Alcatel-Lucent

What we need now—and for the near future—is to overhaul our understanding of our business. Inter-company teamwork will define success as we move toward the next decade of achievement. Ecosystems offer a preview of this collaborative approach and will help us more rapidly assess new trends and meet emerging demands.

The ng Connect Program offers a new and unique approach to the next generation of wireless service delivery by bringing together disparate, multi-industry, infrastructure, device, application and content companies to create an end-to-end ecosystem. Collectively, member resources and expertise help to rapidly deliver next-generation services and applications to service providers, enterprises and consumers.

Delivering end-to-end innovation

Our industry respects and rewards technology and service innovations. But limiting innovation to the confines of a specific company also limits the chances to meaningfully impact the user experience of both consumers and businesses.

An end-to-end collaborative approach to innovation and technology development is required. Concepts like “open innovation” create pre-packaged elements and pre-integrated offerings designed from their inception to operate higher in the value chain. In short, we need a mechanism that allows product and service developers to understand the user demand for a holistic experience.

Ecosystems challenge participants to reassess and redefine how they see individuals and groups of buyers and potential buyers. The results of such reassessment will alter the way offerings are developed, presented to market and supported after they are purchased by businesses or consumers.

Equally important, ecosystems can provide a living lab for evaluating many different ideas. The ecosystem environment teaches members of the value chain about the capabilities of the network to enable new applications, services and business models. It also offers a rich set of pre-market inputs from members who have distinct perspectives on what customers will buy, how they will use offerings and how much they will pay so that the right applications and services get enabled. Interesting discussions can take place as inter-disciplinary teams test new business models by mixing, matching and creating new value-exchange propositions.

Addressing challenges head on

LTE is forcing the industry to acknowledge the difference between cobbling together discrete pieces of technology, and creating a new user experience. While some companies will continue to innovate on their own and then work to integrate their offerings, over time, users will expect a higher level of seamlessness.

The demand for seamlessness is actually beginning to happen already. Nearly everything that consumers and businesses buy is connected to the Internet in some manner. This trend is good because it keeps product and service providers “tied” to their buyers. But end users only have so much capacity to track and manage the seemingly endless numbers of subscription offerings. We are rapidly coming to a point where people want this underlying complexity to be managed. And while ecosystems can present technical, cultural and business challenges, ecosystem initiatives like ng Connect (See Figure) are vital to drive collaborative and innovative ideas closer to the cradle of invention.

ng Connect industry categories

We know that customers are multifaceted. Once we understand and accept this we can move on to the challenge of meeting their diverse needs. Ecosystems offer a richness of perspectives to address customer challenges and create exciting business opportunities for participants.

Then there are the legal challenges that invariably will arise in these environments. As concepts come to fruition, concerns about who owns what start to emerge. This discussion can be an especially thorny issue when valuable intellectual property is involved.

Ecosystems require new frameworks for legal agreements. These new agreements allow organizations to share information and resources while ensuring that important things like patents, trademarks and copyrights are protected.

Creating new value propositions and business models

One of the strengths of ecosystems is they have the potential to create new value propositions and business models that cannot be delivered by an individual company.

At the Consumer Electronics Show in January 2009, Sony Chairman and Chief Executive Officer Sir Howard Stringer told attendees that creating new relationships with service providers was imperative. He cited Sony’s new WiFi digital camera, built in collaboration with AT&T as an example of these new partnerships. The camera can be connected by users, to any of AT&T’s WiFi hotspots to send photos to a photo-sharing site. ^[1]

Ecosystems present very attractive opportunities to benefit from economies of scale and replicate success in developing markets as well. With more than 3 billion people living on less than US $2.50 a day, ^[2] developing markets need pre-configured, proven solutions that work and are cost effective.

The ecosystems being put in place today in developed markets are vital to rolling out LTE in high-growth markets tomorrow. A 2009 study titled “India: The Impact of Mobile Phones,” conducted by the Indian Council for Research on International Economic Relations (ICRIER), indicates that Indian states with 10% higher mobile phone penetration will enjoy 1.2% higher annual average growth rate than those with a lower teledensity. ^[3] Collaborative partnerships will bring new opportunities in e-health, e-learning and pre-paid ventures to the market more quickly than ever before.

Conclusion

There may have been a time in the communications industry when going it alone, with a head-down dedication to address the demands of the day and deliver repeatable solutions, was enough to ensure success. Those days are gone. An insular approach to the market today is no longer the answer. As well, unproductive partnerships that don’t look beyond the communications arena will not succeed.

Multi-industry ecosystems, however, are fundamentally different. They offer a value proposition to network operators, to enterprises, as well as to consumers that has never been delivered before.

Leveraging ecosystem offerings and creating regionally relevant choices at cost points that all markets can embrace will open opportunities for everyone. This is possible because a vibrant ecosystem presents an opportunity to create expanded value. It taps the talents, experience, and market reach of a diverse group of participants so offerings that span technological disciplines can be created from the ground up.

Ecosystems offer a rich playground that enables all participants to innovate and develop user experiences in ways that leverage a comprehensive understanding of how end users truly interact with their devices, networks and applications.

To contact the author or request additional information, please send email to enrich.editor@alcatel-lucent.com.

Footnotes

^[1] http://telephonyonline.com/residential_services/news/service-provider-partnerships-0108/index.html

^[2] http://www.globalissues.org/article/26/poverty-facts-and-stats

^[3] http://www.vodafone.com/etc/medialib/public_policy_series.Par.56572.File.tmp/public_policy
_series_9.pdf