August 24, 2012
Dan Bieler, Bryan Wang, Pascal Matzke, Jennifer Belissent
ORANGE held its annual analyst day in Paris recently. There were no major announcements, but we made several observations:
- ORANGE is one of the few carriers with true delivery capabilities. Its global footprint is a real advantage vis-a-vis carrier competitors, in particular in Africa and Asia. Vale, the Brazilian metals and mining corporation, presented a customer case study in which Vale emphasized the importance of ORANGE’s global network infrastructure for its decision to go with ORANGE as UCC and network provider. Its global reach positions ORANGE well to address the opportunity in emerging markets, both for Western MNCs going into emerging markets and also to address intra-regional business in Africa and Asia. Another customer case study with the Chinese online retailer 360buy, focusing on a contact center solution, demonstrated ORANGE’s ability to win against local competitors in Asia.
- Asia offers particular opportunities for ORANGE. When targeting those large enterprises with Asian HQ that are going global, ORANGE has been traditionally offering its global network services to regional multinationals from countries like Australia, Hong Kong, Singapore, Malaysia, Taiwan, Korea, and Japan. However, over the past 6 years, with the rise of India, ORANGE has leveraged its National Long Distance (NLD), International Long Distance (ILD), and Internet Service Provider (ISP) licenses. Orange owns 12 PoPs in 8 key cities co-located in carrier neutral sites as well as GS India managed services capabilities (from GTL acquisition) to better service Indian multinationals. In India, Orange also has ISO 20000, ISO 27001, and ISO9001 certifications and more than 2,000 staff members across 18 locations, including at its Major Services Center (MSC) in Gurgaon. In China, ORANGE has signed up another network-to-network Interface (NNI), a second-tier IP VPN with a leading Greater China ICT Service Provider, to extend its MPLS offerings beyond usual tie-up with incumbents (China Telecom and China Unicom). Orange has local help desk expansion for Mandarin language support and a WOFE License to resell telecom equipment in China. Orange has more than 190+ staff members in Greater China. Leveraging its local innovation centers in Beijing and Tokyo, ORANGE has been trying to modify its existing services and develop new services toward local needs beyond networking.
- ORANGE’s innovation pitch is still somewhat fragmented. Although ORANGE undoubtedly has an impressive set of innovation activities ranging from ORANGE Labs (technological innovation) to the Technocentre (innovation marketing), we believe that ORANGE does not yet communicate a very coherent “innovation pitch” that brings together innovation drives from the consumer and business angles. But innovation is increasingly becoming a deciding factor during the decision-making process for provider choice. Hence, ORANGE should develop a more integrated innovation pitch that brings together the wealth of attractive assets and capabilities that exist across the group.
- ORANGE needs a comprehensive smart city strategy. ORANGE has all the pieces to have a comprehensive smart cities services offering. But it isn't telling that story, or maybe just not yet. For the most part, the discussion of smart cities focused on machine-to-machine technology, the “Internet of Things,” and the industry solutions around smart metering, connected hospitals, and public transportation to be launched later this year and early next. ORANGE is well placed with M2M with innovation around the technology itself as well as life-cycle management and interoperability. But a city and the needs of cities are more than just things. ORANGE has the tools to work with cities on shared infrastructure for city administration through its cloud offerings, on mobility and the new workplace, and BYOD for city employees – as well as the “smart” initiatives. We look forward to hearing ORANGE articulate how it can and does meet the full needs of a smart city.
ORANGE’s overall strategy is decidedly conservative but does address several of CIOs' key requirements. For example, its cloud strategy focuses predominantly on providing more flexible computing infrastructures through a highly modular menu of selective cloud-enabled services. Its cloud-based UC and workspace services offer solutions around the issues of consumerization and BYOD. However, ORANGE's cloud strategy could benefit from increasing coherence between the different solution areas and further development of its forward-looking vision in cloud computing.
The report “Preparing For The Connected Enterprise” indicates that network and telecommunication decision-makers demonstrated a fairly high degree of skepticism regarding carriers as providers of emerging ICT solutions apart from connectivity provision (see chart). But carriers have a window of opportunity to venture into new market segments. A glimmer of hope for carriers is that a fairly large percentage of businesses will consider carriers as providers for a wide range of offerings, even well beyond the network domain. It is therefore imperative for those carriers with ambitions to open up new revenue streams in the areas such as collaboration and UC to redouble their portfolio, marketing, and customer support activities.
ORANGE’s CEO told us that he believes in a “humility” approach to strategy, i.e., realizing what ORANGE is unlikely to succeed. This approach is healthy, as it should help ORANGE avoid costly mistakes in the form of oversized white elephant projects. But this approach might also slow down the required business transformation process somewhat.