I’ve always been a big fan of looking at and learning from different industries. For instance, I’ve evangelized how slower-moving industries like the Telco industry can learn a lot from traditional retail models. Turns out, on average, Telcos traditionally take six months or more to get their new products or services to market. Because of the massive investment in time and resources, it didn’t seem to matter if a new Telco product would stay on the virtual shelf indefinitely, making money or not. Retailers, on the other hand, can’t afford for their products to shelf-sit because shelf-space is their lifeblood. If a product isn’t selling, off to the bargain basement it goes.
However, there has been a significant shift for Telcos in recent years; they’ve been forced to adopt the retail strategy and have had to analyze what sells and what does not. What’s also interesting is the rate at which the Telcos have transitioned from offering complex rating structures to offering more simplified subscriptions for their services. When I started out in the billing world in the late 90’s, Telco industry bids for billing systems were won on the basis of how a provider could support complex rating structures, time-of-day, day-of-week, distance, and a multitude of other rating parameters that were used to just measure a single network event. Since then, Telcos have done a 180 degree turn and are now adopting a new approach, which is why we’ve seen an industry-wide uptake of the subscription model. They’ve streamlined pricing and, as the price of providing bandwidth has dropped, are offering more “all-you-can-use” options for their voice, text and data services.
In the auto industry, BMW is rolling out its ConnectedDrive software platform and is using the tag line “So connected, you’re free” as the opening salvo for its subscription-based applications in their brand new range of vehicles. This is one of the most provocative phrases I’ve ever heard in my time working in the tech industry, and its message summarizes the sea change in how a broader base of industries are selling their products.
I always expect new business models to go hand-in-glove with new technologies. BMW and others like them are at the bleeding edge of what’s possible in the M2M (machine-to-machine) world and are a testament to what’s possible to monetize—a significant percentage of customers in any market segment will almost always sign up for enhanced convenience options. I guess this is why I was intrigued by Target’s new subscription-based offering for baby-care items. That’s right, baby care!
Like the many products they offer from their store shelves now, Target is following Amazon.com’s lead in offering customers a predictable and automated flow of what they want, when they want it, and how often they want it. It becomes one less thing for the often harried parent of a newborn infant to worry about in their day-to-day lives. Watch for the retail industry to find other ways to offer convenience and automation in things we need to buy on a regular basis.
I’m looking forward to the evolution of all the recurring revenue models, including subscription. I’m definitely going to continue to evangelize the value of learning from other industries.
Faisal Ishaq, Aria Systems
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