The Value of Operator APIs for Developers White Paper - February 2014
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The Value of Operator APIs for Developers White Paper February 2014 Copyright © 2014 GSMA
The Value of Operator APIs for Developers 1 Contents Executive Summary 2 1. Background and Research Question 3 2. Headline Results and Key Insights 5 3. Identified Assets: Detailed Results 8 4. Asset Exploitation in API Strategy 20 References 24 Appendix A: Research Methodology 25
The Value of Operator APIs for Developers 2 Executive Summary Over the last couple of years the mobile app economy has been undergoing considerable shifts of power. Traditional Mobile Network Operators (MNOs) used to “own” the complete value chain. With the advent of smarter phones, the barrier to entry for new players establishing application-based ecosystems was lowered substantially. Any player can provide its assets (data, functionality, or computing resources) to these ecosystems via the concept of Application Programming Interfaces (APIs) and thus add value to the ecosystem. The purpose of this study is to find out which are the assets that only operators can offer to developers, providing unique value, in order to strengthen the position of MNOs in this ecosystem? The scope is not necessarily to validate established assets (such as payment, identity or messaging) but to potentially discover other assets of value to developers. “Assets” in this context does not only refer to capabilities exposed via APIs, but also to how these capabilities are exposed and with which characteristics. To answer this question we deployed a perceived use value (PUV) analysis in two phases: The first, qualitative phase, encompassed semi-structured expert interviews to identify asset areas. Based on the results, the quantitative second phase was designed as an online questionnaire to understand how developers value the various assets looked at. The main insight provided by this study is to expose a clear gap between the high perceived value of MNO assets by developers and the low adoption rate of MNO APIs. The study showed that MNOs do have a range of tangible and intangible assets which are perceived as valuable by developers. However, these assets are not delivered to the market (i.e. developers) in an optimal way, hence the low adoption rate. This insight was confirmed by both targeted segments: long-tail and big-head developers. Other key insights: ■■ There is a clear opportunity gap: 33% of respondents use MNO assets exposed through APIs today — but actually 81% perceive them as valuable. ■■ Perceived by developers as very valuable: – Cross-operator API collaboration (93% of developers agree). – Location/geo-fencing functionality (85%). – Getting a direct communication/feedback channel to app users (within the app) (83%). – Access to users’ context info (83%). – Information about detailed connection characteristics (83%). ■■ Back-end services (e.g. cloud services) - (27%) and exploiting brand strength (22%) are perceived as less valuable. In conclusion, the gap between the perceived value of operator APIs and the current adoption rate suggests an underutilised potential here. If MNOs define APIs as an important part of their overarching strategy, then stepping into this field, and deploying the right developer-friendly tactics in exposing APIs seems to be a very promising step. Furthermore, to reduce operator fragmentation and to increase attractiveness for developers, thinking beyond one operator’s boundaries is recommended (cross-operator API solutions).
The Value of Operator APIs for Developers 3
1. Background and Research Question
The mobile industry has undergone fundamental changes. There has been a clear shift of
power from traditional Mobile Network Operators (MNOs), who used to “own” the complete
value chain of delivering value to the end user, towards new entrants. Traditional entry barriers
into the ecosystem have been mostly removed to facilitate competition and benefit consumers.
Several groups of new entrants have taken away a considerable portion of revenues, which had
traditionally been claimed by MNOs: handset manufacturers, platform vendors, and companies
coming from the Internet domain.
There are two key milestones that have influenced the current landscape: First, Apple’s
introduction of the iPhone with unique and differentiating features (e.g. full touchscreen
for exceptional user experience), which made smartphones “mainstream”. Second, the
establishment of the centralised app store concept – again by Apple – revolutionised the app
market.
MNOs still mostly control the voice and data access and transfer over the network. However,
the challenge MNOs face is that the tremendous traffic growth does not correlate with revenue
growth (Informa, 2009, see Figure 1). Thus, operators are in need of new revenue sources to
support necessary infrastructure upgrades.
Figure 1: Decoupled traffic and revenue growth (Informa, 2009)
5000
Data traffic (PB) Data revenues (US$ mil.)
4000
3000
2000
1000
0
2008 2009 2010 2011 2012 2013
The question is, should MNOs follow a smart- or dumb-pipe strategy to leverage revenue
opportunities? One aspect of a smart-pipe strategy is to strengthen the MNOs’ positioning
Classic Telco Services: Mobile apps
as part of the mobile apps ecosystem. Figure 2 schematically shows the trend of changes
■ Voice
in service usage share over time. Initially the ecosystem was driven by operators, hence all
■ Messaging
services were■ ...
provided by operators. With the advent of centralised 3rd party mobile app
Telco
stores this changed. In addition, more and more 3rd parties successfully supplied services
value
which were traditionally in the remit of MNOs added such as voice or messaging. The goal of a mobile
Service Usage
3rd party apps offering
app-related smart-pipe strategy would be to make sure that the valuable operator assets are
services
telco-like services
leveraged and transformed in a way which generates value for end consumers.
