoming an enabler, it has the ability to speed up the adoption of unified communications as customers and workers find it a familiar platform from which to work. It has the ability to improve collaboration and, in turn, productivity across any organisation if integrated into an efficient strategy.

To make the implementation of unified communications as efficient and effective as possible large telecom providers such as Vodafone are consolidating contracts and billing making the whole process transparent – one contract, one provider. Working with an established telecom provider that offers global end-to-end communications management, practical solutions to real-world communications can be provided – whatever the situation and pace of consolidation.

Nick Webb is head of solutions marketing at Vodafone Global Enterprise

The availability of numbers as a resource is coming under threat

Mobile phone numbers are key assets that have been taken for granted and undervalued by the mobile industry for years.  They are consumed in their thousands every day.  They are acquired, upgraded, re-assigned and switched from one operator to the next.  They are used to lure new subscribers in with tempting deals and thrown away without a second thought.

The growth of mobile, attrition rates and pre-paid SIMs has contributed to the highest consumption of numbers the industry has ever seen.  As a result, the availability of numbers as a resource is coming under threat.

For many operators across EMEA, numbers are actually running out.  Numbers are now heavily regulated and operators must prove a real need before they are given new ones.  If numbers are lost or unaccounted for, then it’s the operators’ responsibility to find them, clean them and reassign them to a new customer.  Therefore, it can be a daunting task for operators to manage the lifecycle of each number without losing track.

The customer lifecycle

Subscribers expect their phone to work with no exceptions.  So from a number management perspective, operators accurately need to see, track and manage what a customer does with their number throughout their lifecycle in real time.

To retain and acquire new customers, operators must have the capabilities in place to cope with the influx of new number requirements.   However, today’s customer journey is posing core operational and logistical issues that are consuming valuable resources.

Simple daily operations such as ensuring the subscriber’s number is assigned to the right device at the right time can pose significant challenges.  It can be difficult to determine the status of the numbers an operator owns at any point in time.  Many operators need to manually search their records to find numbers, looking through disparate billing systems and information silos to find a number that urgently need to be reported or reassigned.  Operators are forced to waste critical resources and it is likely the situation will only get worse over time.

Looking beyond Europe

Operators in the Middle East don’t provide subsidized handsets.  These operators compete through pre-paid SIM card deals instead.  As a result, subscribers jump from one operator to the next, consuming countless pre-paid SIM cards and phone numbers.  When they run out of minutes on their pre-paid SIM card, the subscriber is likely to buy a new one with the operator offering the best deal.

Operators in Africa, on the other hand, report that the huge growth of mobile has come with subscribers owning multiple SIM cards at the same time.  Many subscribers purchase one SIM card for international calls and one for local calls.  In some cases, the subscriber will purchase a SIM card for each circle of contacts.  All these SIM cards come with their own mobile number.  This becomes a number management nightmare determining the numbers that are in use and the numbers that can be repurposed.

When we look at how many numbers are being consumed globally every day, we begin to realize that the surge in the growth of mobile creates a contradiction that is bittersweet.  On one hand, operators can easily acquire new subscribers.  On the other hand, they have the headache of managing the thousands of numbers consumed by subscribers every day.

The customer experience

Unfortunately, subscribers are often surprised when their phones don’t work. Here are some of the examples of where the customer experience can fail:

• The pre-paid SIM card, which they’ve kept for emergencies with 20 Euros credit on it, doesn’t work and says it’s been deactivated.
• They get home from buying their new smart phone and their SIM says it’s deactivated because the operator has already assigned it to someone else.
• They upgrade their service using a new dynamic SIM and no one can contact them, as their number hasn’t been ported to their new SIM card.

In order to resolve these issues, the mobile number, SIM card and any other service resources must all be located within seconds.  Without effective number management, operators increase the risk of numerous points of failure along the customer journey. With the average customer acquisition cost in Europe at around 100 Euros, failure just isn’t an option.

Unlocking revenues

New revenues also can be realized quickly by reselling vanity numbers – often called “Golden Numbers”.  In many cases, a vanity number will be deactivated but left in the system until a customer asks for it.  Instead, operators can proactively allocate them as a new revenue opportunity, customer acquisition or relationship tool.  These numbers are in limited supply and it is crucial to release them quickly once they are not in use so they can be resold.  Vanity numbers that are never reclaimed are lost revenue.

Getting the basics right for growth

To be able to scale, acquire and retain customers, and launch new innovative services, operators need to ensure the basics are properly in place first.  This means whether a subscriber decides to change a SIM card, service or even their operator, they must be seamlessly supported through efficient number management. Operators need to be able to provide intelligence on the status of any one number at any one time through reporting and analytics.  Integration with third parties is crucial to be able to grow, and systems need to be automated and easily integrated into billing systems to accurately forecast customer demand.

With effective number management, operators will have strong foundations in place to provide new services to customers and create a cutting edge by providing the best possible customer experience.

Steve Summer is VP Sales EMEA, Neustar Inc.

Paul Bultema, executive director, UK and Ireland strategy lead for the communications, media and technology operating group of Accenture

Paul Bultema, executive director, UK and Ireland strategy lead for the communications, media and technology operating group of Accenture, talks about consolidation, differentiation and the rise of over the top services.The opportunities for differentiation in this industry are cyclical. At one time carriers competed on network coverage or price. Today, at the dawn of the 4G era, coverage and price remain important to customers—although in many cases there is nowhere for prices to go—but the deployment of new technology is adding into the mix the expectation of improved performance.

As a result, there is a significant opportunity for operators to differentiate on the customer experience, with a focus on the products and services on offer and the brands they represent. Paul Bultema, executive director, UK and Ireland and strategy lead for the communications, media and technology operating group of Accenture, believes that wireless operators are having a tougher time than the fixed line players, which is forcing a certain shift in the network operator business model.

