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Enterprise Voice 2.0: Ecosystem, Species and Strategies

Summary: analysis of the structure of the Enterprise Voice 2.0 market ecosystem, the business models and value networks within it, and conclusions as to what operators can do in order to benefit from it.

[Ed. We will also be focusing on the Enterprise Voice 2.0 Ecosystem at our April 28th-29th 2010 Executive Brainstorm in London, and in our future research programme.]

Introduction - The Enterprise Voice 2.0 Opportunity


The need for better voice and messaging services has been a long-standing concern of the Telco 2.0 Initiative. In 2008, we published a major strategy report: Lessons from Internet Communications Services on the lessons for the industry from the proliferation of consumer-centric VoIP, social networking, and messaging applications. More recently, it's become apparent that much of the potential opportunity here is concentrated in the field of SMB and enterprise voice systems, both for person-to-person and person-to-application roles.

Since the mid-2000s, telephony has been undergoing developments analogous to those which characterised the emergence of the PC and the World Wide Web. The emergence of key general purpose technologies has made it possible to develop new applications in voice and messaging with dramatically lower needs for capital and lead times than at any time since the invention of telephony.

This has resulted in an adaptive radiation – a sudden explosion of new species of companies, the typical consequence of major change in an ecosystem. We described a selection of the new players in the Voice and Messaging 2.0 Innovators' Directory in late 2009, and in this Analyst Note we provide an analytical framework defining the emerging species in the ecosystem.

The species are a highly diverse group of (mostly) start-ups that offer voice applications and services to final customers and also to each other. Typically, they buy connectivity from network operators and sell tailored applications to end users – the main variation between them is how far along the chain from raw material to finished product they work.

In Telco 2.0, a key principle is that “telcos use existing products and services and/or enabling capabilities to add value to the products and services or business processes of companies seeking to engage their customers more profitably.” Most Voice 2.0 players exist to mediate between the needs of end-users and the “raw material” of connectivity. They are the natural users of Telco 2.0 APIs and other products, re-configuring and re-using them to meet the needs of their customers. The customers, in turn, benefit from utilising real-time communications – voice, messaging, and possibly video – as part of their internal software applications and operational workflow.

Voice 2.0, like the World Wide Web before it, is critically dependent on interoperability and interconnection, achieved through open standards. Therefore, another Telco 2.0 principle is applicable here – “The development of new common technical and commercial platforms across Telcos, which create economies of scale required to deliver a ubiquitous solution to upstream customers.” Technically, projects like IETF’s SIP and the GSMA’s OneAPI are already delivering this. Commercially and operationally, this remains very much to be resolved.

This note therefore identifies the structure of the Voice 2.0 market ecosystem, characterises the business models and value networks within it, and draws conclusions as to what operators can do in order to benefit from it, rather than treating it as a problem.

Structure: Enterprise Voice 2.0 as a Value Network

In this analysis we use a model that defines businesses in terms of their place in a value network, and that begins with raw materials (like mineral ores) and ends with the finished product and the customer. The illustrative example is gold – we begin with the goldmine and the miners, digging the ore out of the earth, we see it refined into semi-manufactured bullion, which is worked into wholesale products, which the jeweller finally customises according to the customer's needs.

Figure 1 – Where to play in the Value Network?
Fig%201%20where%20to%20play%20voice.png

Source: Telco 2.0

Each step in the process is linked with a very different type of business; notably, the left hand side of the chart tends to involve very large and capital-intensive firms, whose assets are usually very fixed – nothing, after all, is more fixed than a deposit of gold-bearing rocks. As the process proceeds, the minimum efficient scale tends to fall, and the optimal mix of assets changes; at the very far left, they are dominated by land, then by physical plant, then by intellectual property, and finally by human capital and intangible goods like knowledge of the customer.

Applying this to Voice 2.0 requires a slightly different approach – most Voice 2.0 companies would fit at the borders between each of those groups, as many of them are more akin to the firm that makes the jeweller’s tools than the gold miner. The key interfaces appear in the following chart – we’ve given examples of the processes, business types, and critical skills for each one in its corresponding box.

Figure 2 – Industry Value is Concentrated at the Interfaces
Fig%202%20Ecosystem%20Table%20Voice%20April%202010.png
Source: Telco 2.0

To read the full article, covering...

  • Species: Market Role Vs Asset Nature
  • Diversity of Opportunity Limits the Benefits of Vertical Integration
  • How many players ‘Drink at more than one pool’
  • Skype, Voxbone and Ribbit - as examples of players with ‘overlapping roles’ in the value chain
  • Strategies: Adaptation or Diversification?
  • Conclusions

And including the following additional figures

  • Figure 3 – Mapping the Enterprise Voice 2.0 Players - Role Vs Capital Intensity
  • Figure 4 – Voice 2.0 Players Concentrate at the Interfaces
  • Figure 5 – A Typology of Enterprise Voice 2.0 Species

...Members of the Telco 2.0TM Executive Briefing Subscription Service can access the full item here. Non-Members, please see here for how to subscribe, or email contact@telco2.net or call +44 (0) 207 247 5003.

[Ed. We will also be focusing on the Enterprise Voice 2.0 Ecosystem at our April 28th-29th 2010 Executive Brainstorm in London, and in our future research programme.]