Time3000
The Value of Operator APIs for Developers 4
2000
1000
0
2008 2009 2010 2011 2012 2013
Figure 2: Change of service usage share over time
Classic Telco Services: Mobile apps
■ Voice
■ Messaging
■ ...
Telco
value
Service Usage
added
3rd party apps offering
services
telco-like services
Time
One approach to realising a smart-pipe strategy is to open MNO assets to 3rd third parties.
Assets are accessed via Application Programming Interfaces (APIs). Innovation triggered by
the availability of those assets will lead to the creation of new business models and ultimately
to new revenue sources.
Publicly exposing APIs, however, requires a substantial change in the traditional mindset of
MNOs. In the past, MNOs required strict contractual agreements with 3rd parties which were
usually time-consuming. Individual software or mobile app developers were often not a priority
in such programmes and hence had difficulties joining. Moreover, classic telecom APIs were
complex, proprietary and often not developer-centric. In the past, MNOs generated revenue
by selling access to APIs to developers directly. This is referred to as the “wholesale business
model” of APIs. Disruptive new entrants, primarily coming from an Internet background with
the open Web philosophy in mind proved the wholesale model wrong. Developers working with
these new entrants are offered very attractive opportunities referred to as “two-sided business
models” which do not focus on charging for API access directly. Operators need to rethink the
business rationale: could it be sufficient for operators to get the commercial benefit already
on the retail side from consumers subscribing to high value bundle tariffs because they want
to leverage operator capabilities also in 3rd party use cases? Could operators avoid charging
developers in order to create a competitive offering?
After all, the goal of this study is to highlight assets that only operators can offer to
developers, providing unique value.
The scope here is not necessarily to validate established assets (such as payment, identity or
messaging) but to discover other assets of value to developers. To find these, we conducted
a developer study in two phases: a qualitative phase in the form of expert interviews and a
quantitative phase in the form of an online questionnaire with over 700 responses globally (find
more details about the exact methodology in Appendix A).The Value of Operator APIs for Developers 5
2. Headline Results and Key Insights
In this section we summarise key insights while Section 3 provides a detailed background.
The scope of this study was not necessarily to validate established assets (such as payment,
identity or messaging) but to find other potentially valuable assets for developers.
■■ There is a clear opportunity gap: 33% of respondents use MNO assets exposed through
APIs today — but actually 81% perceive them as valuable.
■■ Perceived by developers as very valuable:
– Cross-operator API collaboration (93% of developers agree).
– Location/geo-fencing functionality (85%).
– Getting a direct communication/feedback channel to app users
(within the app) (83%).
– Access to users’ context info (83%).
– Information about detailed connection characteristics (83%).
■■ Back-end services (e.g. cloud services) - (27%) and exploiting brand strength (22%) are
perceived as less valuable.
The opportunity gap
There is a 48 percentage point (pp) difference between the value that developers assign to
assets from MNOs compared with the rate of their use. In conclusion, there might be an issue
with delivering those assets to developers, rather than a lack of value in the assets in the first
place. General perception in developer communities is that barriers to collaboration with MNOs
should be reduced.
Figure 3: Gap between perceived value and API adoption
Do you already incorporate Do you believe that Operator APIs can significantly
Operator APIs into your apps? improve the functionality of your apps?
No 19%
Yes 33%
No 67% Yes 81%
We could clearly identify an opportunity gap between the
adoption of Operator APIs and the perceived value.
These are assets which developers “agree” or “strongly
agree” could provide value to their products.
Cross-operator collaboration 93% “Cross-operator
collaboration” is
perceived as the most
Location / geo-fencing 85%
important aspect
Direct subscriber communication channel 83%
Subscriber context info 83%
Detailed connection info 83%
0% 20% 40% 60% 80% 100%Do you already incorporate Do you believe that Operator APIs can significantly
Operator APIs into your apps? improve the functionality of your apps?
The Value of Operator APIs for Developers 6
No 19%
Yes 33%
No 67% Yes 81%
The most valued assets
We that
The survey revealed couldthe
clearly
most identify an opportunity
valued aspect gap
reviewed is between thecollaboration.
cross-operator
adoption of Operator APIs and the perceived
This means that a developer in a working relationship with one MNO value.
could leverage assets
from other MNOs at the same time, resulting in a much wider reach and a substantially simpler
process for the developer. The numbers in the below figure summarise this point.
Figure 4: Most valued assets
These are assets which developers “agree” or “strongly
agree” could provide value to their products.
Cross-operator collaboration 93% “Cross-operator
collaboration” is
perceived as the most
Location / geo-fencing 85%
important aspect
Direct subscriber communication channel 83%
Subscriber context info 83%
Detailed connection info 83%
0% 20% 40% 60% 80% 100%
The asset perceived as providing the second highest value is location and geo-fencing
functionality with location info coming from the network as opposed to the device as a source.
The main benefit is that it would also work indoors.
