Case JamCam Agenda

Case JamCam
How to Analyse the Market for a New
Mobile Traffic Imaging Service?
Agenda
1.
1. Objectives
Objectives &&Procedure
Procedure
2.
2. Market
MarketResearch
Research--Results
Results
3.
3. Conclusions
Conclusions and
andNext
NextSteps
Steps
4.
4. Questions
Questions
1
JamCam Starting Point
®
Generic technology platform that allows end-users to
easily access on their handsets real-time images
provided by video cameras.
traffic,
Services will target public sphere images [traffic
weather, tourism].
Mobile JamCam®
Objectives of the Study
Plan product design
and
market entry
strategy
Identify and assess
market opportunities
for this new
promising product
and service
Understand opportunity
context, find potential
users
Market Research
Identify KSFs for the
service
Develop product and
service concept
Service Definition
Implementation of Sales
process
2
Is There A Market?
(According to their research) Yes, because…
Operators are looking to increase data revenues
Experts expect rapid growth in Global Mobile Data Services:
14% (2004) -> 31% (2007) (AGR)
The time is right since ecosystem is complete ( 3G)
Prepare transition in terms of offer
Simple concept -> Simple technology -> Service easy to
adopt
Market Research Content
Figure 1 Europe Wireless Telecommunication
Services Market Volume (source: Datamonitor)
Figure 3 Service revenues
from data in Western
Europe (source: Ovum
Analysis)
Figure 2 Top 25 operators to
reach 15% of revenue from data
(source: Datamonitor)
3
Description of Proposed
Service
The main purpose of the JamCam service for the end-users is to
allow them to check on real-time on their mobile phones images
furnished by video cameras (web cameras, cctv cameras and other
multi-purpose type of video cameras)
The main purpose of the JamCam service for the Telecom
Operators is to increase the average revenue per user for data
services (over GPRS)
Thus, the role of the service provider can be understood as the
role of a content aggregator[1]
The most potential service concept for JamCam is traffic monitoring
®
®
®
[1] Definition: The function of a content aggregator in the mobile
telecommunications industry is to repackage content and
information for distribution to mobile devices while adding, at the
same time, value by delivering content in an appropriate format for
mobile distribution.
Size of Opportunity
Business data
services
5%
Infotainment
12%
Transaction
services
0.5%
Advertising
2%
P-to-P
messaging
11.5%
2007
Voice and other calls
69%
Total 625 BEUR
Figure 6: Forecast of mobile services Global Mobile Service
Revenues in billions of €uro (BEUR). Source: Nokia June 2003
4
Mktg. Rsrch. – End users
Objective
Assess the revenue potential per user
Research Strategy
The service was presented as a complementary offer of
informative real-time images and as a personal
surveillance system
No formal collection of data – no questionnaire
Mktg. Rsrch. – End users
Population (~30)
Techies
Interested users
Normal users
Conclusions
Techies – Not willing to pay – no novelty – location service
interest - personal service
Interested – Will pay minimum for getting maximum – no
subscription - traffic OK for big cities – competition WEB
Normal users – driver security (video surveillance) – concern
easy to use - accept both revenue models
Yearly subscription ~100 CHF – Max 1 CHF connection
5
Mktg. Rsrch. - Operators
Results
Interested in traffic service (not willing to deal with content
providers)
Personal Webcam access from mobile
Ownership of content follows same administrative model in all
the prospected countries
Revenue model is key (volume-based model could work)
Window of opportunity (closing) before 3G launch - Opportunity
with content?
Operator TeleMobil has gateway traffic billing system adapted
Confusion with streaming services
Increase Interest
Private Service
Novelty
Attractiveness of package
(public + private)
Service F(content)
6
!!"#$ #$
Competitors
Large number of companies dealing with real-time
images and different targets:
Expensive Axis webcams
Streaming services (usually new players)
Webcam Software companies getting into products and
service mobile markets
Isolated large firm initiatives – e.g., Nokia Observation Cam
No clear winner
Revenue Projections
Analysing the flow of revenues is particularly useful to organizations that are trying to
meet management challenges, such as expanding existing services. This is the reason
why a revenue analysis of the "projections" of revenue associated with the service for
some operators will be presented.
The complexity and differences of the billing models used by the different operators
prevent an accurate comparative analysis between the revenues generated. In spite of
that, the results could lead to an evaluation of the more profitable clients and of the
capacity of generating a revenue flow.