“On the wireline side there is more of a sustainable and consistent enterprise space where you have not seen the same amount of churn,” Bultema says. “But on the mobile side you have the decline of voice and data revenues combined with the impact of growth in data over the last few years as well as the capex investment needed for those network upgrades. It puts carriers in a precarious position and they’ve historically been very vertical in everything like retail and distribution so they’ve taken a hit on many levels.”

Sticking to comparisons with the wireline industry, Bultema notes that operators have “horrific” data quality linking the physical layers of the network to the services used by customers. And while wireless operators also have this issue, they have the additional challenge of much more dynamic requirements. “It’s one thing trying to manage a POTS customer but another managing them in a 3G or 4G environment where you have to be so dynamic, while at the same time deploying your 4G network, and catering to tablets and devices that are very bursty and have never been seen before in the network,” he says.

This kind of pressure is driving operators to question themselves as to what’s really core and non-core to their business. Bultema acknowledges that operators are increasingly coming to accept that networks are not core to their business—a phenomenon which is driving the growth in outsourcing and network sharing.

“We’re going to see some major changes in the next two to three years in the mobile space, with increased M&A and consolidation impact in terms of retail and distribution and substantial consolidation on transmission,” he says. “Where regulators have historically encouraged competition they now have to change tack a bit and tolerate network consolidation. It’s more of a move towards a utility rather than each operator owning their own network.”

Bultema cites Australia as a prime example, where the National Broadband Network is being pitched as a core national utility—designed to make the country more competitive and aimed at trying to lower the cost of provision per subscriber. He also cites national investment schemes taking place in Brazil and many other countries, where it is unsustainable for every operator to have their own network.

By the same token, LTE is having a dramatic impact on operator business models—with the threat of the dumb pipe—the operator’s greatest fear—looming ever large. But according to Bultema, the dumb pipe strategy is a good thing for the industry. “Consider LightSquared in the US, which is trying to be the dumbest pipe possible. It has no product development or R&D but what it has is open APIs into their OSS and BSS and network so customers can come and plug in to their network and develop products and services on behalf of their own customers where they have greater customer intimacy. I think this model speeds innovation and moves innovation closer to the customers in niche segments,” he says.

In the wake of LightSquared’s creation, the industry has seen a proliferation of the LTE wholesale model adopted by Yota in Russia, as well as operators in Poland and Mexico. Accenture believes this will drive intense competition at the retail level and that mobile operators will be put under further pressure as a result.

“Technology is one of the drivers of this business model–Ethernet and backhaul is a pre requisite–and the upgrades around 4G are more difficult than operators expect. They may know network deployment but this is not just another network deployment,” Bultema says. “It has end-to-end ramifications across the company, starting in sales and marketing, management, infrastructure and engineering, construction, service delivery, and IT, before you even have your node ready,” he says. “Doing that in 3G with a well defined process is one thing but trying to optimise 3G much more dynamically while trying to roll out 4G—and doing that in an efficient way—is another thing entirely, and I’ve not seen one operator that has an end-to-end management workflow system to align those plans on the network. That is a significant issue and means most operators are very much behind schedule in terms of 4G upgrades.”

According to Bultema, telecoms as an industry suffers from tremendous inefficiencies. He picks out airlines as an evolutionary target. There are few players headquartered in any given country and many don’t even own their planes, preferring instead to lease them. Airlines don’t do their own maintenance or their catering, they outsource both. But what they do manage directly—and what they’re really good at, Bultema says—is pricing models, operation heuristics and supply chain management as well as supply and demand forecasting.

“This is what’s driving network consolidation and the rise of LTE wholesalers. Take Yota for example—it’s a much more capital efficient and faster way of deploying LTE,” he says.

“Telecoms has not made that type of change–most operators still own everything on an end to end basis and, outside of the US, the way operators communicate with each other in terms of third party network access is still through phone, fax and email, there’s no e-bonding infrastructure.

“So telecoms has been ripe for an upgrade for decades but nothing had emerged as a critical issue that will drive this—until now. My belief is that LTE, not as a technology, but because of the fundamental dynamics needed to support network upgrades and the innovation required to survive at the IP layer, is going to drive that kind of structural change in the industry.”

Although some operators are considering the dumb pipe model, they also need to consider content and service partnerships, and this is where the over the top (OTT) players have been much more innovative than operators. They are closer to and more intimate with their customers, allowing them to extract a significant amount of profitability from the changes of platforms and ecosystems as they develop rapidly within the industry.

Coming back to the key question of whether or not each service provider in any given market needs to have their own network, Bultema argues that this is something that is becoming increasingly unsustainable. Going forward the requirements for LTE, fibre and network upgrades will drive very deep network sharing. Operators will have to morph themselves into much leaner organisations in order to compete against OTT players and provide that responsiveness and innovation.

And analytics will play a key role in tailoring these services. The ability to dynamically link customers to their products and services and then back to the financials and network quality, so operators can proactively respond to QoS issues and improve the user experience, will be a core competitive advantage and differentiator going forward.

Customer touch points should be extended throughout the customer lifecycle—not just at the end of a customer’s lifespan and not just on the sell side but also on the customer experience side, he says. “Such as text messages when you land in a foreign country giving you information about roaming prices and a notification if you’re about to hit your data allowance–these things can be helpful or beneficial and can improve your perception of the operators,” Bultema says. Again telcos can learn from airlines with their own loyalty programs and improve their loyalty schemes in a way that attracts customers, he argues.

“The OTT players, Facebook, Google and Apple have a fairly loyal fan base and there are lessons to be learned from them by operators in terms of keeping products very simple, and the interface very clean and straightforward, creating a suite of services around what their core strengths are,” he says. “There is rapid innovation but also rapid abandonment if something does not work and all these product management elements are still slow in the operator community.”

