Until a few years ago, "communications" essentially meant telephone services. The contemporary communications market is utterly different, we send SMS, chat with Messenger, and update Facebook and Twitter. Accordingly, the status of communications providers is no longer what it used to be.
"The contemporary world of communications is much broader, and includes more dimensions and platforms," Amdocs VP strategy and customer experience Gil Rosen told "Globes". "The concept of competition has also widened to players like Google, Apple, and Facebook. The level of expectations has changed, and customers expect dynamism and new launches. Communications providers must diversify and change their character."
Thus a new market situation has arisen, in which customers transfer loyalties from communications providers (such as Cellcom) to equipment manufacturers. "Apple, through the iPhone, is grabbing the end users and creating a whole new world for them," says Rosen. "Nokia is doing the same. Its handset is a digital way of life, and the goal of the equipment manufacturer is for customer loyalty to be to it, not to the communications provider. Apple succeeded in creating unrivaled loyalty."
In the past, sales for equipment manufacturers came from cellular companies, and they sold equipment through them. Today, equipment manufacturers bypass the providers.
Amdocs Ltd. (NYSE: DOX) is bucking the trend by betting that its longstanding customers - communications providers - will beat the competition in the communications market. Rosen says, "Communications providers are the natural candidates to be located at the center of digital life. They have the right platforms to collect money and they know the customer. They know his family context, where he is located, and they can offer customers suitable added value services."
Amdocs has provided billing and customer service management solutions to communications providers for years. The company is now expanding its offerings through the Amdocs Interactive Division, which, among other things, designs cellular and Internet portals, connects the portals to the communications providers' infrastructure, and manages the infrastructure. Since communications providers are no longer the only parties developing applications, Amdocs' infrastructure supports various applications, and manages payments for all users. Communications providers, for their part, developed their platform.
Infrastructure is a communications provider's greatest asset. Rosen says that that developing the infrastructure creates value. He says that Apple receives less than a third of the $500 million revenue from iPhone applications, but the applications helped generate billions of dollars from sales of iPhones themselves.
Amdocs is offering a solution through mobile personalization and intelligent portal solutions developer ChangingWorlds Ltd., which it acquired in November 2008 for $60 million. Amdocs helps application developers reach their target audience through personalization engines. Each user will be offered customized applications and content based on what the communications provider knows about him or her.
"Globes": How does this conform with the fact that communications providers are trying to cut operating costs as much as possible?
Rosen: "Communications providers take a broader perspective, and understand that the crisis is temporary. Whereas in the past, they would wait to see what would happen, now they cannot allow themselves to do this because Apple, Nokia, and Google aren’t waiting for anyone."
Published by Globes [online], Israel business news - www.globes-online.com - on August 26, 2009
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