The next three most valuable assets all scored an equal rating (at 83%). First up was getting
a direct communication channel to an app user which would allow a developer to get direct
feedback. A beneficial consequence could be to exploit this for A/B testing. Next was access
to a user’s context information. This is a very powerful asset, and it is probably the case that no
other ecosystem player can aggregate as much information about a user than an MNO, such
as, for instance, usage patterns. In that case, privacy needs to be carefully considered; this is
out of the scope of this study for now though. The last asset ranking in the top five enables
the accessing of information about detailed connection characteristics, such as the current
network a user is on and related performance (e.g. bandwidth) and quality-of-service measures
potentially combined with the user’s data plan. This might be useful for scoping the delivery of
content, e.g. the quality of video streamed to a user’s deviceThe Value of Operator APIs for Developers 7
The least valued assets
The figure below lists those assets that are perceived as providing the least value to developers.
Figure 5: Least Valued Assets
These are assets which developers “disagree” or “strongly
disagree” could provide value to their products.
“Please allow developers to
Access to subscriber contract data 34%
engage without signing
complicated agreements.
Back-end services (cloud, big data) 27% Document the platform […];
provide […] ways to test an
Industry vertical specific data 24%
app […]; write example
libraries and put them on
github. Developers make the
Benefits from brand strength 22% platform vibrant […] ; allow
anyone to work with your
0% 20% 40% 60% 80% 100% APIs and then they will do so.”
(Quote from respondent)
Surprisingly, back-end services (currently much buzz surrounds services such as cloud and big
data) seem to
Tangible be perceived as less valuable. As an explanation,
Assets we can assume that there are
Intangible Assets
already a lot of suppliers out there who provide such services sufficiently well, and cloud or
Logical location provision API Brand strength
big data is not traditionally in the remit of MNOs. Services which are in the remit of MNOs i.e.
classic network functions such as messaging, location or payment, are scored fairly highly (see
Point, line, area location information API App distribution support
Section 3, Figure 13). Moreover, developers assessed direct access to subscribers’ contract data
as less valuable. Voice interaction API App promotion support
At the bottom of the
Direct ranking
consumer is the
channel APIbrand strength of MNOs. Cross-operator
Despite MNOs having very strong
collaboration
brands, developers do not seem to perceive them as very useful in marketing their services.
Subscriber info API
Context API
Targeted advertising API
Vertical-specific API configuration
Back-end processing API
Low-level mobile network functions APIThe Value of Operator APIs for Developers 8
are assets which developers “disagree” or “strongly
3.These
Identified
disagree” Assets:
could provide Detailed
value to their products. Results
“Please allow developers to
Access to subscriber contract data 34%
engage without signing
complicated agreements.
Back-end services (cloud, big data) 27% Document the platform […];
This section gives more depth to the key insights summarised in the previous section. The
provide […] ways to test an
interviews conducted in the qualitative phase showed that MNOs, in principle, app are
[…]; in example
write a position
Industry vertical specific data 24%
to offer assets that are very valuable to developers. It also revealed somelibraries of theand put them on
perceptions
github. Developers make the
about workingBenefits
with MNOs as stated
from brand strength above (e.g.
22% unattractive API offerings, cumbersome modes
platform vibrant […] ; allow
of collaboration), which could be a reason for the gap in perceived valueanyone and adoption
to work withrate.
your
0% 20% 40% 60% 80% 100% APIs and then they will do so.”
(Quote from respondent)
The identified assets can be divided into tangible and intangible ones. Tangible assets refer to
technical functions, intangible ones to supportive services (see Figure 6).
Figure 6: Summary of the MNO API Framework
Tangible Assets Intangible Assets
Logical location provision API Brand strength
Point, line, area location information API App distribution support
Voice interaction API App promotion support
Direct consumer channel API Cross-operator collaboration
Subscriber info API
Context API
Targeted advertising API
Vertical-specific API configuration
Back-end processing API
Low-level mobile network functions APIThe Value of Operator APIs for Developers 9 Description of the Tangible Assets Logical location provision API On top of latitude and longitude position information, logical information such as “in a certain district” or “at the meat counter in a certain supermarket” should be provided. Point, line, area location information API Not just geo-referenced point information but also geometric line and area information should be provided. Voice interaction API A rich set of voice interaction features (start, terminate, on hold, join a call, conference call or video call) should be provided. Direct consumer channel API A direct channel to an app consumer should be possible to collect direct feedback. Subscriber info API Profile information (e.g. demographics) about subscribers should be provided. Subscriber information is probably the most powerful asset an operator has. Privacy aspects need to be considered carefully. Such information, however, could be abstracted through aggregation. Context API Rich types of context information (network usage patterns, mobile device features etc.) should be provided. Targeted advertising API Advertising that is relevant to the consumer based on profile and context information should be provided. Vertical-specific API configuration Different APIs should be bundled together such that they address the specific requirements of particular verticals (retail, automotive, banking, insurance, education, health care etc.). Back-end processing API Processing power (e.g. big data analysis) and storage in a back-end should be provided. Low-level mobile network function API Access to network manipulation functions (e.g. to specify the quality of service, video demands a different quality level than a text email) should be provided.
The Value of Operator APIs for Developers 10
Brand strength
MNOs have very strong and respected brands, and being able to make use of these could be of
great benefit to a developer.
App distribution support
MNOs have a lot of very well established (physical as well as virtual) distribution channels.
