In their landmark 2001 Harvard Business Review article, “Skate to where the money will be”, Clayton Christensen, Michael Raynor and Matthew Verlinden outlined the process by which evolving industry value chains unbundle, and the wrenching challenges and turmoil that this process causes for industry incumbents. They linked this evolutionary process to the concept of industry disruption whereby the pace of technological evolution inevitably outstrips the ability of highly integrated incumbents to absorb it, creating opportunities for new entrants.
Our research into the emerging strategies of mobile network operators (MNOs) in Europe, as well as teaching and consulting work with both mobile operating companies and other industry participants over the past three years, supports and extends the theories of industry value chain evolution and profit migration. We believe the dominant firm-level MNO value chain is ripe for unbundling in response to product/services evolution, and that future success within the industry will go to those competitors with foresight enough to “skate to where the money will be”.
In the early days of the mobile industry, technologies, business processes and channels to market were not yet established. While companies, such as Nokia and Ericsson, developed the network infrastructure and handset hardware to support the infant industry, they did not typically extend their roles into network management. At that time vendors sold boxes and base stations to end clients, who were then responsible for network roll-out and management. Mobile network operators, such as Vodafone, Orange and T-Mobile, employed dedicated armies of network engineers to build and manage industry infrastructure. Network quality and geographic footprint were critical sources of competitive advantage, but there were few vendors able to offer ongoing network management, even if there had there been demand from MNOs. Network coverage and capacity management were focused on voicebased services, which accounted for almost 100 per cent of customer demand until the late 1990s.
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