In a previous weblog article, “Unmuddling APIs, Developer Communities, Developers, Third Parties, App Stores, App Warehouses, and Widgets…..”  I discussed the confusion around the terms and set out some of the categories of third parties that could use operators’ APIs:

• Enterprises (e.g. where an enterprise’s IT developer may want to use presence for their corporate communications);
• Trusted third parties (e.g. local SIs that can use the APIs for the solutions to their SMB (Small Medium Business) customers);
• Trusted third parties that can help operators work better (e.g. someone helping T-Mobile analyze their customer data to they finally start treating me as a customer not a credit card to be billed monthly);
• Content owners that can use APIs to make their audience relationship stronger (e.g. Real Madrid giving up on email and now using SMS to great effect); and
• Developers / service providers who need a channel to market through the operator or web-based developers / service providers who have their own channel.

What I’m seeing in the market is because of the current confusion a serious mistake is being made, most operator API initiatives are trying to use their developer community as customers with the wrong business model.  The problem is their developer community is full of developers looking for the operator to be a channel to market, and expect to share in the revenue stimulated, not be “nickeled and dimed” on APIs,  Apple and Google do not charge for their APIs.  Operators are missing the bulk of the potential customers for the network APIs, those third parties with their own channel to market who just want to use the operator as a network.

So operators need to look at two sets of API business models:

• One for third parties with their own channel to market with straight forward API charges that discount in volume (enabling a wholesale model); and
• A pure revenue share model for developers looking to use them as a channel to market.

If an operator wants to make its API business successful, and not a fashion accessory, operators needs to sell their network APIs to third parties with their own channel to market.  This is not a developer community, these third parties will not come to the operator.  These third parties are paying their hard earned cash, they’re business customers and must be treated as such.  Some of the example services enabled by network APIs include communication enabled business processes, M2M, home security, and content charging using the mobile account.  Operators need to package a number of solutions together and get out there and sell what their APIs can do.

If operators do not want to dirty their hands by having to sell their APIs, they need to get partners on board such as Kore Wireless (M2M), HomeCamera (security), Voicesage (CEBP), Oracle, and SAP as soon as possible.  Critically, operators must make make clear their API business models (both of them) and go to market plans for the different groups of third parties to stop the current confusion and frustration.