InsightFuel Thoughts on the market from the Amdocs Market Insight & Strategy Team

In the not-so-distant past, service providers used to have full control over the customer experience lifecycle. But now, over-the-top providers, niche app vendors, general retailers and others have all moved in to enhance the customer experience lifecycle.

Today’s consumers benefit from a wide selection of offers and possibilities and are more empowered than ever. They have the freedom to design their own personalized customer experience path.

For example, when buying a mobile phone, instead of just going to their service provider’s local outlet to evaluate phones and plans, today’s customer might first go online to compare phones, check out professional reviews, ask their social network for advice, and then, when they’ve made up their mind, go to a retail store that sells more than just phones to make their purchase.

And not only has the experience path changed, the lifecycle sequence is no longer linear – a customer might start playing a game or use an app for free, and then receive a promotion that will lead to a purchase.

So have service providers lost their hold over the customer experience?  Not necessarily. Look out for my next blog to see how service providers can rise to the challenge.

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Today, we’re demanding not just 24/7 connectivity, but 24/7 connectivity anywhere we happen to be.

With tablets, netbooks and even televisions providing ever-more connectivity and real-time interactivity on top of PCs and smartphones, the consumption of services from any application from any device from anywhere is rapidly increasing. I can even pay for a Starbucks coffee using my smartphone.

And the dynamics of our consumption of services and apps is also changing. Activities once largely reserved for “home” use, such as downloading and watching video, have increased significantly on the mobile Internet.  Last year, according to Pingdom, 730 billion YouTube videos were viewed over wireless networks! And, Cisco just announced that they expect mobile video traffic to exceed 50% of the total mobile traffic in 2011.

We’ve truly become anywhere customers.

We, the consumers, are the real winners of this anywhere experience, but so too are the new players who have introduced these great new experiences, such as Facebook, Spotify, Apple, Netflix and so on.

At the same time,  this anywhere experience has fragmented the traditional customer experience, creating a challenge for service providers that I intend discussing in future blogs.

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Orange recently announced a new initiative for supporting their smartphone users. The operator plans to add in-store expert advice to its premium Orange Care Expert Assistance smartphone hotline service. Around 3,000 in-store experts will be available across 1,300 shops in 13 Orange markets by the summer, with Orange “Care Corners” planned for 300 shops.

This is another creative way for service providers to deal with the increasing costs of supporting smartphones. According to WDSGlobal, supporting smartphone customers is four times more expensive than supporting non-smartphone users, while a recent survey commissioned by Amdocs found that the volume of smartphone-related support calls has increased by up to 25 percent over the last two years.

What Orange has cleverly understood is that one of their core competencies as a service provider is customer care – a costly but invaluable service provider attribute. This basic core competency is a key differentiator for service providers in a connected world, where the customer experience is increasingly fragmented across devices, services, applications, social networks, etc. By integrating customer support efforts with in-store experts for example, or remote device support together with contextual and personal care, the service provider can leverage its core competency to provide differentiated value in their customers’ connected lives.

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We all need one another.

That’s the message I finally heard last week at Mobile World Congress.  Listening (for hours on end!) to developers, speakers from giants like Google and Microsoft as well as executives at top service providers from Latin America to Asia, I got the same feeling from every speaker. They finally realized that  in our ecosystem, just like in any other ecosystem, every player matters.

Players need each other to overcome fragmentation and push the industry forward towards the new opportunities the connected world offers. All the speakers I heard agreed that this is a platform play, requiring strong cooperation between the players. Even competing service providers understand they need to work with each other to enable a true connected world.

And in an ecosystem where every player matters everyone should win, It wasn’t just the service providers arguing that they needed to be rewarded for their investment in the network. Even Google’s Eric Schmidt said in his keynote there was a need to find the right business models to reward service providers for their network investments.  The discussions also made it clear that developers need to be treated differently — and to get a better share of the pie.

But while the message at MWC was clear, in a different part of the world at almost the same time, a different message was being sent. Apple, the king of the customer experience whose numbers speak for themselves, decided to test the boundaries of its closed kingdom by introducing their new subscription model for developers and content owners.

It’s now going to be interesting to follow the reactions to this move, from regulators to major players such as Amazon, Netflix and Rhapsody.

 Are we going to witness a tipping point where the closed garden gives way to openness?

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Having recently returned from CES, I was amongst the tens of thousands of people drooling over the thousands of consumer electronic devices on display. What is immediately noticeable at such conventions is the open, symbiotic relationship between service providers and device manufacturers. Almost every major wireless carrier announced a slew of new connected devices including smartphones, tablets, laptops and even automobiles. The relationship is clearly advantageous to both sides with carriers looking to drive network and service consumption while device manufacturers get to sell more devices. It seems that everybody loves connected devices…well almost.

There was one group of companies who were noticeably absent and rather reserved about embracing all things connected, namely television broadcasters and Pay TV content distributors such as cable and satellite companies. For the Pay TV industry, connected consumer electronics such as tablets, televisions and vehicles still present a challenging proposition. They bring with them a new consumption paradigm driven by ubiquitous connectivity and an ever growing catalog of content, much of which is freely available. While this offers great choice and flexibility to consumers, it does not sit well with the traditional content revenue models that have served the industry up until now.