Learn more about Accenture Communications Solutions:

www.accenture.com/communications-solutions

David Ffoulkes-Jones, CEO of CEM solutions provider WDS

David Ffoulkes-Jones, CEO of CEM solutions provider WDS, shares his views on how operators can develop customer experience management into a true competitive differentiator.

There is more than a dash of understatement in David Ffoulkes-Jones’ observation that, “being the CEO of a network operator right now would be a challenge.” In a verbal sketch of the industry, Ffoulkes-Jones, chief executive of customer experience management specialist WDS, depicts mobile operators battling on a number of fronts—internal as well as external—and struggling to maintain their lines.

“They’ve got their shareholders, which are probably the larger pension funds, in a depressed market, saying they want cash so they can afford to make their pension payments. They’ve got their engineers complaining about capacity issues caused by the marketing department subsidising smartphones onto the network and they’ve got the post-sales support teams reporting that those smartphones cost an arm and a leg to support,” he says. “And on top of all these negatives, they’re already deep into the price game, commoditising the product as it stands.”

In this scenario, he says, it becomes increasingly difficult for the operator to convince its shareholders that a multi-billion dollar investment in new network technology like LTE makes financial sense. Of course, once one operator makes this move in any given market, the rest have little choice but to follow. But this relegates the network to the level of a hygiene factor for consumers comparing operators with one another. Meanwhile, the world of content and applications, which operators had expected to enable a new wave of differentiation, has become dominated by over the top providers.

Against this backdrop a new competitive arena has emerged, he says, and it is customer experience management.

“As an operator, while I have to spend money on the network because without it I won’t have customers, I have to accept that the operator down the road is going to do the same thing. So it is not a point of differentiation. I also have to tariff and market the products in the right way, manage them in the right way and get my post-sales services right. I need to create stickiness—and the customer experience, knowing the customer, delivering a great service, managing them in the way that’s right for them—will create that stickiness.”

Today’s mobile operators have a degree of customer interaction that would have been unthinkable just ten years ago. Historically—especially in the days when 12-month contracts were routine—an operator might feasibly have interacted with a customer only at the point of uptake and the point of departure or retention. And if there was contact between these points, it went largely un-analysed.

Today, due in part to the increasing depth and complexity of the mobile experience, many customers interact with their operators’ support teams far more frequently. Invariably, in the wake of each of these interactions, an automated CRM system pings the user a text message asking them to rate the experience. Websites do the same thing, while technical reports from the network feed in information on device connection rates and dropped calls. The net result is a far greater volume of data on the customer experience—which, on the face of it, should be a good thing for any operator looking to put CEM at the heart of their brand differentiation.

But, says Ffoulkes-Jones, information only has value if it is properly exploited—and even then that value can vary significantly. Furthermore, the increase in data volume could be just as easily be a burden as a bonus.

“The challenge is getting a clear message out of all of the noise generated by these multiple touch-points,” he says. “Even if I can get all of this data, and process it in a very clear and concise way, who do I give it to? And is that person set up to receive it? Network operators—and OEMs—traditionally run very siloed environments but I need to be able to deliver this information into an organisation that is capable of making decisions and acting on those decisions in an effective way. So there’s real change required, structurally and culturally, to create an industry that becomes far more customer experience focused than it is today. The customer experience needs to be managed horizontally, as a process.”

The type of feedback generated by automated survey tools in the immediate wake of a customer interaction needs to be treated with caution, Ffoulkes-Jones says, describing it as of “questionable value”. While he says that it is an absolute requirement for operators to survey their customers, he points out that text-based feedback, for example, provides only the snapshot of a moment.

“It’s not a measure of the customer experience, it’s a measure of how they feel right at that minute,” he says. “If they’ve had a tremendous transaction within the operator, they can feel really positive. But the next day they could get a dropped call and then feel terribly negative. So these data are important but they are not the only things that operators should be looking at.

“A truer test would be looking at the churn rate, the level it’s at and whether it’s trending in the right direction. But even that isn’t a completely safe basis for assumption because it could just be that the operator was the first to launch the iPhone. O2 has one of the lowest churn rates in the UK and I wonder if that’s because they’re a great network, or because they were the first to market with the iPhone,” he says.

Data derived from the network can also be improved upon, he says. Operators may well carry out compliance testing for devices that they want to offer to their customers but ticking the box doesn’t go far enough. “How many times do they test the device against the experience their customers have had of the father of that device previously? That would help operators start to understand, from a user’s perspective, whether that device is really appropriate for the network.”

The trouble with customer experience is that, while operators labour to meet KPIs on everything from dropped calls to complaint resolution, customers add an abstract, emotional layer to the mix that is far more difficult to manage. While this can’t be controlled, says the WDS CEO, it can be influenced. If an operator works to build brand equity with its customer, by consistently executing well on its customer interactions and by learning and improving, then they can be honest with their customers about their successes. If, on the other hand, the operator is promising to deliver something that cannot be delivered, a gap is created through which customer loyalty can seep away.

“That’s why we would say that customer experience isn’t about the user interface, or the fact that you’ve done network compliance testing, or your dropped call rates. It’s about all of these things and more. It has to be a continuous and relentless drive towards building better and better services for the customer—that’s how operators can build that loyalty,” he says.

Competition for loyalty is intensifying, though. Over the top players have increased the complexity and depth of the mobile experience but are also threatening the operator community’s control of the customer relationship. One by one, core territories that the operators sought to retain as their own—think services, content and billing—have been colonised by third party providers. But Ffoulkes-Jones argues that this creates an opportunity for mobile operators, as well as a threat, because the over the top players are not making the customer experience a core focus.