Effective app distribution is one of the big challenges for developers.
App promotion support
Developers could benefit from promotional support from operators by leveraging the
operators’ assets such as financial and human resources, brand strength, distribution channels,
and marketing and promotion networks.
Cross-operator collaboration
MNOs often require developers to follow complex legal and business processes which, from a
developer’s perspective, could in many cases be handled in a more streamlined and developer-
friendly way; ideally with a single contact for the developer.
Based on the assets identified in the qualitative phase, we designed an online questionnaire to
quantify the value of these assets1.
Several questions relate to the “Cross-operator collaboration” asset. Related to this is operator
fragmentation which is a pain point for developers. 43.5% claim that they strongly agree with
the statement that they would work more with operators if they could reduce fragmentation
(see Figure 7). This is the highest value achieved for the option of “strongly agree” across all
questions. 44.1% agree.
Figure 7: Fragmentation
I would consider working more with MNOs…
...if they would reduce operator fragmentation (i.e. APIs only
working on the network of one MNO).
STRONGLY AGREE
2.5%
NOT APPLICABLE 43.5%
STRONGLY AGREE
AGREE
1.9%
STRONGLY DISAGREE
DISAGREE
8.0%
DISAGREE
STRONGLY DISAGREE
NOT APPLICABLE
44.1%
AGREE
1. See Appendix A for more details on the methodology.The Value of Operator APIs for Developers 11
Figure 8 shows that 38% of participating developers strongly agree, and 55% agree, that they
would benefit from closer MNO collaboration. We wanted to find out if there is a difference
in the responses from “long-tail” and “big-head” developers . Figure 9 shows big-head results
while Figure 10 shows long-tail results. Interestingly, there is hardly any difference between
these two segments: There is a 5 pp greater agreement from the long-tail developers
(agreement = “strongly agree” & “agree”).
Figure 8: Close operator cooperation
I would benefit if MNOs cooperated more closely to provide better value for developers.
STRONGLY AGREE
1.7% 38.0%
STRONGLY AGREE
AGREE
1.7%
NOT APPLICABLE
NOT1.3%
APPLICABLE 38.0%
STRONGLY AGREE
STRONGLY AGREE
AGREE
DISAGREE 1.3%
STRONGLY DISAGREE
DISAGREE
4.0%
STRONGLY DISAGREE
STRONGLY DISAGREE 4.0%
DISAGREE
STRONGLY DISAGREE 55.0%
DISAGREE
55.0%
NOT APPLICABLE AGREE
NOT APPLICABLE AGREE
Figure 9: Close operator cooperation (big head)
I would benefit if MNOs cooperated more closely to provide better value for developers.
STRONGLY AGREE
2.3% 37.4%
STRONGLY AGREE
AGREE
2.3%
NOT APPLICABLE
NOT1.5%
APPLICABLE 37.4%
STRONGLY AGREE
STRONGLY AGREE
AGREE
DISAGREE 1.5%
STRONGLY DISAGREE
DISAGREE
6.9%
STRONGLY DISAGREE
STRONGLY DISAGREE 6.9%
DISAGREE
STRONGLY DISAGREE 51.9%
DISAGREE
51.9%
NOT APPLICABLE AGREE
NOT APPLICABLE AGREEThe Value of Operator APIs for Developers 12
Figure 10: Close operator cooperation (long-tail)
I would benefit if MNOs cooperated more closely to provide better value for developers.
STRONGLY AGREE
1.5%
NOT APPLICABLE 38.2%
STRONGLY
AGREEAGREE
1.5%
1.3%
NOT APPLICABLE
STRONGLY AGREE
38.2%
STRONGLY DISAGREE
STRONGLY AGREE
AGREE
DISAGREE
1.3%
3.0%
STRONGLY DISAGREE
DISAGREE
DISAGREE
STRONGLY DISAGREE
3.0%
55.9%
DISAGREE
STRONGLY DISAGREE
NOT APPLICABLE AGREE
NOT APPLICABLE
55.9%
AGREE
Figure 11: Cross-operator API access
I would consider working with MNOs if, through the relationship with one operator, I could
STRONGLY
also access services 2.9%
AGREE or APIs from all other operators in my relevant market(s).
NOT APPLICABLE 35.7%
STRONGLY
AGREEAGREE
2.9%
1.7%
NOT APPLICABLE
STRONGLY AGREE
35.7%
STRONGLY DISAGREE
STRONGLY AGREE
AGREE
DISAGREE
1.7%
7.1%
STRONGLY DISAGREE
DISAGREE
DISAGREE
STRONGLY DISAGREE
7.1%
52.7%
DISAGREE
STRONGLY DISAGREE
NOT APPLICABLE AGREE
NOT APPLICABLE
52.7%
AGREE
35.7% of the developers questioned strongly agree that they would consider working with
MNOs if, through a relationship with an operator, they could also access services or APIs from
other operators in relevant markets;52.7% agree, whereas 8.8% disagree or strongly disagree.
