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7 Reasons Why Telco’s Haven’t Successfully Sold Software, Music or DVD’s.

  1. Telco’s online reach is smaller than they think. Sure Telco’s have large customer bases but the only time I have gone to my Telco’s website was when I upgraded my ISP plan. It’s anecdotal I admit. What’s your use of their websites like?
  2. Telco’s have bad websites. When I did upgrade my plan, the website navigation experience was agonising. A good analogy is government versus corporate. Their web mail was one of the worst I’ve seen.
  3. They are big but that doesn’t guarantee a win. When Telco’s spend to compete they serve up a high Cost of Goods Sold (COGS) number for their competitors to squeeze them against. Lean startups can squeeze margins tighter, and if they can hang on to triple digit growth rates then they can drop a big Telco Goliath with a very small stone.
  4. Telco’s are good at being Utilities, full stop. This is appliance market versus utility market difference. Just because your toaster is an appliance on an electricity network doesn’t mean your electricity utility will be a good toaster maker. They are very different markets, very different sales approaches, very different products and require very different people to execute.
  5. Lessons learn’t. Many Telco’s have already tried and failed. Telco’s, since 2000, have been desperately trying to replace falling fixed-line revenues. They just didn’t understand these web business, the appliances of the net. The revenue messiah didn’t come. Consumers were flocking to cool niche shops like iTunes not the big Telco department stores.
  6. Telco’s had the wrong skill set. Telco’s are big ships. Changing the crew from sailors to steam engineers wasn’t and still isn’t quick or easy. Even worse, short web application lifecycles requires you to destroy your mother ship by building newer and better technology quickly. Telco’s extract long term value from long term fixed assets. Two years is frightening when you normally invest for twenty years in fixed assets.
  7. Web business’s tend to invent. Telco’s tend to be slow followers while web startups who successfully commercialise have tended to come from the womb of inventiveness. University assignments (Google), for the fun of it (YouTube) or everyday business problems that need fixing (Salesforce.com). Telco’s tend not to think this way.
Post a comment — Trackback URI RSS 2.0 feed for these comments This entry (permalink) was posted on Monday, April 21, 2008, at 11:46 pm by Marc. Filed in Business.

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  1. Can Telcos sell software (or anything other than POTS for that matter)? at diversity.net.nz on 22-Apr-08 at 12:11 am

    [...] interesting post over on Marc’s blog got me thinking. In his post Marc contends that; Telco’s online reach [...]

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