“They’re saying they’ll have a good deal of the revenue but they don’t fancy any of the costs, which is a great business model if you can work it,” he says. “But if you look at Google, they have the OS and they’ll sell the apps but they’re not assuming responsibility for the experience of the whole solution. So the operators have the opportunity to step in and tell users that they should be loyal to them because they will manage the experience and make sure that it is reflective of their brand.”

But if operators do pursue this approach, they will not be alone. At the retail end at least, they are likely to soon have competition from independent players. “Some retailers could take a truly independent view of the customer and say that, of everything that is on offer, a particular product is most suitable,” he explains. “That solution could be a television, a laptop or a tablet, or it could be a network, a device or an application. That’s not how it is yet, but there are lots of other companies that could get into this space if it’s not taken up by the operators.”

Under fire from all sides as they are in Ffoulkes-Jones’ sketch of the industry, this is the last thing that operators will want to hear. And he suggests that they can only ensure their continued relevance by weighting the customer’s experience such that it occupies a complete 360-degree world view. “It’s not the only information you’ll need to make the right decisions, but it’s a significant chunk of it if you want to ensure that you are delivering an experience that’s reflective of your brand,” he says.

Mike Coward, VP Strategy & Innovation, Radisys

As more websites move to encrypt their content and user data, more questions are raised over the future of Deep Packet Inspection. But advances in heuristic classification mean that DPI systems will still be able to function in an encrypted world.

Every time that I participate in a speaking panel on Deep Packet Inspection (DPI), someone asks, “How do you cope with encryption?” This is a good question since we’re seeing broader deployment of secure web browsing on the Internet; in fact, Facebook publicly moved parts of their site to “https://” in 2011, and Google now defaults to “https://” for their users.

What does this mean for DPI and all the investment that operators have made in DPI technologies? Are all of the DPI-based traffic shaping systems in the market suddenly going to become useless? Will we need to come up with new techniques to manage traffic?

Fundamentally, encryption will not be the death knell for DPI, but it will force greater innovation as operators seek to manage increasing traffic volumes, and to deliver the customer experience their subscribers demand.

The Drivers for DPI

DPI is a technology that can be used for multiple purposes, but the most popular to date has been traffic shaping systems used to manage congestion, first on fixed networks, and more recently on mobile networks.

It’s a cliché to talk about the rate at which mobile data is growing, but this growth remains the dominant driver of mobile infrastructure development and deployment decisions. With the amount of mobile data almost doubling every year, even long-anticipated solutions like Long Term Evolution (LTE) only help—they are not the cure. LTE provides “only” a 3X improvement in spectral efficiency—enough to satisfy 18 months of the projected growth—but is years in the making and will take years more to fully deploy. Other pieces of the solution include small cells, Wi-Fi offload, and opening up new spectrum, but each of these is likely to provide only part of the solution.

Given this reality, it is inevitable that there will be congestion in the network—because operators can’t roll out new technologies and spectrum fast enough to meet the demand. Once this congestion hits, an operator has a limited set of options:

• Do nothing, and allow the users to fight it out for bandwidth. In this scenario, a single user downloading a large file can cause poor performance for everyone else in the same cell site.

• Perform simplistic traffic management and allocate each user a fixed share of the spectrum. This is better than nothing, but is not very efficient.

• Deploy a DPI-based traffic shaping platform and intelligently adjust the bandwidth to each user and to each subscriber individually. This allows individual applications to be prioritised against each other, and can improve the quality-of-experience (QoE) for every subscriber in the cell, including the heavy users.

These traffic shaping platforms have seen strong market adoption and are expected to be a $1.6bn market by 2015.

DPI-based Platforms: Different Implementations

Current DPI or Traffic Shaping platforms can be separated into two categories: those built around a general purpose packet processing platform, and those built with dedicated ASICs or FPGAs.

The ASIC/FPGA-based systems have an intuitive appeal: for a given fixed problem, they can be optimised to perform well on that problem and can offer appealing performance and price points. While they come with a long development cycle and a high development cost, these drawbacks are often overlooked in the zeal to have the densest or highest performing system. This approach is also more common when the DPI functionality is integrated into some other piece of equipment such as a router or a mobile network node like a GGSN or LTE gateway. These systems weren’t designed for DPI, so the functionality is shoe-horned into some limited power and space budget.

A different approach uses a general purpose packet processing platform, which uses a blade-based server that has been adapted for use as a packet processing platform by adding load balancing, special packet routing software, and multi-core processors. Here the developer uses the processor cores to execute the DPI and packet shaping algorithms—making this a software exercise, not a silicon development one. This approach has been popular in the standalone traffic shaping market, which is aiming to offer the highest performance possible and can leverage the pace of silicon change with new chips coming out every year.

Everything, Encrypted

Encryption has been discussed in the DPI community for years, but it was always seen as a theoretical problem with a couple of famous exceptions (e.g., Skype going to great lengths to conceal itself). 2011 was a turning point: the year started with Facebook announcing that many of their services would be offered over encrypted web sessions by default. Facebook’s decision was triggered by the release of a proof-of-concept hacking tool called Firesheep that allowed users to snoop Facebook traffic on open Wi-Fi networks and impersonate other users. This was followed throughout 2011 by other high profile services like Twitter and Google moving to encrypt their sessions as well.

It is fairly clear that this is a one-way evolution. Significant barriers to encryption have been the hardware cost and the time it takes to encrypt and decrypt traffic. But these are shrinking every year with Moore’s Law, as even desktop and mobile CPUs get dedicated instructions added to accelerate encryption. Furthermore, once a web service has added encryption, it’s hard to imagine a reason that they would later remove it, so we can expect to see a steady increase in the percentage of encrypted traffic as service after service adds encryption.

Adapting DPI Platforms to an Encrypted World

To come back to the original premise of the article: No, in the general case, DPI platforms cannot break the encryption and look inside the packets.