Again, there is only a minor difference in responses between long-tail and big-head developers:
long-tail developers agree 2pp more.STRONGLY AGREE
2.9%
NOT APPLICABLE 35.7%
The Value of Operator APIs for Developers 13
STRONGLY AGREE
AGREE
1.7%
STRONGLY DISAGREE
DISAGREE
7.1%
DISAGREE
STRONGLY DISAGREE
NOT APPLICABLE
52.7%
AGREE
Figure 12: Cross-operator capability access
If one operator offered a service allowing access to other operators’ capabilities then I
would choose this operator over others.
STRONGLY AGREE
3.5%
NOT APPLICABLE 33.4%
STRONGLY AGREE
AGREE
1.5%
STRONGLY DISAGREE
DISAGREE
9.2%
DISAGREE
STRONGLY DISAGREE
NOT APPLICABLE
52.4%
AGREE
Developers are mainly in agreement (33.4% strongly agree and 52.4% agree) that they would
prefer an operator which would allow access to another operator’s capabilities over one which
would not provide this collaborative feature. In responses to this question, long-tail developers
are 2 pp less in agreement than big-head developers.
According to our results, cross-operator collaboration was assessed as the most valuable
aspect for developers. The next chart (Figure 13) summarises how developers judged the value
of some other aspects.
Figure 13: Valuable MNO elements
The following MNO elements are useful to me:
APIs for mobile network
functions (e.g. payment,
location or messaging)
84.7%
APIs for other (non core)
services (e.g. cloud storage or
big data analysis tools)
47.2%
APIs for other (non core)
services (e.g. cloud storage or 49.8%
big data analysis tools)
Other MNO services
(e.g. promotion or marketing 33.5%
support)
None of the above 6.8%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Various relevant aspects were assessed by the developers as follows:
■■ 84.7% claimed that APIs for mobile network functions are useful to them
■■ Only 47.2% consider APIs for non-core services to be useful (such as cloud storage)
STRONGLY AGREE
3.6%
■■ 49.8% think access to MNO-specific assets (such as subscriber info) is useful
NOT APPLICABLE 15.3%
■■ Interestingly, only 33.5% think other, non-technical services (such as marketing support)
STRONGLY AGREE
AGREE
by MNOs are useful to them 4.7%
STRONGLY DISAGREE
DISAGREE
28.8%
DISAGREE
STRONGLY DISAGREE
47.5%The Value of Operator APIs for Developers 14
This particular question allowed for additional comments from respondents and several
comments mentioned an interest in “advertising” and “access to connected TV.”
Before going into more detail regarding technical aspects such as APIs, we want to present
other areas where developers see the main benefits in working with operators.
Summary ordered according to ratings by developers (see also Figure 14):
■■ 51.8% believe the benefit is the simplicity of technical integration
■■ 47.3% appreciate platform-independence
■■ 43.1% see the main benefit in the wider reach to customers
■■ 38.2% think speed of technical integration is a benefit
Figure 14: The benefit of operator APIs
What do you think is the benefit of operator APIs?
Simplicity of
technical integration 51.8%
Speed of
technical integration 38.2%
Platform
independence 47.3%
Wider reach to users 43.1%
Greater user take-up 19.8%
Higher usability 31.4%
Support from MNO 30.0%
There is none 4.5%
0% 10% 20% 30% 40% 50% 60%
Access to mobile network
functionality 2.79
Simplicity of APIs
or SDKs 3.21
Revenue share
(of app-related payments) 3.22
Quality of support 4.27
Marketing support 4.28
Quick and simple mode 4.75
Treats me like a real partner 5.43DISAGREE 8.0%
The Value of Operator APIs for Developers 15
STRONGLY DISAGREE 1.9%
NOT APPLICABLE 2.5%
0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%
Figure 15: Simplified mode of collaboration
I would consider working more with MNOs if they would simplify their business processes,
legal proceedures, settlement times, or a combination of these aspects.
STRONGLY AGREE
3.6%
NOT APPLICABLE 40.8%
STRONGLY AGREE
AGREE
1.3%
STRONGLY DISAGREE
DISAGREE
7.6%
DISAGREE
STRONGLY DISAGREE
NOT APPLICABLE
46.6%
AGREE
A simplification of the adoption and operation of operator services or APIs is a considerable
concern for developers too. 40.8% strongly agree (46.6% agree) that they would work more
with MNOs if business processes, legal procedures, or settlement times could be improved (see
Figure 15).The following charts give more details, especially on more technical aspects queried
in more depth.
Figure 16: Location and geo-fencing API
I would find it particularly helpful to be able to gain access to a location API that defines a
geographic area with which I can interact (i.e. geo-fencing) provided by MNOs.
STRONGLY AGREE
4.0%
NOT APPLICABLE 35.0%
STRONGLY AGREE
AGREE
1.9%
STRONGLY DISAGREE
DISAGREE
9.4%
DISAGREE
STRONGLY DISAGREE
NOT APPLICABLE
49.6%
AGREE
35% of respondents also considered geo-fencing based on location APIs provided by MNOs as
particularly helpful
STRONGLY
3.3%
AGREE (strongly agree). 49.6% agreed.
