In February, India’s largest telecom operator, Bharti Airtel, launched an app store, giving its consumers access to 1,250 applications. Vodafone followed, offering around 800 applications.

As telecom companies play the numbers game with the applications they offer, they have now started outsourcing this to specialised application developers. “There are hundreds and thousands of applications in the market. It is not possible for telecom companies to develop all these apps in-house,” said Neeraj Roy, managing director and CEO of Hungama Digital Entertainment.

Reliance Communications has tied up with American application developer Get Jar. This will give its subscribers access to GetJar’s catalogue of over 65,000 applications, available for free.

If an application is developed in-house, a telecom company can earn from a licence fee charged when an app is downloaded. However, many companies (such as Reliance) are not focusing on that revenue. Instead, they are banking on the data usage generated as subscribers consume more data to download and use these applications.

“RCoM’s application store strategy is directly linked to increase in data traffic, increase in data plan adoption and sale of other services through the use of free applications. This strategy will help achieve mass mobile data plan adoption and mobile internet use,” the company said.

Loop Mobile has recently launched a mobile application developed by SMS Gupshup. Called ‘Reply all’, this allows consumers to SMS to a group of seven people at the cost of one SMS. If one of the consumers in the group replies, the response will be sent to all the users, allowing a chat conversation in a group, giving the same utility as a reply-all e-mail.

“Applications are not great technologically innovative products. Application development is all about generating good ideas and telecom companies can never aggregate as many ideas. This has to be driven by market forces and should come from a wider community,” said Alok Shende, principal analyst and co-founder, Ascentius Consulting.

‘Not our expertise’

Outsourcing also helps telecom companies convert fixed costs into variable costs. While most telecom companies have an in-house team which work on applications, this is not the core business of a company. “Engaging a team takes up a lot of bandwidth. Besides, so many app developers are working independently and our aim is to launch a product as quickly as possible. We always get better developed products from outside,” said Surya Mahadevan, COO, Loop Mobile.

Telcos that have to cater to a wide range of tastes also look at niche value-added services (VAS). This could be better achieved by sourcing from specialised developers. CanvasM, a subsidiary of Tech Mahindra, focuses on utility-based, VAS-like, commercial transactions and mobile banking. SMS Gupshup specialises in social networking-based applications. A telecom company can pick and choose different types of applications across categories from each of these developers.

“We can get different kinds of content-based apps as well. Some offer jokes and some offer beauty tips. Adding these apps happens on a continuous basis as we keep offering different kind of products to our customers,” said Mahadevan.

Experts also note that exclusivity in apps is also reducing, as companies have stopped developing these in-house and developers license these to many operators. A lot of revenue models are followed by companies with regards to apps, the most popular being revenue share, where the developer gets a part of the revenue. There is also a minimum guarantee model, where a telecom operator pays an upfront amount, even if the application does not generate any revenue. The telecom company will enjoy all the upside if the application becomes successful.

Currently, telecom companies prefer to take the lesser risk of a failure and share the rewards. A telecom company also invests in the success of a value-added service by spending on promotion and advertising the application. But the focus is to decrease churn and increase consumer stickiness to their network, which they attempt by regularly offering innovative products.

“Once consumers are tied to an application, they are tied to a network. This is one of the many reasons why telecom companies need to build an ecosystem of applications,” said Shende.

Source:http://www.business-standard.com/india/news/telcos-bankoutsourced-apps-to-ring-in-revenue/406301/

As network operators continue to look for new ways to reduce operating costs, telecom equipment vendors are nearing a tipping point at which the managed and professional services they provide will deliver substantially more revenue than infrastructure sales, according to a major new report from Heavy Reading(www.heavyreading.com), the research division of Light Reading (www.lightreading.com).

Driven by network operators’ desire for cost savings, simplified network operations, and shorter time to market for new services, managed and professional services have become a rapidly growing business for telecom equipment vendors over the past five years. Today these services account for 35 percent to 48 percent of total revenues for leading vendors, and this figure is forecast to reach 60 percent within the next seven years.

