Will Mobile Industry go the IT way?
During 1980s, the IT Industry was vertically aligned. The old style computer manufacturers had their own semiconductor chips, built the computer in their own factories and developed their own proprietary Operating System. But as the 1990s approached, the industry had gone through a tectonic shift, as the industry structure got horizontal. With the emergence of powerful players like Intel in microprocessors and Microsoft in OS, computer manufacturers were forced to align themselves to a horizontal structure where different players controlled different parts of the Value Chain.
This phenomenon has been described in detail by Andy Groove in his book, Only the Paranoids Survive. Looking at the similarities betweek IT industry and mobile industry, a question which becomes relevant in today’s context is, whether the mobile industry would also go through a similar phase? A closer look at today’s mobile industry reveals that the structure of industry is more vertical than horizontal as the mobile network operators not only control the infrastructure, but also control the software farm which runs over the infrastructure and the sales and distribution. Until some time back, this industry structure worked out well for the mobile network operators. However, as the number of subscribers continue to grow, it is becoming difficult for the mobile network operators to control multiple and distinct elements of the value chain e.g. mobile infrastructure commissioning and maintenance, customer acquisition, keeping pace with technological changes and advancements: customer service, billing and invoicing etc.
A few mobile network operators such as Airtel (a part of Bharti, India) had realized this few years back, when they decided to outsource their IT Software and Infrastructure to different entities, so that it can solely concentrate on sales and distribution.As the subscriber base of these companies are growing by leaps and bounds, archipelago of communities are emerging which have specific needs and requirements. One such community is Enterprise segment, which have niche requirements in mobile data services. It is challenging for the mobile network operators to cater to the requirements of each and every segment as it better suits them to focus on generic requirements of all customer segments. As these communities become large and their voice becomes more prominent, it would be increasingly difficult for the mobile network operators to satisfy these customers with their services. That is when, the mobile industry structure would shift from vertical to horizontal in which operators would concentrate on maintaining the infrastructure and providing generic services and the value added services catering to a particular segment would be provided by a new breed of companies called as MVNOs. Some early signs of the shift are already visible - Disney catering to the requirements of family in the US and other countries, Virgin catering to youth in the UK, US, Australia and Canada and ValueFirst catering to the enterprises in Asia Pacific and Europe.
(Reader submitted article: Author – Nimesh Bhandari, VP – Mobility Solutions, ValueFirst)
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