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This Executive Briefing Report is a collection of company profiles of firms in the evolving voice and messaging space. It covers a broad set of innovators, spanning from services provision to messaging vendors, to underlying providers of specific technology components or APIs. Together, they represent a snapshot of what's interesting in the Voice and Messaging 2.0 space, although this is not intended to be an exhaustive directory of the scores (maybe hundreds) of participants.
We intend this Directory to be both a guide to potential collaborators and competitors, and a source of inspiration for innovators.
Competitor or Partner?
The focus here is on non-telco companies, rather than the in-house efforts by various fixed and mobile operators to evolve their own core services portfolios. Almost invariably, initial APIs exposed by telcos are around voice and messaging, for example with Orange or Deutsche Telekom’s developer initiatives. However, Telco 2.0 documents operator platform activities in a variety of other reports, briefs and blog posts. Instead, many of the profiles here highlight ways in which telcos can partner with emerging vendors or “cloud” service providers.
There is also a set of countervailing trends – many of the companies discussed also implicitly compete with operators' future Telco 2.0 value-add strategies, and/or drive substitution or price erosion for traditional voice and messaging services. There is a distinct risk that much of the value viewed as unique and proprietary by traditional operators is being diluted: both start-ups and major Internet players like Google and Skype are starting to become entrenched in the voice and messaging space, with alternative mechanisms for authentication, payment and customer data mining. A broader theme seen in the Telco 2.0 space is that operators' key assets are like any other asset – they depreciate in value over time and need to be exploited whilst “fresh”. Given the length of time that standards take to be created and implemented this can lead to a mismatch between incumbents’ intentions, and their ability to respond to less-constrained innovators.
Taxonomy of Innovator Types
There is now a bewildering list of companies offering “cloud-based” telephony APIs, enabling developers to add functions like click-to-call, setting up conferences, create speech-recognition IVR trees, send or receive messages and so forth. Jaduka, IfByPhone, Twilio, Voxeo, Ribbit and many others are now playing in this space.
In this Executive Briefing Report, companies profiled are loosely grouped into the following categories:
· Leading Internet Players
· Integrated CEBP specialists
· Standalone telephony API & component providers
· Mobile/Innovative VoIP specialists
· Messaging specialists
· Other selected voice & messaging companies
It should be noted that the size and diversity of many of these companies (for example, Microsoft) means that a certain measure of overlap is inevitable. Whether categorised by industry “tier” (enabler, platform, application etc), or target customer group (consumer, enterprise, operator), there is inevitably a degree of blending.
It is also worth introducing another issue, which will be examined in greater depth in more general Telco 2.0 publications on the voice and messaging space. Over the past two years, there has been a huge proliferation of companies offering telephony APIs or CEBP applications, especially for developers and enterprises, enabling voice-based applications to be integrated with the web. Names like Ribbit, Jaduka, IfByPhone and others are well-known within the voice industry. Yet it can be difficult, at first sight, to differentiate between these organisations, or other more-established vendors and service providers that also pitch their voice/messaging APIs at the “developer community”.
Some of the dimensions to consider here include:
· Telco ownership or relationships. Some (e.g. Ribbit) are owned by operators, others like Jaduka or IfByPhone are clearly aiming to partner, certain vendors like Broadsoft are already operator suppliers looking to extend their franchise, while still more seem fairly hands-off and following the Internet-only model.
· Within the CEBP space, there is a subtle distinction between those offering “off-the-shelf” applications for specific functions (e.g. making delivery appointments), versus those that enabling existing applications (e.g. SalesForce, SAP) via APIs.
· Programming languages for the APIs vary widely, with some aimed at web developers (e.g. Ribbit's use of Adobe Flash), while others use alternatives like Ruby (e.g. Adhearsion) or XML/VoiceXML or an array of proprietary alternatives. Each has its own benefits in terms of breadth of current developer base, ease of use, richness and so forth. At this stage, there is no obvious single “winner”.
· Business models are still extremely fluid, with a variety of approaches to charging setup and usage fees. Some such as Twilio are advocating simple per-minute pricing for voice features, while others have a menu-style approach. There is no “right answer”, as a cheap rate for person-to-person calls might look very expensive for a 10-person teleconference.
Potential Customers as well as Peers
From an operator point of view, the landscape is even more confusing when considering the impact of these players. At one level, they can be considered as competitors to those operators developing their own in-house voice and messaging API / CEBP offerings. But alternatively, they may be seen as partners with deep domain expertise in certain verticals, or addressing particular developer communities outside the reach of the operator’s own initiatives. Lastly, they may themselves be “upstream” consumers or distributors of certain non-voice APIs, such as location or payment.
Furthermore, all of this likely to vary by region – whether they operate in a given telco’s domestic market, or perhaps enable it to gain reach and distribution internationally. For example, at the moment, the US is the hotbed for much of the independent telephony API providers, reflecting the simplicity of the wholesale marketplace for phone calls. In Europe and elsewhere, the complexities around fixed-to-mobile call termination rates make it much harder to build a simple, developer-friendly proposition.
For the first 22 companies featured in this report, we’ve given our top-level generic strategic appraisal of the potential of each company to act as a partner (Opportunity) or competitor (Threat) for Telcos. We offer these appraisals with the following important caveats:
The appraisals contained in this document are based on analysis conducted by STL Partners.
Although the analysis was extensive it was not exhaustive and circumstances of the companies may also have changed between the analysis and publication or since publication.
The appraisals are offered as indicative only and readers are advised to undertake their own due diligence on these companies prior to embarking on relationships with them.
The true role of each company will be market and potential partner / competitor specific, and desirable strategic responses should be formulated in the context of a more detailed specific analysis.
We will also be conducting further analysis to define the taxonomy and positioning of these and other innovators.