Turnkey Networks: The Future of Managed & Professional Services examines the current and future state of the managed services landscape, explores how the shift to managed services has indelibly altered network and business models for both telecom vendors and telcos, and considers what lies ahead as this market continues to grow. The report analyzes the portfolios of 18 telecom vendors, consultants, IT specialists, outsourcing specialists, and systems integrators that compete in this market. This analysis is augmented with real-world case studies from Orange and Sprint, to provide insight into the realities associated with adopting a managed services model.

For a list of technology suppliers analyzed in this report, please see:http://img.lightreading.com/heavyreading/pdf/hr20100823_companies.pdf

“From 2000 to 2009, an unprecedented number of managed and professional services deals were signed, as network operators took measured but aggressive steps to reduce opex,” says Jim Hodges, Senior Analyst with Heavy Reading and author of the report. “As a result, vendors seizing the business opportunity have rapidly morphed from hardware-centric infrastructure purveyors to managed services specialists and consultants.”

The strong growth of managed and professional services is largely due to the explosive growth in emerging markets of wireless services, which have relied heavily on managed services resources to launch greenfield networks, explains Hodges. “But in established markets, many wireless and some fixed operators are also now embracing managed services to reduce ongoing operational costs, as margins for legacy voice services continue to contract.”

Key findings of Turnkey Networks: The Future of Managed & Professional Services include the following:

Wireless technology will continue to fuel the managed services market. In 2009, Heavy Reading estimates there were more than 4.2 billion wireless subscribers. Yet based on vendor claims of subscribers served, only approximately 31 percent of these are currently served by some form of managed agreement. By 2017, we forecast this number will increase to 45 percent.

Major acquisitions are likely as competition intensifies in managed services. Given the competitive dynamics, very large acquisition or consolidation deals will be required in order for any one vendor to achieve true market dominance, and this possibility should not be discounted. Such deals would result in the creation of an entirely new class of network equipment provider – a “SuperNEP” – capable of controlling more than 40 percent of the managed services market.

The partnership model among the major players will remain extremely fluid and dynamic. Although telecom vendors, IT outsourcers, systems integrators, process consultants, and OSS specialists will continue to collaborate to win new business, the lines between them will continue to blur, and they will increasingly become competitors.

The notion of the network as a competitive differentiator is outdated. A large number of Tier 1 wireless operators have outsourced, or even share, their infrastructure. Rather than relying on the network, these operators are focused on differentiating at a “customer experience” level. Since managed and professional services can shorten time to market and enhance service capabilities, they are seen as having a positive impact on customer service interaction.

China could be the spark that propels the managed services market to the next level. While the outsourcing trend has yet to take hold, any decision to turn to managed services will have an immediate impact in a market that represents more than 770 million wireless subscribers, spread among just a few carriers.

Turnkey Networks: The Future of Managed & Professional Services is essential reading for a wide range of industry participants, including the following:
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• Telecom service providers: How will the increased emphasis on managed and professional services influence the competitive landscape in your market? Are you utilizing the best third-party managed services providers to serve your needs? How will the widespread use of managed services influence the emergence of new telecom service business models? How can managed services help your company to enhance the end-user experience and provide highly personalized services for your customers?
• Telecom equipment vendors: What does the growth of managed and professional services mean for the future of your business? How will your company differentiate itself in a market in which the majority of revenue is from managed services and consulting, rather than infrastructure equipment? How will acquisitions shape the managed services arena, and will your company have to acquire other providers as competition intensifies – or will your company be acquired? Which of your competitors is seen as leading in the managed services sector, and which players are poised to dominate in the future?
• Investors: How will the pursuit of new managed services opportunities shape the competitive landscape among telecom vendors? As infrastructure sales plateau and vendors look for new approaches to gain managed services market share, how is future consolidation likely to take shape? How is the managed services model likely to develop in China, which represents the next big market opportunity? How will new network management technologies and business models influence winners and losers in this growing marketplace?

Turnkey Networks: The Future of Managed & Professional Services costs $3,995 and is published in PDF format. The price includes an enterprise license covering all of the employees at the purchaser’s company.

Source:http://www.prnewswire.com/news-releases/managed-services-revenue-to-surpass-infrastructure-sales-for-major-telecom-vendors-new-report-finds-101396729.html