* Competition in market for content and application services
Today, we’d like to conclude our thesis about how competition will continue even in the face of service provider consolidation. Last time we discussed why we believe competition for network connectivity will flourish. This time, we’ll argue that the market for content and application services is even more competitive than for network services.
We’ve noted in the past that, with VoIP, call control moves from the switching model to the computing model. So although it may take a decade or more for the traditional public switched telephone network to be overtaken by softswitches and distributed computing, the question is not one of “if” but “when.” If ring tone, dial tone, and Caller ID all become applications encapsulated into IP frames, then traditional telephony voice session control can move away from the current Class 5 switches and can be controlled from distant servers or even from a desktop computer.
Call features and control bring an entirely new set of competitors to the mix – not the least among them being Microsoft.
On the data side, content, like application hosting (analogous to our “water inside the pipe”), is already being supplied by the likes of Oracle, Siebel, SAP, and newcomers like salesforce.com. Hosted application services provided by SBC and Verizon are relative babes in the woods, while AT&T’s and MCI’s hosted content services come closer to being in the adolescent stage – so the pending mergers among these companies ought to boost their prospects.
The real “adults” in the market, however, are players like IBM and EDS, which have many years of experience.
Lest these wireline companies become complacent, though, they need to look ahead to the wireless service providers. Wireless providers are evolving their infrastructure to IP Multimedia Subsystem (IMS) architecture and already have significant experience at providing wireless applications to the consumer market. These wireless providers are already deploying managed enterprise mobility applications like workforce dispatch, sales force automation, and customer relationship management systems on their broadband platforms.
Together, the factors we’ve outlined in this three-part newsletter series point out that not only can competition intensify between the traditional players, but also convergence opens up competition to a range of players the telecom industry has only just begun to consider.