In order to think about how a DPI platform can function in an environment where most of the traffic is encrypted, it is helpful to think back to the main purposes of commercial DPI platforms today: to understand which users are consuming the available bandwidth and then making intelligent decisions about which traffic to prioritise. Although strict encryption prevents the DPI platform from looking into the packet, there are still plenty of clues for the DPI platform to look at: the source and destination of the traffic, the packet size, and the pattern of packets. For example, a stream of small packets every 20 milliseconds in both directions is almost always a VoIP call. Traffic to and from the Facebook servers is, by definition, Facebook traffic. It’s also possible to correlate separate flows: even if everything is encrypted, if the platform sees a request to a server at CNN, followed by a request to Akamai, it can reasonably assume that Akamai is serving CNN content and thus apply the appropriate rules. This is called “heuristic” or “inferred application” classification, and can reach similar levels of accuracy as the traditional DPI approach.

With this information, the DPI platform can make the same decisions that it would have if the packets were unencrypted: control the amount of bandwidth that each user is allocated, and within that bandwidth help the user prioritize interactive services like VoIP and video streaming while de-prioritising less sensitive services like big downloads or backup sessions.

This approach is more compute-intensive than traditional DPI—it takes more CPU cycles to track flows, look at packet sizes and packet arrival times, and then correlate different flows than to just look inside the packet—but it’s still possible. Developers with FPGA and ASIC-based platforms are in a tough spot, though: the ASICs can’t be changed once they are in the field, and the task is more complex than FPGAs can be expected to handle because they are good at fixed function but poor at heuristic correlation.

Developers on Commercial Off-the-Shelf (COTS)-based packet processing platforms have an easier time: the same multicore CPU that was looking inside the packet can instead run heuristic code to infer the application, so systems that are already deployed can be repurposed to handle encrypted traffic with just a new software load.

The death of DPI?

The death of DPI has been predicted multiple times. I’ve no doubt that very prediction will be proffered at this year’s Mobile World Congress.

There are those who believed the functionality would be absorbed into adjacent network nodes. Those who argued that users wouldn’t put up with it. Most recently, there have been those who believe that encryption will render DPI useless. The shift to heuristic-based application classification, however, coupled with the use of general purpose packet processing platforms, provides a solid path forward that preserves existing investment and delivers the same benefits in a timeframe that meets the needs of operators already struggling with traffic congestion.

Mike Coward, VP Strategy & Innovation, Radisys

Patent value is now more important and complex than ever

It is impossible to open the business pages without some reminder of the huge importance of patents to the telecoms industry.  This largely reflects the changes in the industry and the transformation of mobile devices so as to challenge the role of the PC, cameras and even books.  The government’s proposal to introduce a ten per cent rate of corporation tax for patent-related profits is designed to encourage investment in innovation in the UK, and further highlights the opportunities for those who get patent value right.  This could mean that some businesses (perhaps SMEs) should now take a greater interest in filing patents, and others will want to review their established R&D, patent management and transfer pricing arrangements so as to make best use of available tax regimes internationally.

Patent value is now more important and complex than ever as giants like Apple and Samsung battle for market share, not least because patents can provide competitive edge by delaying others’ introduction of attractive user features.  Also, the relative strengths of patent portfolios will determine the net royalty burden when competitors enter into cross-licences.  These cross-licences are needed because of technology standardisation and the existence of multiple patents that are essential in order to implement those standards.   This complicates the application of the Patent Box in the telecoms sector, because the contribution to profits from a company’s own patents is not always easy to discern.

What all this means is that patent battles are not just seen in court but also in the auction house.  Old-school technology businesses like Kodak are seeking to pay off debt by offloading under-exploited patents that could have strategic value to others as bargaining chips.  Speaking of Kodak, it is worth noting, in present economic circumstances, that the Patent Box regime contemplates the making of profits, albeit particular kinds of profits from prescribed activities calculated by making prescribed deductions.  Where losses arise from these calculations, businesses should carefully analyse how to make use of Patent Box (if at all).

Patent Box will allow companies to apply the reduced tax rate to relevant profits from the sale or licensing of patents, the sale of products that owe value to patents, and compensation won in patent litigation.  The regime is generous when it comes to products, because there need only be one European or UK patent underlying the product in order to be able to include the whole of the income from the product (and, potentially, accessories, although this is not clear) as the starting point for the calculations.  Perhaps controversially for the telecoms sector, however, this contrasts with the approach taken to services businesses: if services income is generated with reference to patent rights, an intra-company royalty arrangement must be established and the reduced tax rate can only be applied to the royalties earned for licensing of the patent to enable the services.

The draft legislation requires companies to have undertaken technical development if they are to enjoy the beneficial regime, even if they are purely licensing businesses.  This should have the effect of excluding those companies that acquire telecoms patents purely for licensing purposes (sometimes known as ‘trolls’).  However, it is open to interpretation whether the development requirement is satisfied for example by acquiring patents and then participating in the development of a relevant standard – if so, patent trolls might still qualify.  Where the tax paying company is part of a group, the development work can be done by another group company as long as the claiming company manages the patent portfolio.  This latter point may have implications for technology businesses that outsource the exploitation of patent portfolios.  The extent of required development, and of the requirement for involvement in patent management, will clearly be open to interpretation and large businesses will also need for example to consider whether to manage all intellectual property in one subsidiary or create a standalone patent holding arrangement.

The distinction between patents and other intellectual property (such as software copyright or trade marks) is another important factor, because relief will be limited to profits from patent rights.  This contrasts with similar regimes in other countries, such as Luxembourg, which do include income from other intellectual property.  Under the UK regime, the calculation of attributable profits involves a deduction of a notional royalty for the use of ‘marketing assets’ that include for example brands.  This could be particularly significant for the telecoms sector, where the contribution made by particular patents is sometimes difficult to gauge.  Unlike the pharmaceutical sector, where one patented compound will often comprise the entire product, the numerous patents for, say, features of a mobile handset, often bring only small incremental gains.

