A previous article provided ‘A Managed Services Primer.’ Managed Network Services (MNS, aka Outsourced Network Operations) was a $10B business in ’08, with a CAGR (Compound Annual Growth Rate) of 16%.  Europe accounts for 45% of the market.  The leading supplier in the market, Ericsson, rips-out other supplier’s equipment and installs its own in the networks it manages (e.g. in H3G Sweden).  So for any supplier in the telecoms industry, if you can not deliver your product as a managed service, you may not be delivering it for much longer.

MNS breaks down into network outsourcing and service hosting.  Network outsourcing is buy far the larger business, roughly $8B, compared to service hosting at roughly $2B.  Service hosting tasks (or managed services, the term used in this article) include product/service definition, service delivery platform development, service delivery platform operation, content acquisition and management, application and content development, and application operation.  The focus of this article is on managed services, and uses IMIMobile (IMI) as a case study in the success of this category.

IMI’s converged mobile and online technology platforms enable it to deliver managed content services to over 80 mobile operators and media companies around the world. IMI’s product portfolio includes a Service Delivery Platform, carrier grade messaging platforms and gateways, applications for data services, web services and voice platforms Customers include Airtel, Vodafone, Virgin Mobile, Google, Reuters and Yahoo!. This is a critical point, IMI could sell products, but they do not; they sell a managed service based on their technology.

BSNL (Bharat Sanchar Nigam Limited) and IMI partner to deliver a personalized ring back tone service (PRBT), launched in 2007 and branded BSNL TUNES.  They achieved 1 million customers within 52 days of launch, and passed 2 million customers back in early 2008.  IMI manages the technology and service on behalf of BSNL.  BSNL gains in this relationship as they avoid capital investment, significant system integration costs, the operational costs of yet another platform to be managed, and all for a relatively small share of the revenue generated by the platform.  For IMI, they can re-use their existing managed services platform, avoiding the costs of implementing a BSNL version of their solution; and they can re-use the service marketing experience of other deployments to help BSNL sell the service more effectively through appropriate inventory and effective marketing campaigns.  As BSNL has discussed, the platform managed by IMI provides a foundation upon which they can launch further VAS (Value Added Services).

This model need not be limited to mass market services, it also enables service experimentation.  For example IMI has a UGC (User generated Content) service called UnIspace, which is deployed in Malaysian operator Maxis.  UnIspace enables customers to share audio, video (including 3G video calls), pictures and text; and have the opportunity for customers to earn rewards (e.g. free airtime) when other members of the community download their content.  As with the BSNL case, IMI’s managed service avoids capital investment, significant system integration costs, the operational costs of yet another platform to be managed; while enabling the ‘service recipe’ to be crafted for the local market.

For the VAS being deployed today, one thing is clear; local market factors matter more than ever in service success.  These factors includes local culture / social norms, competitive / regulatory environment, pricing, internet availability, competitive / complementary services, etc.  These factors make determining service success difficult.  A common refrain from many application developers is operators are always expert on what services will NOT work in their market.  IMI’s managed services model provides an example of how to lower the barrier to entry for new services to enable operators to experiment more freely and hence let the market decide on service success.