NOT APPLICABLE 29.2%
STRONGLY AGREE
AGREE
2.5%
STRONGLY DISAGREE
DISAGREE
10.8%
DISAGREE
STRONGLY DISAGREE
NOT APPLICABLE
54.2%
AGREESTRONGLY AGREE
4.0%
The Value of Operator APIs for Developers
NOT APPLICABLE 35.0% 16
STRONGLY AGREE
AGREE
1.9%
STRONGLY DISAGREE
DISAGREE
9.4%
DISAGREE
STRONGLY DISAGREE
Figure NOT
17:APPLICABLE
49.6%
Direct user interaction
AGREE
I would find it particularly helpful to be able to gain access to APIs that allow me to set up
a direct communication channel to my app users (e.g., to obtain feedback about certain
functions or designs).
STRONGLY AGREE
3.3%
NOT APPLICABLE 29.2%
STRONGLY AGREE
AGREE
2.5%
STRONGLY DISAGREE
DISAGREE
10.8%
DISAGREE
STRONGLY DISAGREE
NOT APPLICABLE
54.2%
AGREE
We found out that 83.4% of participating developers either agree (54.2%) or strongly agree
(29.2%) that a direct communication channel to app users could be particularly helpful.
Figure 18: User context
I would find it particularly helpful to be able to gain access to different types of context of a
user (e.g., which device, network, usage patterns, locations, or demographics).
STRONGLY AGREE
3.3%
NOT APPLICABLE 27.7%
STRONGLY AGREE
AGREE
2.3%
STRONGLY DISAGREE
DISAGREE
11.0%
DISAGREE
STRONGLY DISAGREE
NOT APPLICABLE
55.8%
AGREE
Also, access to the rich context of a user provided by MNOs seems to be very relevant for
3.8%
developers (27.7% strongly agree, 55.8% strongly agree).
STRONGLY AGREE
NOT APPLICABLE 28.0%
STRONGLY AGREE
AGREE
1.7%
STRONGLY DISAGREE
DISAGREE
11.2%
DISAGREE
STRONGLY DISAGREE
NOT APPLICABLE
55.2%
AGREESTRONGLY AGREE
3.3%
NOT APPLICABLE 27.7%
The Value of Operator APIs for Developers 17
STRONGLY AGREE
AGREE
2.3%
STRONGLY DISAGREE
DISAGREE
11.0%
DISAGREE
STRONGLY DISAGREE
NOT APPLICABLE
55.8%
AGREE
Figure 19: Data connection
I would find it particularly helpful to be able to gain access to APIs that provide detailed
info about the data connection (e.g., roaming status info).
STRONGLY AGREE
3.8%
NOT APPLICABLE 28.0%
STRONGLY AGREE
AGREE
APIs for mobile network 1.7%
functions (e.g. payment,
location or DISAGREE
messaging)
STRONGLY DISAGREE 84.7%
APIs for other (non core)
services (e.g. cloud storage or 11.2%
DISAGREE
47.2%
big data analysisDISAGREE
STRONGLY tools)
APIs for other (non core)
services (e.g. cloud storage or
big data NOT
analysis tools)
APPLICABLE
55.2%
AGREE
49.8%
Other MNO services
(e.g. promotion or marketing 33.5%
support)
28% of
Nonedevelopers
of the above strongly6.8%
agree that APIs which provide detailed information about data
connection such as roaming status seem to be particularly helpful, 55.2% agree.
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Figure 20: Classic mobile network functions
I would prefer to use these classic mobile network functions from MNOs rather than from
other (non-MNO0 players in the market.
STRONGLY AGREE
3.6%
NOT APPLICABLE 15.3%
STRONGLY AGREE
AGREE
4.7%
STRONGLY DISAGREE
DISAGREE
28.8%
DISAGREE
STRONGLY DISAGREE
NOT APPLICABLE
47.5%
AGREE
A majority of developers (62.8%) either agree or strongly agree that they would prefer to work
with MNOs to use classic mobile network functions rather than using services provided by
other players (non-MNO). Only 33.5% disagree.Greater user take-up 19.8%
The Value of Operator APIs for Developers 18
Higher usability 31.4%
Support from MNO 30.0%
There is none 4.5%
0% 10% 20% 30% 40% 50% 60%
Figure 21: Most important factors when working with an MNO
For me, the most important factor when working with an MNO is (please rank):
Access to mobile network
functionality 2.79
Simplicity of APIs
or SDKs 3.21
Revenue share
(of app-related payments) 3.22
Quality of support 4.27
Marketing support 4.28
Quick and simple mode 4.75
Treats me like a real partner 5.43
Other 7.62
0 1 2 3 4 5 6 7 8
The developers also ranked the importance of certain factors when working with MNOs (from
“1” as most important to “8” as least important). The top three factors are:
■■ Access to mobile network functionality
■■ Simplicity of APIs or SDKs
■■ Revenue share
The questionnaire had several open-ended elements where developers could give qualitative
feedback. Here is a summary of the core messages and some selected direct quotes:
■■ Developers perceive MNOs in general as too restrictive and slow-moving
■■ Fragmentation and the resulting need to choose the “right” MNO is a considerable pain-
point for developers
■■ Developer experience in using APIs, tools, documentation and testing could be improved
and simplified
■■ Context and personalisation is valued highly by developers as future MNO-core assets
■■ The topic of advertising was mentioned several times
■■ Connected TV seems to be of interestThe Value of Operator APIs for Developers 19 Quote 1: Please allow any developer to engage with the MNO platform without signing complicated agreements. Document the platform and its APIs without signup; provide test/sandbox servers and ways to test an app without signing an agreement; write example libraries and put them on github. Developers make the platform vibrant, and developers are not interested in engaging in a “partnership” model; Allow anyone to work with your APIs and then they will do so. Quote 2: One of the issue as a third party dev is to identify the MNO in case there are many MNOs in the country. Quote 3 (Related to question about user context): These APIs above can help us to quickly develop innovative services. SMS and voice is being replaced by IM and Vo-IP services, therefore as Business Development, we should always look to create new services. These APIs would help us to create more personalised services. Quote 4: Fragmentation makes working with operator specific APIs unappealing. Need to build apps that work worldwide (or at the very least across all of a country’s carriers) not just with one carrier. Quote 5: These are really interesting questions and YES common APIs and Operator Based APIs would be something really great to have. One suggestion: Provide these APIs to Academics (for final year projects etc) and see the wonders that come out! :-D
The Value of Operator APIs for Developers 20
4. Asset Exploitation in API Strategy
API Strategy
The mobile app economy has developed and moved on. Market forces changed. The beneficial
consequences of exposing assets via APIs are well known and accepted (Jacobson et al., 2012).
