IBM survey shows telcos switching emphasis to new business models but slow to change

December 5, 2007

2 Min Read

ARMONK, NY -- A new IBM (NYSE: IBM) survey of more than 250 global telecom executives shows how the industry is responding to the ongoing revolution in the communications and media sectors.

The survey, conducted by the Economist Intelligence Unit on behalf of IBM's Institute for Business Value, found that 69 percent of telecommunications service providers expect business model transformation to be the primary source of value over the next five years compared to only 34 percent in the preceding five years. An overwhelming majority of executives (72 percent) expect collaboration with external partners will be critical as they structure these new business models.

Cost containment and efficiency have been the key watchwords in the industry for nearly a decade. The new opportunities around data, content, video, advertising and IT services are causing service providers to take a fresh look at business models to once again drive growth. This growth imperative is reinforced by the continued decline in voice revenues -- although telecom executives do not anticipate the rate of decline to be as severe as once feared -- and the rapid convergence of new media, online and telecommunications players.

Business Model Transformation Far from Reality for Service ProvidersContrasting telecom executives' reported willingness to embrace business model change, the respondents continue to prioritize traditional sources of competitive advantage such as network coverage (52 percent of respondents) and customer reach (45 percent). A smaller percentage are prioritizing the capabilities required to deliver personalized, interactive services and offers to customers, such as device control/management (8 percent), ease of use (11 percent), customer service (16 percent), and customer knowledge (22 percent).

"Service providers demonstrated a new recognition that business model innovation is paramount, yet many of our survey respondents still pointed to traditional strengths as their differentiators," said Noel Taylor, general manager and global communications sector leader, IBM Global Business Services. "Ease of use, customer knowledge and device management are all central to the delivery of new content and advertising-based services -- and all potentially offer key sources of competitive advantage -- but they are not yet key priorities for many service providers."

IBM Corp. (NYSE: IBM)

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