At the start of this year I created a white-paper around API management for Apigee (previously called Sonoa Systems). Apigee is a 65-employee company with 55 engineers (10 working on the Facebook team), run on $40 million in funding from Bay Partners, Third Point Management Partners, Norwest Venture Partners, Juniper Networks and SAP Ventures. Its business model centers on the 1-2% of their users who pay an average of $75,000 a year for custom enterprise API design and management. It handles HTML through JSON APIs for email marketers like Constant Contact, media producers like MTV Networks, financial institutions like ING, and projects like Netflix’s streaming to Xbox service. The company sees retail moving from e-commerce to A(PI)-commerce with physical purchases being made through apps, and it is positioning itself to facilitate this change.
APIs allow enterprises to create application that incorporate third party services underneath the API. For example on eBay, an enterprise can use the API to create a gateway to move all the items in it’s catalog onto the auction site. Items that are being auctioned off on eBay or that are for sale on Amazon can find their way to new audiences when the enterprise uses APIs to include the product listings in their own applications.
Google and Facebook have 5 billion API calls a day. Twitter has 3 billion calls a day that amount to 75% of its traffic. I’ve reached a conclusion on Twitter its a weapon on mass distraction, I see the most weakly thought out statements made by people who should know much better, and because there’s no moderation or comment, it ends up a mass of ill-formed opinions, its taken those involved down to such a poor level of thinking it should have a government health warning (anyway rant completed on that one). Salesforce.com has 50% of its traffic flowing through APIs. In many articles you’ll see a focus on developers, that’s missing the point, developers are behind all enterprises. The point is APIs enable enterprises to effectively embed their business into many more platforms, i.e. reach more customers, or lower cost of operations.
Wholesaling capabilities is a core competence of operators since the emergence of the intelligence layer on top of the telephony switch. As an example, 800 (free phone) numbers are a capability that is applied to many business problems. Operators do not create “airline customer complaint toll-free phone services,” they enable businesses do that with the capability they wholesale. This is a critical point: APIs are not limited to consumer applications; rather, enterprises are the major adopters of APIs. For example, in an enterprise workflow where a request to made for a new purchase, this triggers a message to the approving manager, who confirms the order is OK, and the order is placed. If the messaging and confirmation are done via an SMS or automated phone call it can speed up a business processes from days to minutes – which is a very compelling business case.
As telecom and web merge the operator can wholesale a multitude of capabilities, including messaging, billing, click to call, mobile content, conferencing, location, single sign-on, address book, age verification, identity, profile, presence, call control, mobile lookup, IPTV content, connection status, quality of service, messaging short codes, video streaming, set top box APIs, mobile device APIs, to name just a few. All of these need to be provided under the secure policy control operators provide today for their customers – hence Apigee’s critical role.
At the moment there’s a bit of a mis-focus on APIs, its not just about developers. Its about the enterprises that employ the developers. They need to understand the business benefits of the APIs. For operators to be successful in the API business its not just about having a website and some APIs. Its about API management (Apigee), and putting the sales effort behind educating enterprises on the benefits so they make the investment, and hence embed telecoms into their business. Voicesage does a good job on education, so all operators need to do is make the investment and copy. It likely requires less than 1% of the investment currently being made in LTE (Long Term Evolution), which is simply driving operators towards an ISP (Internet Service Provider) business model if an equal investment is not made in remaining relevant to customers as a service provider.