Lately we’ve seen some traditional Dallas companies investing in technology and expanding in non-traditional ways. By finding innovative uses of mobile applications and cloud-based services, these firms aren’t just digitizing what they do, but creating opportunities for their own companies and their customers.
When the convergence of communications services and devices took hold, consumers and businesses began to behave differently and the culture changed. Businesses are now starting to respond. “There’s a growing realization that companies must establish successful platforms, not just products,” explains Amit Basu, a professor at Southern Methodist University’s Cox School of Business.
What’s a platform? Basu explains it as a way a business can both reach more customers and allow others to innovate on its behalf. Apple, for instance, creates all sorts of digital services as a way to sell more devices. Its iTunes digital music store may average more than 15,000 songs downloaded per minute, but that’s all done to fuel the need for a new device on the other end of that download.
Other companies are investing in new technologies to build their platforms, too. Locally I’ve seen at least three examples, and in each case, the action could result in a network of others creating and selling services and products on behalf of the originating firm.
GameStop’s Mobile Move
The first example is the retailer GameStop, which acquired browser-based gaming site Kongregate back in 2011. Recently, Kongregate announced that its parent was bankrolling a new mobile developers program, creating a $10 million fund to help independent game developers get their games on people’s phones.
Mobile gaming is very different from the console game sales that power GameStop’s 6,650-plus retail stores and the browser-based games that attract more than 15 million monthly visitors to Kongregate’s website. But GameStop’s executives have been consistent in saying they want to reach gamers no matter where or how they play games. The investment timing is great because mobile gaming is growing fast. Last year, 80 percent of the estimated $10 billion in revenue that came from mobile apps was thought to be from mobile games, according to Flurry Analytics.
It’s true that Kongregate’s browser-based games are just as easily played on iPads and other tablet devices, so GameStop can claim some mobile gaming cred. But browser-based games don’t take full advantage of what makes a mobile game special. They don’t incorporate motion, location, and proximity to other players within the game’s objectives. Also, they don’t have the ability to share screens with other gamers or project some game play to larger screens like TVs. For this, specially-built mobile apps will be needed and, to the extent that those apps are enjoyable and addictive, GameStop will make all its money back by maintaining its credibility with gamers everywhere.
Genband’s Cloud City
Genband, a Frisco-based telecom equipment manufacturer, provides another example of a company reaching outside its usual distribution methods to create a new platform. Since 2006, Genband has acquired seven companies or parts of companies, divested at least one product line, and declared that it would sell and support enterprise customers as well as service-provider customers.
It’s not really difficult to explain what Genband does—it helps its customers modernize their communications networks—but it is very challenging to say how the company does it, given all the bits and pieces Genband has picked up over the years.
But with a new effort involving cloud computing, Genband has put a nice wrapper around a collection of application servers, gateways, and softswitches that all work together to provide services like Internet-based phone calls, HD video conferencing, scheduling and team calendar applications, and so on. In February, Genband announced it would provide a cloud-based service where it would use its own infrastructure to become something of a service provider itself.
The company will now provide unified communications services for its customers (service providers and enterprises) to resell to their customers (small businesses, other companies, and consumers). Rather than having to explain to the market how all of its acquired businesses and products work together, Genband decided to show it all in action with its new service, which it calls NUViA.
I’ve always said the most compelling reason companies do things in the cloud is that they can simply rent what they used to buy (and barely, if ever, use). This is definitely the case with Genband’s customers. They can now rent Genband’s services and, if the business case demands it, they can buy the gear later and exert more control over that part of their IT infrastructure. This cloud service holds promise for Genband, too, giving it a way to enjoy recurring monthly revenues from the services it provides instead of having all of its business based on gear sales.
A third example of a company creating new opportunities for itself involves the AT&T Foundry in Plano, a development center AT&T started two years ago in a building owned by Alcatel-Lucent. The Foundry was created to give AT&T a place where it could create new businesses more quickly than it could before and also collaborate more with application developers and others who are building things to enhance its network. With its partners, AT&T claims to have invested some $80 million in the programs hosted by its three Foundry centers. (The other two are in Palo Alto, Calif., and Ra’anana, Israel.)
AT&T Behind the Scenes
The first standalone business to come from the Foundry in Plano is a business called the AT&T Partner Exchange, which was announced in February. What AT&T is doing is allowing other solutions providers—regional IT shops, ISPs, etc.—to private-label and bundle AT&T services with their own applications and services.
As an example, a company—let’s call it Phil’s POS—that leases IT gear and point of sale systems to small retail stores could now hook up with the AT&T Partner Exchange and bundle Internet connectivity, on-demand storage, and in-store Wi-Fi for those customers. Not only does Phil’s POS have a menu of different products to sell to its established customers, but now AT&T is being represented by a company that the small retail store already trusts.
Don’t worry, there’s a technology story here, too. AT&T has to expose a certain number of application programming interfaces (APIs) to, in our example, the Phil’s POS IT team so that it can operate the network on behalf of its customers. This allows Phil’s POS to respond to service calls and address network problems without AT&T getting involved.
Before smartphones opened up a way for any developer to build applications for any device on any network, this sort of thing wouldn’t have happened at AT&T. But the mobile revolution forced AT&T to accommodate app developers and it laid the groundwork for exposing these once sacred network controls to trusted partners. “It is an extension of the concept of opening up the network for developers,” says Brooks McCorcle, president of AT&T’s new Emerging Business Markets organization. “The fact that we’re here at the Foundry and working in this collaborative manner is part of this whole philosophy.”
That philosophy McCorcle references is really the point here. Most businesses have websites and mobile apps, but are they really pushing to create a platform for their customers or just move more units and book more sales? (Not that there’s anything wrong with that.) Can your company take some part of what it does now, offer it as a service or an application, and allow others to add it to what they do and innovate on behalf of both of your businesses?
SMU’s Basu says that with new innovations like cloud computing and mobile apps, businesses are finding success by building “on both sides of a platform.” Mobile apps that don’t make money might be worth creating if only because they help you build an audience or a market you wouldn’t have otherwise reached. GameStop, Genband, and AT&T are a few companies showing us how mobile apps and cloud computing are helping exploit new distribution methods, create a more diverse revenue stream, and expand into markets by way of allowing customers to sell services to others.
Where might your business go if you decide right now to start building a platform, and not just another product?