And while smart televisions were a key theme of CES it was still not evident how Pay TV providers are looking to develop the relationship with these new connected sets that break the bonds with the familiar set-top box. For the moment Pay TV providers seem to be more focused on letting users remotely program the DVR using a Smartphone or search for content using a tablet, but there is still a long way to go in terms of truly embracing over the top devices and content. I discussed this in a recent eBook that I wrote looking at the new online experience battleground and potential OTT strategies for Pay TV providers. You can read the eBook here: http://www.dox-brand.com/ebooks/paytv/

In contrast, new online distributors are only too happy to partner with connected device manufacturers. Take Netflix for example who recently announced deals with several major device manufacturers to embed the Netflix “Watch Instantly” streaming service across a variety of connected platforms including internet-connected HDTVs and Blu-ray players (read more about it here http://gigaom.com/video/forget-tv-everywhere-how-about-netflix-everywhere/). Netflix now accounts for more than 20% of downstream internet traffic during peak times in US and they have crossed the 20 million subscriber mark.

While I don’t believe that traditional Pay TV companies are going out of business any time soon, I can’t help feeling that the OTT train has left the station and Pay TV providers are not really aboard. They still need to urgently accelerate their strategies to become the new online experience providers of choice before somebody else does.

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We know that developed markets are enthusiastically embracing the connected world—a world of hyper-growth in demand for ubiquitous connectivity, information anytime, anywhere and smarter connected devices. But Eastern Europe, Latin America and South East Asia are also driving new growth in communications markets. In fact several of these key markets are on the cusp of realising their own unique flavour of the connected world.

As these emerging markets evolve, what is the service provider’s perspective on the connected world? What do they perceive as the key challenges and opportunities? Following the publication of the Connected World 2010: A Survey of Emerging Markets report by Frost & Sullivan, which Amdocs commissioned, I attended a media roundtable in London to discuss some of the key findings of the report.

We found ourselves with some time to spare and so Edyta Kosowka, a Research Analyst from Frost & Sullivan and I took the opportunity to film a short interview to cover some of the key points.  Here’s the video:

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For anyone who knows me they’ll tell you straight away that the “connected world” is not just a slogan for me, it’s pretty much the way I live my life. I love the fact that we are living in the midst of the world’s greatest technological revolution and the number of advancements made every day is simply staggering.

However, I also believe that there are times when we need to disconnect for a while and remind ourselves how simple things used to be. So, when I heard about the annual Perseid meteor shower I decided that the whole family would travel out to the desert to do some old old-fashioned star gazing. This was as far away as you could get from a regular evening in for us. No television, no computers, no internet, no connections.

We travelled along with hundreds of other people to the town of Mitzpe Ramon in Israel where they had opened up the local soccer stadium to the public in order to watch the meteorites. All of the lights in the city were gradually turned off enveloping the stadium in a blanket of darkness, and in turn lighting up the night sky with a dazzling display of stars and constellations.  The best way to view the meteor shower is to simply lie down in an open area and watch the sky through naked eyes.  This is it, the absolute power of nature, the enormity of the universe making all our technology seem small and insignificant. No need to boot up, log-in, sign on or dial a number…or so I thought.

It started with a question from my youngest daughter, “What star is that?” My colleague Rachel who had also traveled to see the show said, “I think it’s probably Jupiter since we’re facing East”. I suddenly realized that I could offer absolutely no additional astrological wisdom and fell into an uneasy silence.

And that’s all it took for me to get over the enormity of the universe and connect to the enormity of the Apple app store. I quickly pulled out my iphone (dimming the screen so as not to disturb my fellow viewers) and began searching. A minute later I had downloaded and installed Starwalk, an application that uses the internal compass of the phone as well as GPS coordinates to provide an accurate, augmented view of the night sky. I should also mention that the app happened to be on sale because of the Persied Meteor shower making it an even sweeter deal. We handed the phone around holding it up to the sky and were amazed as we began to make out the constellations of Pegasus, Andromeda and Perseus.

So, did I feel regret? Remorse? A pang of guilt for letting technology invade an otherwise perfectly natural setting? No, not really. The connected world is becoming an inherent part of our lives today and as long we get the balance right it can add to the already awesome experience provided by nature.

See you all at the Draconids Meteor shower expected in early October.

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Forrester recently published a report forecasting a decade of disruption in the IT service sector.  The economic crisis, combined with cloud computing, and software as a service (SaaS) threatens to change and replace the traditional IT focus of system integration, outsourcing and consulting.

The upheaval they describe mirrors the changes we are seeing across industries.

As more services become commoditized, as new technologies and players appear on the scene companies need to look inwards and outwards.  They must take a hard look at themselves and decide what is core to their growth. They must look outside to see who can take on the services they choose not to focus on.

According to a recent article in the New York Times, consumers are finding more satisfaction in spending on experiences than on products. This type of spending strengthens their social bonds, making for better relationships and making them much happier. They are looking for new, inexpensive – if not free, exciting and personal experiences. This forces companies to reassess their products and look outside again to expand their eco systems more creatively and timely.  This time, to create what Forrester calls “experience bundles” which will differentiate them from the rest.

This process is relevant to all – in order to create a new, more social and personal experience – we’re seeing GM enhancing its OnStar offering, now adding mobile apps to its cars. Amazon is partnering with Facebook – Amazon who offered usage based recommendations can no longer ignore social media and is creating a new online experience for its customers and their friends.

This means that instead of looking for the magical “killer” app or service, service providers should be looking for the “killer” experience. Or they should look to partner with others to enable these types of experiences.

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Hello and welcome to our new blog!

First let me introduce the team — Daniela Perlmutter, Michal Harris, Jonathan Shmukler, Hollie Halpin and Rachel Laufer (that’s me).

We’re from Amdocs’ Market Insight & Strategy Team and this is where we’ll be posting our thoughts on what is happening around us – anything we think that might be of interest to others,  to our customers and to our colleagues.

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