The function used for the calculation of the revenue projections is based on:
The amount of potential end-users of the service
Because of the lack of accurate data about the proportion of GPRS active
end-users per operator, the amount of potential end-users presented in the
analysis has been estimated based on information of a single operator and
extrapolated for the rest
The cost of a the KB for the end-user
The cost per KB used in each billing plan of the operator has been
calculated and represented in the graphics
The assiduousness of the use of the service
We estimate in this report that an average of normal monthly consumption
of the service is up to 60KB
7
Revenue Projections
Revenue Projections - Operator XX in Country YY
160000
Yearly Revenue
140000
120000
100000
80000
No plan
60000
Service 20M
Service 2M
40000
20000
0
0,58
2,9
5,8
29
58
116
Subscribers ('000)
Assumptions:
-50% revenue share
-Transactional billing
(note: data has been invented)
Service Concept
Leverage existing network of traffic cameras
User can send SMS to receive a real-time image from a
given camera
Revenue shared between service provider and operator
8
There It Was...
What do you think of this analysis?
Strengths?
Weaknesses?
How credible you consider the assumptions to
be?
How would you do it, if asked to?
Problems With the Study
Unrealistic estimates of market potential based
on self-interested, over-confident projections
No consideration of the business system
required to deliver the service in practice
Unrealistic assessment of market potential with
uninitiated users
Idea of market opportunity fixed early on,
subsequent focus on this opportunity only
No realistic assessment of the viability of the service
for the user
No analysis of what would be the best concept
What if the traffic jam does not emerge under the
fixed camera but, say, 100 meters further down the
road?
9
How Would YOU Do It?
How can you fix an evolving service
concept and estimate its market potential?
How would you apply the discovery-based
planning logic to estimating the
commercial viability of this service?
Lessons
You cannot do traditional market research when the ”market” is only
to be created
Extrapolating from assumptions makes no sense when the future is
unpredictable
Presenting macro level data does not make us any wiser when we
are concerned with micro-level business model implementation
Repeating guesses made by others does not add value – it only
creates an illusion of market research
Do not get stuck to one business model – either implicitly or
explicitly – when you cannot know which model would be the
optimal one
Do not trust potential customers’ word regarding a service that does
not yet exist – it costs them nothing to state that they would buy the
service
Remember that you cannot predict large overall market size and
then expect to capture, say, 1-2% of a multi-billion € market
After all, how many alternative PC operating systems are there in
existence?
These are often Winner-Take-All situations
10
How You Should Do It
First, consider alternative business models
Which players need to come together to make the service happen?
What alternative governance structures can you implement?
What roles does your business model articulate to your partners?
What entry wedges do the various business models suggest?
Even if you cannot predict, you may find analogous business models,
services, or situations that you can examine and from which you can learn
E.g., ”old media” applications of traffic information systems
List ALL assumptions that you are making – this is an iterative process for
which you will want to have critical feedback from many sources
The implicit assumptions are the most difficult to recognize
Estimate the volume of business that your investment will require for
reasonable ROI (reverse income statement)
Calculate the cost structure of your alternative business models – be
reasonable and rely on real industry data input from similar sectors
Experiment to test your assumptions
Develop milestones for alternative business model implementations –
experiment to test your assumptions
Consider doing a Lead User research to optimize your service offering
In addition, consider responses to competitive entry (à la Teece) as well as
strategies required for consolidating you position (à la externalities)
Lead-User Study: Ideas
Who would be the users most likely in need of
this kind of service?
Who would stand to benefit the most?
Who would already have developed solutions to this
need?
How about taxi drivers and delivery services?
Collect a focus group of users for panel
discussion
Realistic concept development
What functionalities are really needed
How would the users use the service
What alternatives exist
11
TO REMEMBER
You cannot do traditional market research for products or services
that do not exist as yet – this includes pretty much all technology
products and services
Instead of market size, the important question to ask is: What does it
take to get this business going? In other words, we are concerned
with market creation research instead of market research in the
traditional sense
Market creation research is a search and experimentation process:
you must imagine alternatives and find ways to test the viability of
these
Try to learn and understand the discovery-driven planning process:
this is an important philosophy that can provide a lot of wisdom if
you understand it correctly
Questions?
12
Backup
13