This trend gave rise to the notion of the “API economy”. The Cutter Consortium defines the API
economy as:
…the economy where companies expose their (internal) business assets or services in
the form of (Web) APIs to third parties with the goal of unlocking additional business
value through the creation of new asset classes3.
The benefits of exposing APIs can broadly be summarised as:
1. Wider reach (e.g. of an organisation’s brand)
2. External sources of innovation (i.e. facilitating the idea of open innovation)
3. New or extended sources of revenue
4. Improved internal efficiency
It is up to the asset holder (MNOs in the scope of this study) on which benefit to focus in order
to support their overarching business strategy. Based on theories of strategy, there are always
the internal (which specific and valuable capabilities does an organisation have?) and external
views (market dynamics, trends, competitors, customer behaviours etc.) which guide the
definition of a strategy. The internal view (also often referred to as the resource-based view)
was heavily influenced by the works of Jay Barney (1991) who claimed that an organisation’s
capability of strategic importance needs to be VRIN: valuable, rare, in-imitable, and non-
substitutable.
The external view is mainly about macro environmental drivers, often summarised as PEST
(political, economic, social, and technological) based on the works of Francis J. Aguilar (1967),
and the industry forces, which Michael E. Porter (2008) described as the Five Forces (rivalry,
buyers, suppliers, substitutes or new entrants).
Figure 22 illustrates how the internal and the external views influence the tactics that make up
an API strategy. Strategies can be cascaded; an API strategy could be part of a digital strategy
which in turn could be part of the wider business strategy.
3. See http://www.cutter.com/content-and-analysis/resource-centers/agile-project-management/sample-our-research/apmu1306.htmlThe Value of Operator APIs for Developers 21
Figure 22: Influence of internal and external views on API strategy
1. Where are we now?
2. Where do we want to be?
3. How do we get there?
Tactics
Strategic Fit
Business Digital API Business Model
Strategy Strategy Strategy Technology
Marketing
Operators
External View Internal View
5 Forces, PEST VRIN Capabilities
Leveraging the results of this study
The main insights of this study can be summarised as the identification of a clear gap between,
on the one hand, the high perceived value of MNO assets by developers and the low adoption
35%
rate of MNO APIs on the other hand. Based on our results, we interpret that MNOs have a
Europe
8%
range of valuable
North tangible
23% 96% 33%
and intangible assets. However, these assets are not Asiadelivered to the
4% 20%
market (i.e. America 7% in an ideal manner; hence the low adoption rate. We83%
developers) could not identify
a significant97%
4%
difference
5% between long-tail and big-head developer segments.
The most apparent and most valuable aspect for developers according to the results of this
37%
study seems to be better collaboration between Africa
operators to provide benefits to developers
in terms of wider reach and simplicity of API or69%
37%
service adoption. Other works such as by
19%
Vision Mobile (2013) clearly show the global “mobile app trade” across not just countries but
continents. The graph in Figure 23 shows that Europe and North America have the highest
Latin 25% 21%
demands, followed by Latin America in third place. The largest number of App Oceania
imports to North
America
11% 21%
America come from 91% Africa, followed by Europe and then Asia. Asia’s top app 85%export continents
7% 8%
are North America and Europe. Furthermore, Vision Mobile analysed several telecom markets
globally by comparing the addressable market size (i.e. mobile subscribers per market),
smartphone penetration and user-engagement levels in that market. The bottom right quadrant
in FigureNorth
24 highlights
America
those markets offering
Europe
the greatest opportunities.