Consumers will often be entirely unaware of the contribution made to the end product by those patents.  So, for companies that do opt in to the UK regime, it will be important to ensure maximum input to the Patent Box in respect of income that could be attributed to patents, as opposed to excluded features that may be more visible to users.

The consultation on the draft legislation closes on 10th February.  This is potentially a highly attractive new regime, but it has not been developed with the telecoms sector particularly in mind.  To take best advantage companies will need to review not only their tax and transfer pricing arrangements, but also the terms of joint ventures, licensing arrangements, business disposals and acquisitions, and plans for group reorganisations.  Savings could be considerable, but planning must begin now in order for arrangements to be in place when the regime comes into operation in 2013.

Jeremy Morton is a Patent lawyer and Partner at CMS Cameron McKenna LLP

Without an adequate medium of delivery, there is no message

Way back in 1996, at the dawn of the digital revolution, Microsoft founder Bill Gates declared in an article that “Content is King.” Gates drew a parallel to television, saying that “The television revolution that began half a century ago spawned a number of industries, including the manufacturing of TV sets, but the long-term winners were those who used the medium to deliver information and entertainment.” This statement has proved prophetic.  However the ensuing evolution of content – or more specifically content quality –is also proving to be one of the greatest challenges to the digital future. Without an adequate medium of delivery, there is no message.

The iPhone, the iPad, the Android platform, the Kindle, the ultrabook – new mobile devices have transformed the world in which we live and work. But this transformation has come at an increasingly high financial cost. The scale of network investment required to achieve the performance that customers expect – and the increased need to support complex services and content – is threatening the business case for mobile broadband services.

Typical mobile operators spend between 20 percent and 30 percent of operating expenses and 50-70 percent of capital expenses on network cost. As data volumes increase and the deployments of 4G networks proliferate, so will network costs. Such increases, combined with uncertainties about how to monetize higher levels of data traffic, represent a continuing challenge to operators that could hinder future profitability and cash flow.

One of the solutions to this problem is to limit network costs through network sharing, a formal arrangement between two or more mobile operators to share various components of their networks.

Changing Strategy

Historically, networks have been considered areas of competitive differentiation. Superior network performance and coverage have been the slogans of providers for years. However, many network components today are simply table stakes and may not be true differentiators. Indeed, by focusing on cost-reduction measures such as network sharing, management may be able to reinvest savings into alternative differentiating strategies such as customer service, innovative offerings and being first-to-market with new devices.

A well-executed network sharing venture has the potential to deliver a 20 to 40 percent reduction against standalone cost run rates . From one-third to two-thirds of those benefits are rooted in cost avoidance, with the balance resulting from actual cost reductions. Equally important, network sharing can help an operator significantly accelerate deployment speed, plug coverage gaps and grow revenues without increases in network costs.

Negotiating, planning and managing a network sharing deal requires executive leadership to overcome multiple complexities, including organizational integration issues and regulatory challenges. The prize for overcoming these challenges is the opportunity to control costs and achieve market advantage in the years ahead.

The business case

For a typical mobile operator, the majority of network costs don’t come from the core network. They come from the access network, often called the “edge.” This includes “backhaul” – the microwave, fiber or copper connections between the core network and base stations – and the “radio access network,” the final connection to the device. A recent industry analyst report found that these elements can account for more than 80 percent of incremental network costs. Most network sharing arrangements will therefore cover one or more elements in the edge, while the backbone is rarely shared. Which elements exactly are shared or kept separate will depend on the tradeoff between cost control and differentiation that the sharing partners are willing to make.  The financial business case is one that is clearly measurable, while differentiation is much more difficult to quantify. Interestingly enough, it is the differentiation agenda that will stir up the most emotions.

Savings are usually realized by consolidating two network infrastructure footprints into one, eliminating redundant sites and connections. Cost avoidance is delivered by using another operator’s network sites or leveraging a joint deployment strategy, thereby reducing deployment  and operating costs. In addition, operators often receive a top-line boost from network sharing. By using a partner’s existing sites, operators can accelerate deployment of services and improve customer experience and retention. These have obvious positive impacts on revenues.

Mobile network sharing strategy depends on careful planning in three key areas.

Choosing the right organizational model

A formal network sharing partnership requires a dedicated organization to manage it. These arrangements are generally of three types. An operating joint venture involves both parties contributing financial and human resources to the organization. An asset-owning joint venture involves having the network sharing organization take control of the assets and liabilities related to the network share, with each party having an equity stake in the organization. The third arrangement is one where a neutral third-party operates and manages all aspects of the network sharing venture and charges back all relevant costs to the different partners.

If the sharing partners are similar in terms of spectrum position, backhaul strategy and market share, the first model is often the most appropriate. The other two models work better when there is a significant difference between the sharing operators.

Regulation

A number of important regulatory constraints, especially those focused on the impact of network sharing on competition, must be carefully considered and managed. Typically, operators cannot use network sharing to reduce competition or coordinate their market behaviors.

This restriction can hinder rollout synergies because it limits the extent to which the sharing partners can align their plans. Only the joint-venture organization is permitted to view both operators’ intentions, but it cannot share this information with either party. Both operators need to be aware of these constraints and not be tempted to compromise them in a way that would increase regulatory risk.

Integration

Successful network sharing requires meeting several integration challenges across systems, processes and people. From a technology perspective, the success of a network-sharing venture depends on the ability to align the information systems across the different organizations and to keep the information consistent for both. Network processes will also overlap, so it’s important for operators to understand each other’s existing processes, delineate the responsibilities each operator will have, and make any needed changes to either side’s approaches to support the success of the venture, as well as prevent any leakage of competitively sensitive information

Because network sharing changes the way people work, effective change management activities are important, including clear communications, team building and support for cultural change.

