AI is absolutely essential for the Messaging Platform Business Model to take over the World (of B2C)

Over the course of the last weeks and months you couldn’t escape news and stories about messaging platforms going after B2C use cases à la “order me some food”, “book me a hotel room” or “I need a ride downtown in 30 minutes”.

Pioneered and taken to huge success in Asia by platforms like Weixin/WeChat, LINE and Kakao, especially Facebook with its two behemoth platforms Messenger and WhatsApp is taking decisive actions to bring businesses and consumers together on their platforms. Kik is even faster, having just launched such a botstore for brands. In their launch line-up are 18 well-known brands such as Sephora, H&M or The Weather Channel. And with these moves, communications platforms will tap into significant revenue streams in the form of rev shares and commissions for being the facilitator between businesses and consumers in everyday Transactions.

Communications features are complete — now onto the next stage…

Now that their services have reached a stage of more or less completeness regarding their core communications features (messaging, voice calling, video calling and all sorts of creative mash ups of these), they possess of the right degree of stickiness for their users in order to launch the next stage… the monetization stage.

Among other things possible to monetize within a communications platform (e.g. premium content, VAS, etc.) they are basically going after the app ecosystem that we have gotten used to since 2008. Why would you need dedicated apps for certain services when you can principally manage all the necessary interaction within a communications thread? “Smart communications bubbles”, or chat bots will replace a lot of e-commerce apps by directly placing a conversational user experience within a communications thread with the provider.

“Smart communications bubbles”

Instead of a taxi or ride-share booking app, you simply express your order within such a smart bubble that connects you to the provider e.g. via Facebook Messenger. The potential behind this is massive. It is simply much more frictionless and a more natural way of interacting with businesses. You get all of this within that very service that you use most anyway throughout your day.

A key implication from this is that the way orders and user desires are submitted is much less formal and not structured in the way those businesses have gotten used to in the last 20 years of e-commerce services. There is a stark difference between going through a dedicated user flow with forms, checkboxes and submit buttons versus flexibly and freely expressing something like “for my stay in Dallas I would like that room type again that I had when I stayed with you in Seattle in 2014”. Or “please deliver to me by lunchtime that Mexican dish again you are advertising this week”. Or “book me a flight to Helsinki with an aisle seat that has more legroom that on my flight with you to London last month”, etc.

How does it scale?

So far, scaling of such services has worked just fine by customer self-care tools in a highly standardized world of forms and functions on websites or within apps. Scaling was a matter of adding more processing power to the underlying systems. On the other hand, scaling respective services that have an inbound channel via phone, require more human operators (albeit supported by IVR systems helping to preselect use cases and services).

Now imagine scaling such services that interact with the user via a conversational user-interface like a messaging chat on a platform that has billions of users on it. Adding dozens of thousands of human operators to grasp the users’ intent and execute the right actions doesn’t do the math. Thus, it is inevitable to rely on artificial intelligence disciplines like natural language processing and machine learning or deep learning in order to tackle this type of interaction with your customers.

No scaling of conversational UI e-commerce services without AI

So you can boil it down to the simple formula “you want to tap into massive e-commerce business opportunities on those messaging/communications platforms”? Then you better get your AI homework done! Since this is the not the core business of e-commerce companies, the Facebooks, Microsofts and Googles of this world naturally have to provide support with the right tools. They have the resources and interest from other parts of their business (to exploit AI) anyway, so offering AI enabling technology for conversational interfaces is a natural by-product of this.

There a big plans, first services launched and I am sure we are going to see a lot of success stories where a big deal of suitable e-commerce transactions moves from websites and apps into “smart communications bubbles” within communications platforms. This is a win-win both for providers of e-commerce and on-demand services as well as for the providers of the communications platforms.

And the telcos?

But…where does this put the mobile carriers? Previously the owners of basically all voice and messaging communications on mobile devices? They seem to be still figuring out how to cope with the dramatic that put their “charge per message/minute” or later “charge flat for the core communications service” business model literally out of business in the first place. In my opinion, telcos are hopelessly overwhelmed by the changes that have come to this part of their core business logic.

The incumbent’s dilemma

Sure, they have been hit by the incumbent’s innovation dilemma. New technologies outsmart the way they have done business so far (provide communications services only to people on your technical access network) by removing key limitations (anyone can provide communications services to any connected user without being the access provider). I order to make a bold move, they would have had to open up their approach, risking and cannibalizing what is left of their communications business and put their last (but shrinking) revenue contributors in this business at risk. Broad hesitation was the general consequence.

Some telcos are more hesitant than others, but there was no “wow!” anywhere to be seen, despite some modest efforts to do something (Swisscom, Orange, o2). Instead they tried to do things like they always used to do it: in the federated operations model where every telco introduces their piece of a standardized service. Only standardized services take a lot longer to, well, be standardized vs. bespoke services and not every telco committed to an implementation. So we saw the stillbirth of RCS / “joyn”, the GSMA’s cumbersome answer to their new rivals’ IP-based mobile communications services. These attempts were and are basically only happening in camera.

And then there is the slow and sluggish digitalization of voice services in the form of VoLTE, another GSMA initiative. And RCS based digital voice and messaging services and VoLTE do not even have a coherent strategy of being unified into a single platform across the telco industry, at least none that has a short to medium term horizon. Key learning: it is clearly a difference if you have to have hundreds of players agree on a set of standards and then everybody needs to deliver their piece of the pie to the overall cake or if a single player can take 100% of decisions for his own, globally accessible “cake” that is bespoke but massively functional and popular.

Different worlds regarding innovation pace and determination to execute

And now the pace of innovation is accelerating as the current situation of B2C monetization moves outlined here shows. We are entering harvesting time for the new breed of digital communications services. It couldn’t be more obvious how long overtaken the telco industry approach is in contrast to the unleashed “over-the-top” business model of the internet players.

Soon, the differentiation will take place on who provides the best and smartest artificial intelligence backed services to their hundreds of millions if not billions of users. This is far away from telco R&D expertise and skillsets. Both from a topic point of view (do they employ AI R&D teams for connecting users to the internet, wired or wireless?) and what I call ‘innovation DNA’ point of view (who has access to the best talent in AI?). I do not believe there is anything telcos can put up against this.

So this is all about an even brighter future out there for the big internet players and some startups which we might not even know about today… and even tougher times ahead for telcos.

Read on my blog @andrecramer.net

Read on LinkedIn Pulse