Saturday, August 20, 2016

Apps Become Services; Services Become Apps

Nomenclature (the names we give things) is among the lesser problems we sometimes grapple with in the communications business.

Still, when the nomenclature changes, it is a sign that the business model has changed, as well.

Consider the phrases “TV as a service” or “voice as a service,” compared to the phrases “TV as an app” or “voice as an app.” Each phrase signals a change in supplier revenue model and customer mode of use.

Traditionally, TV was an “app,” while consumer voice was a “service.” The definitions hinge on whether the product was purchased as a recurring service or created by a product owned by the customer.

But for businesses, voice often was an “app” (they used their owned private branch exchanges to create their own voice services).

For consumers, with the advent of linear subscription TV, that formerly-free “app” become a “for fee” service. Whether something is called an app or a service hinges on the business model.

Some suppliers have pushed the term “voice as a service” precisely to illustrate how a hosted PBX service is different.

Businesses buy PBX equipment to create their own voice, as an app. The supplier business model is hardware sales. The customer use model is “make my own.”

Consumers buy communications as a service, generally speaking. The supplier business model is “sell service.” The customer use model is “buy the service.”

In an era where most consumers in the U.S. market have purchased TV as a service, some now push the idea that TV can be an app (not purchased a service).

The new wrinkle is whether a full on-demand access (pay as you go) can be called an app, even if the content is purchased.

For many, TV remains a “service,” even if a non-linear service (Netflix, Amazon Prime, others), however.

Apps are becoming services; services apps. Each change signifies an attempt to create a different revenue model and mode of usage.

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