The common thread among these success factors is strong program management. A dedicated program management function – which drives the coordination and integration of the consolidation and rollout –can make the difference between success and failure of a network sharing venture. Some operators are looking to improve speed to value by leveraging a third party to deliver program management – an organization that can bring experience from other similar ventures and that can, by being neutral and not aligned to either side, be in a better position to make difficult decisions.

A final thought

Network sharing is a significant opportunity for network operators to keep costs under control while also improving the customer experience and retention. However, operators need to be aware of the subtleties that underpin this strategy, specifically around cost reduction versus cost avoidance. In addition, benefits will be difficult to achieve without effectively addressing a range of operational and management challenges around the organization, integration and competitive aspects. Getting this right will significantly improve an operator’s chances of driving advantage from a network sharing strategy.

Paul Bultema is Executive Director, UK and Ireland Strategy Lead, Communications, Media and Technology operating group, at Accenture. Read his comments on Customer Experience Management in a forthcoming feature due in February.

Traffic is growing, but can the networks keep up?

According to UK regulator Ofcom, we have become a ‘smartphone nation’, ultra-connected night and day via the magic of mobile technology. But the evidence suggests that the UK is falling behind the rest of the world in providing the kind of networks needed to support the explosion in mobile device usage and data consumption.

In October 2011, Ofcom announced that it has been forced to delay the UK’s 4G spectrum auction by six months, saying that a further round of consultation is required after receiving ‘substantial and strongly argued responses’ during the first round. As has been widely reported, the auction for spectrum in the 800MHz and 2.6GHz bands was initially delayed due in part to the change in government and the lack of agreement between mobile operators and Ofcom

Additional alterations to the original schedule have seen the timetable slip from the first quarter of 2012 to the second and, in light of Ofcom’s announcement, the auction will not take place until the fourth quarter. Ofcom claims that the deployment and launch of Long Term Evolution (LTE) services in the UK need not be delayed, as spectrum would not be released until 2013 anyway. However, as reported in the media, operators say that with an auction not taking place until the end of 2012, it is unlikely that LTE services will be launched in the UK much before 2014.

This poses something of a challenge for the industry as many observers, including Virgin’s CEO, believe that traffic levels will double; due to the rapid evolution of the smartphone and M2M markets and the resultant increase in demand for data-heavy applications and content. Cost conscious consumers are taking particular care when choosing mobile services; resulting in slower than expected adoption of newer, faster products. But as the smartphone market continues to make data-heavy consumption a de facto part of mobile contracts, this trend will only rise. And it’s not just Virgin that predicts such exponential growth. Luminaries such as ’father of the internet’ Vint Cerf predict exponential and continued growth of the internet and web services; all of which must be facilitated by already overstretched networks.

All this in the midst of a growing row over existing network speeds; the industry is now clamouring to find a meaningful solution to the issues of universal broadband provision and speed, and all eyes are turning to 4G / LTE to provide the answer.

The importance of ‘Superfast Broadband’

You can usually tell how significant a technology is likely to be by noting BT’s reaction. In October of this year, BT set out its superfast broadband intentions stating that its Everything Everywhere initiative (launched jointly with Orange and T-Mobile) would mean 4G trials would provide a viable broadband alternative for those in rural areas. 4G has now, undeniably, become a lynchpin in BT’s rural broadband strategy but delays to spectrum auction won’t see a launch any time soon.

4G not only helps support today’s technologies, internet, email, phone and video traffic but also allows higher quality consumption; something that consumers are demanding more and more of. As VoIP moves to deliver ISDN-grade calls, video conferencing moves into HD technology, emails support large photos and other big attachments and the internet is used for the download of large files and software, the networks are groaning under the strain. 4G alleviates this strain by allowing the provision of high-speed services, delivered over a wider spectrum.

At the time of writing, 3G coverage stands at approximately 75 per cent of the country but, as revealed recently by the BBC, coverage remains patchy in some areas and is by no means guaranteed.

The BBC study showed that, overall, people are getting 3G approximately three quarters of the time, but coverage is nothing like as good as the operators would have you believe. Most city-dwellers will have great coverage but there will be certain places, even near city centres, where some if not all the networks are just not providing a decent connection. The overall conclusion is rural areas, whilst struggling to obtain fixed-line broadband, are also suffering as a result of patchy 3G coverage.

The Business Case for 4G

According to a recently published report  on mobile data consumption by Allot Communications, UK data consumption increased by 77 per cent in the first half of 2011, with video streaming increasing by 93 per cent overall. This increase makes mobile video streaming the biggest culprit in terms of data consumption, with a 39 per cent share. The report shows the majority of all video streaming comes courtesy of YouTube, with the video giant accounting for 52 per cent of that total. Not only does YouTube account over half of all video streaming, it’s responsible for 22 per cent of all mobile bandwidth usage, making it by far the most popular mobile destination. What this report shows is that mobile consumption is far exceeding expectations and there’s an enormous revenue opportunity here for networks, service and content providers alike.

4G is much more than high access speeds — it is a new network paradigm. Unsurprisingly, 3G operators are learning that future average revenue per user (ARPU) does not come from traditional services like voice services but data services such as mobile, video, music, games, Internet access, navigation and messaging (SMS and MMS) are the path to greater profits. The trend is unmistakable and leads to more services that exploit infrastructure offered by future advances in technology.

Faster is Better – Be Prepared

Broadband provision over FTTC or FTTH is suffering as a result of a number of factors: cost of tunnelling into hard-to-reach areas; perceived lack of funding; and low uptake in some rural areas. Network initiatives, such as the connection of 50,000 new build properties to Fluidata’s broadband network, which give inexpensive access to rural areas via existing networks, are providing the solution in some areas but, where a need is identified where networks can’t reach, alternative solutions are critical.

