Forrester Research Expects Digital Experience to Lead to Market Disruption

"Longstanding structural barriers to innovation are about to collapse," says Forrester Research analyst James L. McQuivey.  That belief flows from a conviction that economic assets might now, at least in part, because the cumulative impact of new digital technologies have made a world in which it is much easier for attackers to disrupt existing businesses, including even those with substantial barriers to such disruption.

That is the reason video industry executives are so worried about Netflix, for example. But something more than that is at play. Increasingly, the best products in many industries will build a digital relationship into the experience. In some ways, that is a linear extrapolation from what has been happening for at least a decade, namely that physical products have been incorporating more software as key parts of the overall product value. The typical way we say this is that "all companies are becoming 'experience' companies."

The relationships are probably easiest to see in products with some existing "content" component. That's why Sony began investing in content assets. But the iPod builds on iTunes as smartphones and tablets now build on app stores.

What is harder to see, but will become increasingly more obvious, is that most products, even those without a "content" component, will start to use content more frequently. Most companies create brochures, white papers, data sheets, press releases, websites, videos, podcasts and webcasts. Some create mobile apps and games. All of that is "content." What will change, over time, is the prominent use of other types of content as a routine part of the branding and relationship-building activities conducted by companies.

10 'Innovation Principles' for success in a disrupted telco marketplace

Taking care of a firm's biggest-spending, most-profitable customers is a rational strategy for virtually any company in any industry, and the telecom business is no exception.

But there's a downside to success. When a business model works well, there is resistance to change, and sometimes change is needed.

Analysts at Telco 2.0 point out that one way to jumpstart innovation is to focus on "unattractive" customers. By that they mean a focus on why some customers or segments have proven difficult to serve at reasonable margins, or which have not so far generated enough gross revenue.

That will not be an instinctive reaction, as competitors typically will have incentives to launch attacks at a firm's best customers, leading an incumbent to focus even more attention on the "best" customers.

On the other hand, attackers also have incentives to attack those customer segments that are not well served by incumbents. Short-haul or discount airlines have proven troublesome for incumbent airlines, for example.

The point, say analysts at Telco 2.0, is to seriously examine why a particular customer segment cannot be served at a reasonable profit, and retool the delivery system so a reasonable profit can be made.

10 'Innovation Principles' for success in a disrupted (Telco) marketplace

Steve Jobs Single-Handedly Restructured The Mobile Industry

With the introduction of the iPhone, Steve Jobs achieved something that might be unique in the history of business: he single-handedly upended the power structure of a major industry, argues Chris Dixon, Hunch co-founder.

Before the iPhone, the carriers (Verizon, AT&T, Sprint, T-Mobile) had an ironclad grip on the rest of the value chain, particularly, handset makers and app makers. Back in the old days, an application could get access to the customer only by cutting a deal with a carrier.

That mostly is not the case anymore. To a greater or lesser degree, app developers can work directly with handset vendors these days. That's a huge switch.

Steve Jobs Single-Handedly Restructured The Mobile Industry:

Is VoIP Significant?

Some years ago, many observers were convinced VoIP would be "disruptive" to the global telecommunications industry. There's much less certainty now. In fact, one might ask: is VoIP mostly a better way to do voice, or just a new way? Mobile clearly is a new way, and might be disruptive in many ways. So is VoIP. But "different" isn't the same thing as "disruptive."

The global industry made a transition from analog to digital switching, as it earlier made a transition from mechanical to electronic switches. New services and efficiencies were gained in each of these transitions. But one can question whether the differences were transformational.

Likewise, most of the U.S. competitive local exchange carrier industry thought it was doing something revolutionary in buying its own Class 5 switches to compete with incumbents. As it turns out, that wasn't hugely disruptive.

These days, most tier one carriers earn only about 20 percent of total revenues from consumer voice, and not significantly higher percentages even if enterprise voice is included in the total.

The point is that "voice," though still hugely important as an end-user value, is less and less the revenue driver for the global industry. So VoIP is in many ways a much-better way to use voice, but such a smaller part of total revenues that it cannot strategically change industry dynamics, one way or the other, so long as a transition away from reliance on voice revenues is predictable.

There are precedents for that as well. Long distance revenues have been declining, in terms of revenue per minute, if not volume, for decades. But the industry had time to transition away from long distance as a driver of profits.

At this point, it certainly looks as though VoIP is more nearly the latest enhancement to basic voice, rather than a disruption. If anything, it is mobile that represents the big "disruption."