The effect of disruptive innovation in the South African mobile telecommunication industry.
Date
2016
Authors
Beharie, Sannesh Rabiechand
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Abstract
The South African mobile telecommunications industry is made up of 77.6 million subscribers, four main mobile operators and many suppliers. Prior to 2010, mobile network operators provided voice, SMS and MMS services on basic and feature phones.
Post 2010, smartphones and their Over the Top (OTT) applications disrupted mobile network operators and replaced basic and feature phones. OTT application providers disintermediated the mobile network operator’s business model by using an internet distribution channel to market applications to customers, via an applications store (App Store), on the smartphone. This created a blue ocean market for OTT application providers such as Google.
This research ascertained the effect of disruptive innovation in the mobile telecommunications industry of South Africa by performing a descriptive cross-sectional qualitative study, with the disruptive product innovation being smartphones and their OTT applications.
This study found that smartphones and their OTT applications have affected mobile network operators negatively in areas of the basis of competition, market share, market size and customer behaviour. The study further evaluated that customer value has migrated within mobile network operators’ organisations and from mobile network operators towards OTT application providers; which gave the OTT application providers more bargaining power. This research also found that mobile network operators’ business models were affected negatively in the areas of value proposition, value networks, profits and key resources and processes.
Mobile network operators could use the findings of this research to understand the metrics of their business model affected by the disruption and the impact of their strategic decisions pre and post the disruption. Operators could use this research to forecast future disruptions, amend their business model in response to competitive innovation and build strategies to disrupt other competitors e.g. the adoption of Open Innovation. Various research groups benefit from this study.
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Keywords
Telecommunication -- South Africa. Cell phone services industry -- South Africa. Diffusion of innovations -- South Africa.