Vodafone: Embracing open source with open arms

Kerry Capell
15 Apr 2009


In December, the company's in-house venture capital arm paid an undisclosed sum for a minority stake in t+ Medical, a British outfit that uses mobile phones as medical tools. Patients with diabetes, for example, transmit information such as blood glucose levels to their doctors, who, in turn, can order changes in treatment based on the freshest data.

Meantime, betavine's ad hoc collection of software writers is producing new apps. Vodafone customers in Germany and Britain can now access real-time train arrivals and departures. In Britain, they also can tap an Amazon.com (AMZN) 'widget' personalized with their account details and a second widget with showtimes for movies. Betavine, says Emeka Obiodu, a senior analyst at London telecom consultancy Ovum, 'is the most elaborate example of open innovation among all the wireless providers.'

A full-fledged apps store may be next, say some analysts. Already, France Telecom's Orange and 02, a British wireless company owned by Spain's Telefónica, run their own app stores. Vodafone would be competing not only with these other network operators, but with Apple and BlackBerry maker Research In Motion (RIMM). Colao says only that he's investigating ways to expand business.

Vodafone's biggest challenge is its size. Its unwieldy corporate structure, with dozens of subsidiaries, joint ventures, and equity interests spread around the globe, makes integrating new products and services tricky. 'Every CEO of a large company faces the problem of how to make innovation flow across the corporate hierarchy and borders,' Colao says, 'and I won't claim we have cracked it.' Vodafone also is grappling with how to roll out its new offerings as far and wide and fast as possible, while tailoring products and services to suit each market.

But a decade of empire building, the widening embrace of open innovation, and the global slump may put Vodafone right where it should be. 'In the current economic environment, operators, technology firms, handset makers, and application developers all need each other to make sure true innovation emerges,' Colao says. 'We want to be the guys who make it possible for developers to work with everyone.'

Capell is a senior writer in BusinessWeek's London bureau .


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