Why Now?

Yesterday, we announced our intention to acquire The Now Factory. I think Bert did a nice job of summarizing the logic here (as usual, Silicon Angle has a great point of view), but, I wanted to provide some additional color on 3 macro trends.

Trend #1: Massive Investment, Coupled with the Need for ROI

There is a macro-economic issue that is hindering ROI in telco. In short, its the need for massive investment, in order to remain relevant. Hundreds of billions have been spent in acquiring spectrum (US- $60B, Germany- $51B, UK- $31B, India- $21B), further billions have been spent in modernizing the network (AT&T- $20B, Verizon- $17B), and hundreds of millions is being spent on driving differentiation through devices (CSP's subsidizing devices, etc). Anytime you see investments of this magnitude, ROI will be in doubt, unless there is a clear path to monetization.

Trend #2: Shift From Voice to Data

While this one may seem obvious, I'm not sure the magnitude of this shift is well understood. Plus, this has a strong relationship to Trend #1, in that while operating expenses have grown massively, the revenue (ROI) has not yet caught up. This puts the telco providers in a quandary. Two charts best illustrate this shift:

Global Mobile and Voice Data Traffic (Source: Cisco)

US Wireless Average Revenue Per Unit Per Customer (Source: Chetan Sharma Consulting)

Even worse, adoption of 'over the top' VOIP services is forcing the providers to quickly rebuild their businesses based on data. This requires a differentiating capability to monetize data.

Trend #3: New Business Models

The dynamics presented by the first 2 trends, are forcing telco providers to find new sources of revenue and profit. Emerging business models include things like mobile ads, content delivery models, and real-time charging. However, none of these business models can be executed, without the right data and data services, and integration with backend business systems.

All of which brings us to The Now Factory.

To succeed in the presence of these macro trends, telco providers must deliver new higher value products and services. In order to do that, the core capability needed is the ability to integrate network events with backend systems, in real-time. That is a hard problem to solve. You can't just throw Hadoop at it, as Hadoop alone is not insight.

The Now Factory has superior technology to deliver on the promise of insight and analytics, from network data. When you couple this with our technology in Big Data analytics, we have a unique ability to help telco providers navigate the key macro trends.

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