BusinessWeek recently did an interesting article on a major shift in company strategy at telecom giant Vodafone, called "Vodafone: Embracing Open Source with Open Arms." It focuses on how the company, following a string of huge acquisitions over the past few years, is looking away from doing more expensive deals and looking toward open source and crowdsourced strategies for introducing more innovative applications. From the conditions in the current economic environment to new opportunities on the mobile applications front, this makes a lot of sense, and more behemoth companies should be thnking this way. Here's why.
As BusinessWeek notes, "Vodafone got to the top largely through acquisitions, buying interests in two dozen phone companies around the world in the past decade, including a 45% stake in Verizon Wireless in 1999 and 70% control of Ghana Telecom last year."
Many of those acquisitions were done prior to the arrival of Vodafone's current Chief Executive Vittorio Colao. Colao is much more focused on finding innovative new applications to spur the company's growth, and particularly mobile applications. For example, Vodafone has introduced betavine, an open community for mobile application developers, where innovative projects get featured prominently, and there is now a thriving community of enthusiastic developers.
BusinessWeek notes that Vodafone "used betavine to enlist those enthusiasts to test a software add-on that enables mobile broadband customers to access the Internet via Linux." It's also intriguing to note that Vodafone is very focused on the emerging opportunities in mobile healthcare applications. As I wrote here, there is a huge opportunity for the open source community to create applications for mobile healthcare for mobile phone users.
At the recent introduction of the iPhone 3.0 operating system, Apple demonstrated two new applications for the iPhone that monitor the glucose levels of the owners and monitor blood pressure. There are also applications underway for transmitting diagnostic information like this back to doctors at regular intervals.
On the Vodafone front, the company has taken a stake in t+ Medical, a British company that develops applications for using mobile phones as medical assistants. That stake could pay off big if analysts are right that mobile healthcare applications will be huge on portable phones. Betavine is likely to become an open source think tank and breeding ground for innovative applications in this area.
Vodafone is wise to look at open source and crowdsourced solutions, rather than to expensive acquisitions, to fuel growth going forward. Many other companies of its size could benefit from developing the kind of enthusiastic community found on betavine.
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