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Business models for mobile services

Sami Kettunen (presented and modified by Jups). Business models for mobile services. Republica Corporation in Short. Republica Corp. www.republica.fi FOUNDED: 1996 NUMBER OF EMPLOYEES: 70 (5/2001) OFFICES: Helsinki, Jyväskylä

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Business models for mobile services

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  1. Sami Kettunen (presented and modified by Jups) Business models for mobile services

  2. Republica Corporation in Short • Republica Corp. www.republica.fi • FOUNDED: 1996 • NUMBER OF EMPLOYEES: 70 (5/2001) • OFFICES: Helsinki, Jyväskylä • BUSINESS: e- and m-business infrastructure software. Four software products ready to ship, first implementations 6/2000

  3. Republica Corporation in Short • MAIN PRODUCT: X-Fetch Suite;XML&Java component and agent based e- and m-business infrastructure suite including • X-Fetch Agent Server • X-Fetch Wrapper • X-Fetch Unifier • X-Fetch Performer • IPR:Patents pending on the key areas of XML-based content aggregating and XML->application parsing

  4. What are mobile services? • Services that you can use with mobile device • Mobile – European sight (mobile phones, PDA´s) • Wireless – US sight (PDA´s) • M-commerce • Mobile commerce is all kind of commerce where communication, transactions or consuming is done with mobile/wireless device

  5. Mobile Evolution Year 1990 Year 2001

  6. Markets are growing? Mobile penetration 100 • Finland • Norway • Italy • Sweden • Austria • Switzerland • Denmark • Japan • Netherlands • Spain • UK 50 • USA • France • Germany 0 50 100 Internet usage penetration

  7. Wireless business applications Communication Commercial Functions (Transactions) Mobile entertainment (infotainment) Value-added services Directory Services News and info services Community applications Icons, ring tones, games Profiled content Mobile intranet 3rd party commercial apps Dozens of other applications

  8. Mobile commerce • Three main categories • B-to-C – Internet-services • B-to-B – Extranet-services • B-to-E – Intranet-services

  9. B-to-C 1/3 • Communication • SMS, chat • Information services (SMS, push and pull) • One message/order (weather info) • One month (business news) • Limited time (Neste Rally Finland) • Targeted mass communication and advertising • Group SMS for consumers (with permission, opt-in) • Case Add2phone and snowboarding • Alarm • Stock prices (high-low)

  10. B-to-C 2/3 • Reminders • Time based reminders – once a month/year • Community services • Mobile buddies, group SMS • Personalization • Logos, icons, picture messages, screen savers • Entertainment • Horoscope, biorythm, jokes, games, chat

  11. B-to-C 3/3 • Financial services (WAP) • Stock broking • Bank services (pay your bills) • Internet/mobile based games • Finland vs. Sweden ‘war’ • Habbo Hotel chat community • Location services • Where is the nearest gas station, and/or what is the price

  12. B-to-B 1/2 • Open your databases for your customers • Mobile extranet • Based on real extranet – same authentication • WAP or SMS based • Alarm services • Supply chain management (low amount of raw material) • Error information (network down) • Risk management (time to call maintenance)

  13. B-to-B 2/2 • Reporting • Usage reports (today you used 1 000 tons of oil) • Follow up info (electricity stock info) • Configuration • Use website to adjust your tractor • Adjustments will be sent to the tractor via OTA-file (Over the Air) – Case Valtra

  14. B-to-E 1/2 • Databases/Intranet services • Address book, CRM, ERP, management reporting, alarm systems • Email, calendar, resource calendar • Reporting systems • Work allocation and follow up, logistics follow up

  15. B-to-E 2/2 • Information • Push-info for target groups • Desktop SMS • News feed from own markets • Location services • Logistics follow up • Emergency situations – where is the next service person? • Radiolinja and health organisations tested this in Helsinki region – how to find nearest ambulance?

  16. Social services • Home care - trials, some succesful • The home helpers make orders with communicators from the residense of the elderly • Health care - still to come • Call centers • Health data from everywhere any time • keyed in • sensored

  17. Authorities • Some opinions in favour of closed official networks • extra features • recording, tracking, locating, securing • EMP-resistance • Fines for speeding • SMS used by the Finnish traffic police • retrieve speeder’s gross income from tax databases • The Finns got 30% richer in one night!!!