Africa Demand in region
Latin America Asia Oceania Demand outside of regionTactics
Strategic Fit
Business Digital API Business Model
The Value of OperatorStrategy
Strategy APIs for DevelopersStrategy 22
Technology
Marketing
Operators
External View Internal View
5 Forces, PEST VRIN Capabilities
Figure 23: Mobile app trade map (Vision Mobile, 2013)
35%
Europe
8%
North 23% 96% 33%
Asia
4% 20%
America
7% 83%
97% 5%
4%
37%
Africa
69% 37%
19%
Latin 25% 21%
Oceania
America
11% 21%
91% 85%
7% 8%
North America Europe Africa Demand in region
Latin America Asia Oceania Demand outside of region
Figure 24: Telecom market opportunities (Vision Mobile, 2012)
25
Maturity
User engagement (app downloads per smartphone)
US UK
20
Sweden
Netherlands
Germany
15
Australia
Russia
France
10
China
Spain
Italy
Poland
5 Brasil
India
Bubble size = addressable market
Opportunity (mobile subscribers per country)
0
0% 10% 20% 30% 40% 50%
Smartphone penetration per capita (%)
Data: Xyologic, Tomi Ahonen, Analysis by VisionmobileThe Value of Operator APIs for Developers 23 Some of the results of this study are new and encouraging for MNO API programmes (e.g. the gap, cross-operator collaboration, direct customer feedback channels, geo-fencing), some are surprising (e.g. not too much interest in cloud or big data topics, leveraging MNOs’ brand strength is of secondary importance), some provide confirmations (e.g. developers appreciate location or payment APIs by MNOs, developers are not too impressed by MNOs’ offerings for developers) while some can be judged as obvious and nothing new (e.g. developers expect MNOs to deliver classic network functions (voice, SMS) better than other market players). In conclusion, the gap between the perceived value of operator APIs and the current adoption rate suggests that there is currently an underutilised potential. If MNOs perceive APIs and an API strategy as purposefully contributing to their overarching strategy, then stepping into this field and deploying the right developer-friendly tactics seems to be very promising. Furthermore, to reduce operator fragmentation and to increase attractiveness for developers, thinking beyond one operator’s boundaries is recommended (cross-operator API solutions).
The Value of Operator APIs for Developers 24 References Aguilar J.F. (1967): Scanning the business environment. Macmillan. Barney J.B. (1991): Firm Resources and Sustained Competitive Advantage. Journal of Management. 17(1), pp.99-120. Informa (2009): Mobile Network APIs. Enabling Web Services, operator app stores and developer communities. Informa Telecoms & Media. Jacobson, D., Brail, G., & Woods, D. (2012): APIs -- A Strategy Guide. Sebastopol, CA: O’Reilly. Porter, M.E. (2008): The Five Competitive Forces that Shape Strategy. Harvard Business Review, January 2008, p.86-104. Shanker A. (2012): A Customer Value Creation Framework for Businesses That Generate Revenue with Open Source Software. Technology Innovation Management Review, March 2012, pp.18-22. Vision Mobile (2012): Developer Economics 2012. www.visionmobile.com Vision Mobile (2013): App Trade: A Global Opportunity. http://www.visionmobile.com/blog/2013/10/app-trade-a-global-opportunity/ Woodruff, R. (1997): Customer value: The next source for competitive advantage. Journal of the Academy of Marketing Science. 25(2), pp.139-153.
The Value of Operator APIs for Developers 25
Appendix A: Research Methodology
Figure 25 below summarises the deployed methodology underpinning the developer survey on
operator APIs. The defined research question was:
What are assets that only operators can offer to developers, providing unique value?
The scope is not necessarily to validate established assets (such as payment, identity or
messaging) but to find out about other potentially valuable assets for developers. To answer
this question we deployed a perceived use value (PUV) analysis mainly based on the works of
Woodruff (1997) and Shanker (2012). The project was split into two phases.
The first, qualitative phase encompassed 13 semi-structured expert interviews (in three
categories: developers, independent industry experts, MNO staff) with the goal of identifying
(ideally new) asset areas.
The ideal goal was to find valuable, rare, inimitable and non-substitutable assets (VRIN model),
which according to Barney (1991) are those assets that can lead to a sustainable competitive
advantage. Only some of the identified assets fulfil all of the VRIN characteristics, but all of
them are valuable to mobile app developers.
Based on these results, the quantitative second phase was designed as an online
questionnaire. This questionnaire had an outreach to about 70,000 contacts using email
distribution and social media, with a response rate of over 700 individuals.
Figure 25: Operator API developer survey
Methodology
Research question
What are assets that only operators can offer to developers, providing unique value?
Outreach
70,000 contact points with 700 responses
Method
Perceived use value analysis in two phases
1. Qualitative Phase 2. Quantitative Phase
Expert interviews Online questionnaire
Assess which assets developers value Quantify outcomes from Phase 1
Confirm existing assumptions Gauge relevance of Network APIs
Identify new opportunities Deduce relevant strategiesGSMA Head Office Seventh Floor, 5 New Street Square New Fetter Lane, London EC4A 3BF UK Tel: +44 (0)207 356 0600 oneapi@gsma.com www.gsma.com ©GSMA February 2014
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