Telstra’s biggest competition in future may come not from traditional telcos, but from innovative players like Google, Apple and Facebook, according to one analyst — and the big T may not be prepared for what’s coming.
Last week at the telco’s investor day, its chief executive David Thodey placed a big emphasis on future Telstra offerings in media and cloud computing, citing “the exciting area of network applications and services”, where he said Telstra saw “tremendous growth opportunity”. “We have wonderful media assets that we are going to continue to invest in and we think are very important going forward,” he added.
Just yesterday Telstra revealed it was planning to launch its own Android-based tablet device in November — putting the company squarely in competition with Apple’s iPad device. And like Google, it hopes to woo customers to cloud computing platform.
But speaking in a video interview on the day, Telsyte research director and seasoned analyst Foad Fadaghi said Telstra may not be prepared for the fields that it wanted to play more strongly in.
For starters, Fadaghi said, telco brands were not resonating in the media world at the moment with consumers. “We saw Vodafone quietly close down their online music store recently in Australia,” he said. “They’re a big international brand, and they’ve not been able to go into media effectively.
On the cloud side, Fadaghi said consumers were more used to using Google’s offerings than they were to using similar services from the likes of Telstra. “Consumers want best of breed products,” he said. “They don’t want something that’s just a Telstra version of the same thing.”
The key problem as the analyst sees it is that right now, Telstra and other telcos are seeing their services become increasingly commoditised. Where a customer might have previously connected to Telstra products and services over a Telstra network, now they simply used Telstra’s network for transit to access their Gmail on the road, for example — or YouTube.
“The challenge there is that the likes of Google and others are dumbing down the pipes and trying to assume as much value as they can through those pipes,” he said. “It’s going to reach the point where the telcos will kick up a stink.”
Telstra has recently started to claw back its share of the broadband market — but Fadaghi pointed out that it had done so by cutting prices and increasing download quotas. And Google is also making threatening moves in Telstra’s home ground.
“If you look at Google right now, they have joined the Communications Alliance, which has traditionally been for telecommunications operators,” he said. “So why have they joined — what are their interests in that space?”
Thodey mentioned the potential for Telstra to make acquisitions. Asked what he would buy if he were leading Telstra, Fadaghi said the telco could potentially buy in areas where advertising dollars were flowing, or acquire the intellectual property rights to certain events — in sports, for example.
He also advised Telstra to partner with best of breed companies — in a similar way that channels Seven and Nine have done with Yahoo! and Microsoft respectively to create Yahoo7! and ninemsn in Australia. “Telstra for too long has kind of been out of that game and tried to do things alone,” he said.
Finally, a word for Facebook. During the presentation at the investor day, Telstra played a video with the theme of ‘connecting people’.
“Now connecting people is what Facebook does,” said Fadaghi. “So I’ll be very interesting to see what Telstra is going to do different in connecting people, when people today see the main mechanism for connecting with each other as social networking, which is something that Telstra doesn’t currently provide.”
Video credit: Delimiter