  18. How to make money with mobile solutions? • Operators are winners • Developers and content providers accuse operators having too high comissions • Consumers are not willing to pay 5 FIM/message • Are consumers ready to pay? • Time management • Time wasting • People with company phone use value added services • Corporate users – office tools • Email, calendar and information services • Mass market entertainment services • TV Chat, icons, ringtones, chat, dating services, community services, group messages, games…

  19. Problems Problems Application Platform Vendors Mobile Service Operators Mobile Network Operators Technology Platform Vendors Infrastructure & Equipment Vendors Application Developers Content Providers Content Aggregators Problems Problems Problems Mobile Portal Providers Customer Value Chain of Mobile Markets Content (Reuters, CNN, Yahoo, Kauppalehti, SM-Liiga...) Content aggregation (Digitallook.com, Sanoma-WSOY) Operating systems and microbrowsers (Openwave, Nokia, Ericsson, Microsoft) WAP, HSCSD, GPRS, EDGE, UMTS (Nokia, Ericsson, Siemens, Motorola, Lucent) Middleware and standards (Nokia, Phone.com, Ericsson, ETSI, WAP Forum, UMTS Forum) Mobile platform applications (Yomi Vision, Akumiitti, Dr. Materna, Add2Phone) Various forms of support Handset Vendors Handset and SIM Retailers Retailers (Mäkitorppa, Setele, Tietopuhelin, Luurikauppa...) Application aggregation (Radiolinja, Sonera Zed, Telia MyDOF, T-D1@T-Online, BT Cellnet Genie) Operators (Vodaphone, Sonera, Telia, Orange, Mannesman, Telenor....) Value Added Services (Saunalahti, Buumi.net, Keltainen Pörssi, Alma Media/MTV3.fi) Handsets (Nokia, Ericsson, Motorola, Philips, Microsoft...) Based on Mobile Commerce Report, Durlacher

  20. Operators Value Chain Customer Terminal vendor Hosting applications and/ or third-party portal Subscription/ access fee, Service charge Handset subsidies Bulk handset purchase Pays for hosting/ portal service Site fee Banks/financial service providers Mobile operator Content provider Site fee And/or Revenue sharing Cut of transaction And/or revenue sharing Pays site fee Site fee Big portal player, eg. AOL, Yahoo! etc Retailers e-commerce merchants Advertiser Lähde: Ovum

  21. Pricing of mobile services • Monthly fee – flat rate • News service – 50 FIM/month • WAP-SOLO – 4 mk/month + data connection • Transaction fee – pay only when you use • Ringtone – 5-10 FIM/download • Chat – 5 FIM/message • Vote in TV program – 3,50 FIM/vote • Time based fee • Start fee (0,60 FIM) + 1 FIM/minute • Free service – paid by advertisers

  22. Mobile software – pricing models • How mobile start-ups and others valuate their software • Fixed price • One time licence fee • User amount based pricing • Registered users – XX USD/1000 registered users • Weekly visits in the site • Step by step pricing • Revenue sharing (risk revenue sharing) • 10-50% from the client fees

  23. Value chain of mobile services Content provider Gramex or other Content provider Content packager Operator/ ISP Customer Technical integrator Advertiser

  24. Value Chain and Money in B-to-C - 5 FIM 1,5 FIM 2 FIM 1,5 FIM Content provider Content packager Operator/ ISP Customer 1,5 FIM 2 FIM 1,5 FIM Content provider Content packager Operator/ ISP Customer Advertiser - 5 FIM

  25. Value Chain and Money in B-to-C 1 FIM Content provider Gramex or other - 5 FIM Operator/ ISP 4 FIM Customer

  26. “Literary and artistic works“in the Net IPR owners writers, composers, artists, performers, AV-producers, etc. (The representatives maintain register of works: Gramex, Teosto, Kuvasto, Kopiosto) Service providers Utilize the works in creating content: Responsible for the protection Fees to the IPR owners (their representatives) Works The IPR owners can decide upon using and performing the works in the net Operators Arrange the channels and data transfer - no fees, no responsibility Public instutions Libraries, archives, universities Compensate internal use (low rates) Consumers Browsing: no fees to the IPR-owners, but to operators Packaged works: pays the price

  27. Value Chain and Money in B-to-C - 5 FIM 0,2 FIM 4,8 FIM Content provider Content packager Customer Integrator Advertiser Content packager has own WAP-gateway (case Keskisuomalainen)

  28. Operators Revenue in the Following Years • Where they will make the revenue • Airtime 60% • End user fees 17% • Content 10% • Advertising 5% • Mobile e-commerce 5% • Hosting services 3% Source: Ovum

  29. Mobile service start-ups • No risk money available • Venture capitalists are not willing to fund mobile technology anymore • Where is the revenue? • Clients are not investing • Operators are not investing at the moment • 3G licence and network costs are huge • When they are going to buy some applications? • Bankruptcy? • Many players will go down

  30. How Technology Will Change? • Faster networks and handsets • Fast access • Allways on connection • Better software in handsets • Java Card –technology • You can download software to youhandset • Smart House –concepts • Always with you - manage your house with mobile phone

  31. Source: Durlacher

  32. Thank you! Questions and discussion sami.kettunen@republica.fi +358 40 3011 135

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