Google as telecom player - Value Grid Framework Critique
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Google will act as a "virtual" mobile network operator in the US by leveraging the networks of Sprint and T-Mobile to sell data, voice, and services under the Google brand targeting specific customer segments at low costs. The US telecom market is dominated by the top 4 operators with 92.7% market share, and virtual operators only capture 3.2% of subscribers. By becoming a mobile operator, Google can generate new revenue streams and influence customer demand by owning the last-mile customer connection.
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Google as telecom player - Value Grid Framework Critique
- 1. Google as mobile operator in US
- 2. Google will leverage Sprint & T-Mobile’s network established all over the US to sell data, voice and services to end-customer under Google brand. Will offer low cost services targeting specific segment. Google acts as “Virtual” Mobile network operator (MVNO) or Telecom Resellers.
- 3. 3 US telecom industry market : 92.7% market share by top 4 mobile operator… Even with 50+ providers, MVNO’s capture only 3.2% subscriber share in the US •US mobile operator industry is a mature industry with 30+ operators. •The growth rate of the industry is expected to be 3.3% CAGR (14-19). •Mobile “Virtual” network operator (Telecom resellers) is a declining industry with over 50+ such operators •The growth rate of the industry is expected to be -0.6% CAGR (14-19). The capital intensity is medium
- 4. 4 …it generates new revenue stream that Google can tap by becoming mobile operator Source : Gartner Google will get the opportunity to influence customer demand by owning the last mile connect with the customer. •And by exploring different penetration points (such as Google Fiber, Wi-Fi hotspots) in the value grid Google’s existing presence Google target opportunity Google can target billion dollar market opportunity marked in Blue.
- 5. Google Labs Android App Store … Wallet Chrome OS Drones Nest … Nexus Glass Google Car Project Loom Space X Fiber … Google VoIP ISP Cloud Solutions … Social Maps Search Voice Internet Handsets … Broadband Enterprise Solutions Google’s value grid in addition to telecom value chain Mobile Hardware Broadband Web Telecom value chain Google value grid By entering the telecom industry, we can see in the value grid that how Google is : a) Integrating value b) Influencing demand in both the direction but…..
- 6. The value grid doesn’t reflect… – Digital business of the technology firms such as Google. – Customer oriented strategy of Google – Multiple businesses and their interconnections within the blocks.
- 7. Web Android Applications (Maps, Gmail) Glass Wallet Google Fiber Voice Customer Google VoIP Analytics Space X Media (Youtube , Play) Internet Project Loom Nest (IoT) Shopping IaaS Handsets Drones Search Car Nexus Hangouts Productivity apps Applications We propose a converging value grid for Google –showing its customer centric business User Experience = Hardware + Software + Services
- 8. Strategies to be used by mobile operators to fight against Google Differentiate their offerings Add a low-cost business Switch to selling solutions Become exclusively a low-cost provider Acquiring resellers rather than partnering with them, and using them as sub-brands to target niche markets Bundling the handsets, landline, broadband, mobile along with applications & services to provide more value . Not a feasible alternative for large operators. Few players control the market Google should integrate these strategies since the start of its operation to neutralize Mobile Operators tactics. Customer can upgrade their phones more frequently, get free international data roaming as well as data for tablet customers . E.g T-Mobile recognized itself as an Un- carrier.
- 9. Thank You
- 10. For Google as a company, $1.3 trillion I.o.T market* Google applications Android OS + Google Play Nexus Google Voice : VoIP Real Time Communication - Hangouts Nest, Google Car, Glass Diagram Sources: Pyramid, GSMA, World Bank, IMS Research *Source : IDC 2014 Google Cloud (Enterprise) Google Fiber / Project Loon / Space X Google’sStrategicmove toaTelecomoperatorSprint and T-Mobile to get $750 million and $250 million resp. by 2018 ; Increase network utilization New price war expected specially with AT&T and Verizon (as they have 65% market share combined).