Mobile operators are increasingly coming up with credible and commendable new services for the global market.
Partnerships crucial to mobile service evolution
A key theme from the recently concluded FT Innovate conference in London is that operators should continue to innovate in mobile services for various strategic benefits.
Another consensus is that successful innovation must leverage core strengths, but operators should go further, using their core assets to claim new ground beyond their traditional base.
Finally, and above all, forming partnerships are the key to successful innovations.
The mobile industry’s continued enthusiasm towards launching new services, even in areas where their efforts have previously proved futile, is primarily due to two major, interrelated challenges.
Rapid, well-received innovations from outside the industry – especially those from the likes of Google and Apple – are threatening to remove operators from the premium segments of the value chain.
Taken to its logical conclusion, this will reduce the operator’s role in the value chain to nothing more than a bit pipe. To avoid this outcome, operators have continued to be unrelenting in their quest to innovate.
The primary focus of this activity remains the operator’s ability to leverage its core assets and strengths to deliver new services.
Mobile money services are the most popular category of launch, and these have brought huge benefits to users, while also earning substantial revenues and profits for operators. However, not every mobile money service will achieve the same high level of success.
Encouragingly, operators are also reinventing voice. Whether it is with HD voice, visual voicemail, or voice SMS, there are now opportunities to derive more revenues from the basic voice service, even if these are only in the short term.
There is even an example of how to release the hidden value in a basic, and previously free, service. Vodafone’s “Name Your Number” service in Romania demonstrates how operators can monetize the willingness of people to choose their own numbers.
New services are not all going to generate additional revenues or profits for operators. In fact, many of them will be a drain on operators, with no prospect that they will turn enough profit to justify the investment in time and money.
However, operators have significant strategic reasons for launching them. These can be as varied as using the service as a loss leader in the market, leveraging the service to boost the operator’s brand, or helping the operator to defend an existing competitive position.
This last point is particularly crucial, and as MTN and Zain have shown with their mobile money services across Africa, it is foolish for operators not to take action to prevent their competition from outflanking them in the market.
Some other innovations take a more circuitous route in adding value to the operator. This is most pronounced for services that straddle the boundary between marketing and innovation, such as Cell C’s deal to offer Nike Football+ in South Africa.
Partnerships with non-operators bring immense strategic benefits to cellcos. Collaborators bring significant expertise which operators can never hope to develop in-house. They can also bring massive customer bases in adjacent industries - which the operators would never otherwise have access to.
However, partnerships must be nurtured and the relationships must be symbiotic.
The success of Apple and Google’s app stores has demonstrated how creating a win-win value chain can help all parties.
Given that it is now clear that these examples of collaborative innovation are beneficial, operators need to ensure that their internal culture and structure is adequately set up for collaboration.