Like Cars in the 1950s

Peter : On Rad's Radar?
Peter
| Peter Radizeski of RAD-INFO, Inc. talking telecom, Cloud, VoIP, CLEC, and The Channel.

Like Cars in the 1950s

Did you know that from 1920-1960 there were hundreds of US auto manufacturers? Then it collapsed to just 5 - Ford, GM, Chrysler, AMC and Studebaker, according to Wikipedia.

Most of the collapse was due to the Big 3 claimed 94% of the market by 1955. So a hundred other companies were competing for 6% of the market.

And it was a Big Market. "A total of almost 58 million cars were produced and sold during the 1950s by the American manufacturers. Compared to the total population of the United States by the end of the decade, 179,323,175, that is almost one new vehicle for every three living persons of all ages." [wiki]

It reminds me of the cable industry. There were hundreds of mom-and-pop cable companies. Some merged to be regional; some sold out. Now there are 660 cable operators according to NCTA, but it is mainly just 4 with majority market share - Charter, Comcast, Cox, Altice.

CLEC numbers have dwindled. RBOCs are back together in 2 buckets - Verizon and AT&T. Frontier, CenturyLink, Windstream, VZ and AT&T have the lion share of the business telecom market.

Hosted VoIP/UC is a lot like the auto industry in the 1950s. Only the product is so similar as to be indistinguishable. At least, cars had distinguishing features like car doors, lines, looks, radio, interior. VoIP pretty much all looks the same. Some of the mobile apps are starting to change that a little.

Some of it is scale. Once the Big 3 got big, costs go down, name recognition goes up. The smaller guys cannot afford to make one-tenth the number of cars at the same cost. Vendors give volume discounts but when Ford is selling 12M cars and Edsel is selling is 108 thousand! there will be cost differences. It is one of the things that smaller ISPs don't grasp. They want to resell from AT&T or Verizon for cheaper than their vendor. It doesn't work that way in any industry. Do you think Firestone sold tires to Ford for a lot less than Edsel?

The problem with cable/pay TV right now is that the OTT product is a little cheaper and much better at meeting the needs of the buyers. Think Netflix or Hulu.

There are so many analogies but look at Italian food. Chains with Italian food like Olive Garden and Carabba's appeal to masses who just want food that looks Italian and is affordable. The foodies want the authentic food. Still others want pampering and service etc. VoIP providers are shooting for the masses. They have a mass market product for the masses. They are Olive Garden. However, in technology today, there isn't really a MASS market. There are many market segments with different types of buyers with varying needs and desires.

InnovationBellCurve.png

Only so many brands (I use that term loosely in telecom) will dominate the mass market. Everyone else will be niche or fringe (like the MSO sector or even the auto industry).



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