Tag Archives: revenue

Qualcomm’s consumer services business going to the dogs

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Tagg is a mobile pet tracker and promising veterinary diagnostic tool, offered by Snaptracs, a Qualcomm subsidiary. The hardware costs $100, with ongoing service at $8 per month for the first pet and and $1 for each additional one.

Tagg on a not-so-lively dog

That eight bucks gets you a text message whenever your dog strays from home, with GPS feeds to help you find him. Or your cat, if it’s one of the few big enough to handle the weight and tolerant enough to wear it.

It also lets you analyze the GPS and accelerometer data it collects all day to assess his activity level and give you a rough indicator of his overall health. The online analysis can be passed on to your veterinarian for assessment.

It’s popular enough that Snaptracs is wholesaling the hardware to vets and using them as a distribution channel. But Snaptracs is missing a bet by not including them in the ongoing revenue stream.

True enough, Tagg isn’t any use without an ongoing subscription and it’s a new enough product that early sales growth will swamp anychurn at this point. But the novelty will wear off and the actual utility will diminish in value: most dogs don’t often stray far from home (although the ones that do can lead you on a merry chase) and you don’t really need daily confirmation that he’s getting his usual 16 hours of sleep. The business model is heading toward an annual churn rate north of 50%.

That’s where vets can help. Use more of the sensors on the chipset – thermal and audio, for example – to monitor vital signs, mine the data and pass it on to vets. They can tell you when your dog might be having health issues and be frontline churn fighters. And the more skin they have in the game, the more enthusiastically they’ll fight. Right now, they don’t have any.

Snaptracs is working on the technology needed to boost utility, but not as yet on the business model. Parent company Qualcomm is a dominant player in mobile hardware and intellectual property with a poor track record selling services and content. To turn that around, they need to give their distribution channel partners a reason to help.

Policies, partnerships and common goals attract broadband investment to communities

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Capital expense, operating expense and revenue are the basic parameters of a business plan. With broadband-specific incentives that improve those metrics – even marginally – local governments and economic development agencies can attract private broadband investment into underserved areas.

Public policies can be tailored to significantly reduce construction costs. Uniform, broadband-friendly right of way and permit procedures eliminate a huge source of uncertainty for business planners. The more certain they are of their estimates, the more likely they are to invest.

demand study
   In the long run, it might not seem like much,
   but even a little guaranteed anchor revenue
   can make a huge upfront difference
Offering public facilities, for example vertical assets or space for nodes, on a co-investment basis and pre-installing empty conduit whenever roads are built or trenches are opened will also lower the hurdle for network builds. Of course, standard economic development tools such as sales tax concessions, community development funds and local seed capital work for broadband too.

Reducing the capital cost in a given locality improves its competitive position versus other regions by broadening the pool of potential service providers and increasing their return on investment. It also makes it easier for projects to qualify for assistance from the likes of the California Advanced Services Fund and the federal Rural Utilities Service.

Reducing capital costs isn’t always the answer, though. There are tradeoffs between capital and operating expenses. For example, it’s cheaper to hang fiber on poles than bury it, but the ongoing costs are higher. Capitalizing leases for node locations and vertical assets reduce operating expenses while raising capital costs.

Another way to reduce operating costs is for local agencies to partner with service providers on items like bulk Internet access and maintenance. One big wholesale bandwidth purchase will usually be cheaper than two medium size contracts. Local agencies might be able to set up agreements for joint pole maintenance or trenching. There’s a long list of possibilities worth discussing with prospective broadband system operators.

Documenting demand and leveraging public sector IT and telecoms budgets will brighten revenue prospects. The cost of an investment-grade demand study ranges into the low six figures for a local or regional-scale project. A service provider will spend that money on localities it already finds attractive, leaving local organizations to fund research for the area they represent.

A local agency can be an anchor tenant for a new broadband system, particularly when it can suggest ways of configuring a network so that key points are included. The agency should be able to reduce its own operating costs, while at the same time providing an early, guaranteed revenue stream to the service provider.

Given the tradeoffs between operating and capital expenses, the fixed cost of running a broadband system can be relatively low. The greatest value of an upfront contract to a system operator is its reliability, not necessarily the dollar amount involved.

It’s surprising how even small incentives – such as slightly lower costs, upfront contracts or small loans – can grab the attention of potential broadband operators and tip the balance in favor of a given locality. Sometimes, it’s just a matter of everyone speaking the same language.