When Infosys launched its reusable software platform Flypp for mobile operator Aircel nearly three years ago, the innovative solution was perceived as harbinger of the Bangalore-based company's now retooled business strategy. But since December 2009, when Flypp was unwrapped, it has failed to make much progress, highlighting the potential pitfalls of software platforms on which Infosys has pinned such high hopes.
Built and launched for Aircel, Flypp was positioned as just what mobile phone operators needed to counter falling tariffs by opening up new revenue streams from mobile value added services. It was meant to connect cellphone operators and their subscribers to the world of third-party applications. And revenue for Infosys would be based on usage, tying it very closely to outcomes for its client.
However, app stores from the likes of Google and Apple which sit on mobile devices have changed the market so drastically that phone operators are no longer keen on hosting their own stores, dealing Flypp a crippling blow.
"There is a lot of risk in this practice. We have to keep trying and innovating," said Sanjay Purohit, senior vice president and global head of products, platforms and solutions at Infosys.
Infosys has launched around 12 platforms and 9 products for which it has around 50 clients and booked business of about $300 million. This pales in comparison with the company's total revenue of $7 billion, but products and platforms, according to Infosys, have only just begun their journey. In the new strategic direction, called Infosys 3.0, the company aims to derive at least one-third of its revenues from products and platform-based solutions.
A platform is essentially reusable software that can be customised for several clients. The advantage for clients is that capital expenditure gets converted into operational expenditure and is tied to predefined outcomes. Software companies may bear the initial cost but if the platform succeeds they are assured of a stream of revenue stretching into many years. So, when a platform such as Flypp fails to click, the time and money spent can be hard to recover.
At the time of Flypp's launch, the then sales and marketing head Subash Dhar-who is no longer with Infosys-claimed Infosys was in talks with at least nine other Indian telecom companies for deployment of the platform. Aircel, the only operator that deployed Flypp, is yet to see significant improvement either in terms of the number of users or revenue.
"It takes at least 10 clients on a platform, before the investments are recouped," said Ankur Rudra, vice president who tracks the IT sector at Mumbai-based brokerage Ambit Capital.
Flypp was done in by the overwhelming dominance of mobile app stores from Apple and Google, whose operating systems are used in the majority of smartphones.
"Branded app stores failed to garner significant adoption primarily due to device fragmentation (India being predominantly a feature-phone market), inconsistent experience and ineffective communication and marketing campaigns," said Jayanth Kolla, partner at Bangalore-based consultancy Convergence Catalyst.
Infosys is now looking for ways to salvage its investment by looking for alternate applications for the Flypp platform, including with cable TV operators and enterprises.
"Flypp has now evolved into a new platform and now will cater to larger market. We are seeing a lot of interest from enterprise clients who want a suite of enterprise apps on multiple devices," Purohit said.
Infosys says it is in advanced talks with a European telecom player to build customised applications for television, with Flypp residing in a set-top-box. It is also piloting this platform with an auto manufacturer to build an app store in the car dashboard. And it is also in conversations with retailers and enterprises to build suite of applications.
Ambitious and risky as it may be, service providers need to make sure that their platform -based strategy is building on their existing strengths. Such "evolutionary" platforms have a higher chance of success than "revolutionary" platforms such as Flypp, which must be backed by the clout of global organisations that can change the course of industries, said, Partha Iyengar, country manager, research at the Indian arm of technology advisory Gartner.
"When a company overextends itself, or is drinking its own cool-aid in terms of its clout in the industry, there are likely to be failures or even disasters," he added.
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