Satellite can plug some of the gaps and the Government’s rural funding pledge will connect more areas but, the reality is, mobile networks are amongst the more far-reaching and, therefore, offer the promise of ubiquitous coverage in even the most remote areas.

The reported delay to the spectrum auction and rollout of 4G networks in Britain is costing businesses an estimated £732m a year and so finding a solution is imperative.

When 4G becomes a reality in Europe, this should open the door for the industry to create a new breed of products and services but one final consideration should be its ability to deal with perennial problems of service contention. Will 4G deliver the same varying mobile broadband speeds depending on the time of day? Currently download speeds can vary by as much as 25 per cent at peak periods and in high density urban areas and with limited backhaul capability resulting in slower data delivery. It could be that the power that 4G possesses may remain locked if technology can’t deliver.

Piers Daniell is MD of service provider Fluidata

Can businesses risk choosing one technology over another?

The richness and diversity of today’s intensely competitive mobile market has provided a level of choice like never before. With Apple, RIM, Google and Microsoft battling it out, we have seen an explosion in the development of devices and applications for consumer and enterprise use.

If the battle between the major players in this multi-platform, multi device world seems somewhat  familiar, it’s perhaps because we can draw a number of parallels between the smartphone wars of today and the PC wars waged in the 80’s and 90’s.  The names have changed but, essentially, what we’re now seeing, as the battle lines are drawn and re-drawn between Apple and Android, is reminiscent of the Microsoft and Mac wars which played out a couple of decades ago.

As the giants jostle for position, what can we learn from these PC wars of the past and what does it mean for developers and enterprises alike, faced with the choice of investing in a mobile ecosystem?

Back in the 80’s as the software giants, IBM, Linux and Microsoft fought for share in the desktop market, Apple emerged with a proprietary model, which locked users in to their ecosystem, fostering brand loyalty and setting new standards in the user interface experience.

Just as in the 80’s, when Apple captured market share through this innovation over the more established players  in the PC market, now too, we see a smartphone market where the other mobile giants are playing catch up with the functionality it offers. It’s the same business model as the Mac PC, in which Apple will not license the use of its iOS to any other company.  With this closed business model, Apple has seen its revenues rise to $28.27bn in the quarter ending September 2011 compared to revenue of $20.34bn, in the same quarter the year before.

Now history is repeating itself with the battle of the ‘open’ versus the ‘closed’ models.  Android, for example, is achieving dominance with the open business approach: seeding its software across the market to achieve critical mass and widespread adoption and influencing hardware manufacturers to embrace its OS.  It has also focused on the more price sensitive spectrum of the hardware market. This approach – in which Google licenses the mobile Android OS for free – has now seen it surpassing other players to become the most used smartphone operating system.

But whatever the paradigm of the platform selected, be it open or closed, both can result in ‘lock-in’ for developers and enterprises alike. Competition and diversity has its advantages, providing choice and driving innovation, however the multi-platform era and the explosion of devices and platforms also creates uncertainty around which players will dominate. Therefore, for developers and those tasked with investing in a platform, it’s difficult to determine where the best commercial opportunities will come from. Moreover, the rate of change of new versions of operating systems and hardware has created a ‘lock-in’ of a different kind: it can be difficult to innovate or remain competitive with an old system or an old device which can’t be upgraded due to budget.

These choices now facing enterprises in the mobile space were played out as the PC market evolved. Regardless of which hardware is selected, once you have bought into an interface or an operating system, be it proprietary or an ‘open’ system, it becomes costly to change. Investment in a new platform in an enterprise environment represents a significant outlay and, besides the cost of migration, there is a sharp learning curve for users and those supporting a new OS.  The risk lies in making choices that could limit them from moving to a different platform or from incorporating new devices in the future, as well as the need to ensure integration with existing applications, ease of interoperability and ongoing support.

Consolidation is Inevitable
For developers, the risk lies in opting for a platform which may become obsolete and commercial interests dictate that market share will be a key factor when considering which platform to develop for.  It’s not a decision which businesses or developers can afford to postpone for much longer; with IDC predicting that the global mobile worker population to increase to more than 1.19 billion in 2013, up from 919.4 million in 2008.

To add to this complexity, with the tablet market evolving at a pace, there are further changes ahead and most businesses will want their applications to work both on smartphones and on tablets, because each has its own uses and relevance. Can businesses risk choosing one technology over another?

The competing platforms of the smartphone market and diversity of platforms have made the stakes, for companies faced with mobile strategy decisions, much higher. Instead of the two-horse race of the 90’s between Microsoft vs Apple, companies now have the ‘paradox of choice’ and the pace of change has accelerated, with operating systems updated more frequently and hardware lifecycles shortened. However, if we can learn something from the PC wars it is that convergence is inevitable and, while new entrants may yet emerge to shake things up, eventually there will be consolidation of just two or three big players, be it through partnerships or acquisitions.

Unlike the 90’s however, the question of who will win, is perhaps the wrong one for today’s smartphone market and the question now should be, why choose one model or ecosystem over another? Whilst enterprises are faced with options, times have moved on, and it may be too limiting to think in terms of ‘winners’ and ‘losers’ or the drawbacks of ‘lock-in’ to one channel – be it operating system, platform or device.

Our multi device, multi application world is driving the need for greater flexibility and approaches are needed which can deal with the complexity of taking any application to any channel.  So, instead we should think about the power of choice, providing developers and enterprises alike with the flexibility to transition applications across platforms and devices without the ‘rip and replace’ scenario of the past.   In this way the limitations of vendor lock-in which typified the PC wars, need not repeat itself.

David Akka is the UK, Eire & Nordics MD of Magic Software