New business models in the mEducation market

The words 'business' and 'education' aren't frequently used in the same sentence.  However, the business of education is increasingly becoming an important topic as educational institutions adapt to budget pressures and entrepreneurs develop new approaches to education by 'blending' traditional and new techniques.

The GSM Association, in its role of enabling markets for new mobile enabled services, invited me to carry out a  study on the mEducation market. This focused specifically on commercial drivers and business model innovation. In the middle of 2012, I had several discussions with education service providers, policy makers and mobile operators from across the globe; everyone was enthusiastic and hungry for knowledge and insights into the commercial and business model aspects of this market.

M2M Corporate Transactions Q3-2012

Please check the "Corporate Initiatives" navigation tab for the most recent market developments.

M2M started to develop as a sizable and strategic market for the mobile industry around 2008. This was the year that consumers and mobile operators began to appreciate the novelty of Amazon's Kindle connected eReader.

The Kindle offered an innovative eBook service enabled initially by Sprint's mobile network and now supported by AT&T in the USA. It employed a smart pricing model that did not force readers into a mobile data contract. It also did not oblige users to think about how much data they were downloading. Amazon's business model was also intriguing in positioning the device as a way to drive revenues in Amazon's core eCommerce business rather than a standalone commercial proposition.

In the market evolution of M2M, 2008 is also important for another reason. This was the year that mobile operators as a group addressed the market potential for connected devices through the GSM Association's Embedded Mobile market development campaign.

Mobile operator business models are going 'Digital'

Business model innovation is all about implementing the right delivery model to address a new business opportunity or to counter a competitive threat.

In this context, the 'right' delivery model involves a mix of elements as described in an earlier post. This multi-element approach is especially important when considering new areas of opportunity. The reason for this is that while marginal changes in the pricing element or re-packaging of an existing offering may provide temporary market respite they are unlikely to be competitive in the long run. Enduring innovation requires several inter-dependent elements of the business model to be reconfigured.

Over the last couple of years, connected devices have opened up many new application and service opportunities in non-mobile markets; think of eReaders, smart meters, connected health devices and digital photo frames. As a result, mobile operators and organizations in markets adjacent to mobile are altering their business strategies to address these opportunities.

Competitive dynamics of international M2M alliances

This note will be updated in light of new alliance announcements. 

In July of 2012, seven mobile operators announced a cooperation agreement featuring a unique SIM. This appears to be a move to address a segment of customers seeking to deploy global connected devices and to compete with Vodafone's global SIM offering. However, there are other competitive dynamics at play and longer term corporate strategy implications for companies that are using partnering approaches as a rapid means of market entry.

Where is the value in the M2M value chain?

M2M has historically been viewed as a specialist market in the context of the wider mobile industry. It struggled to achieve scale because many applications focused on narrow, enterprise sector opportunities.

These applications also involved proprietary designs and significant expenditure on customized engineering efforts. As a result, the value proposition was only perceived in few application areas where there were exceptionally strong financial or operational imperatives. However, this situation is constantly evolving and companies need to understand how value is shifting as they plan their business strategies.

Reference framework to analyse and design business models

A ‘business case’ for a particular business venture quantifies its financial profile and net present value taking account its inherent level of risk. This is essentially an exercise in projecting future costs and revenues based on assumptions about products and services offered to targeted customers, and the investment in equipment and operations necessary to achieve this.

‘Business model’ is a term that describes the how an organization captures commercial value from a particular business opportunity. In other words, what are the different elements that an organization employs to deliver a valued product or service to a target customer group in a commercially sustainable manner?

Origins of "More With Mobile"

In 2008, the mobile industry started to pay serious attention to new types of connected device. Amazon's Kindle played an important role in this process. Unlike the traditional M2M market, the Kindle was the first mass-market device with embedded connectivity. 

The Kindle also introduced a new payment model to the industry in the form of a $9.99 charge to download an eBook. At that time, mobile operators were selling airtime plans for data cards and USB dongles to a consumer base that had little notion of how many mega-bytes they needed on a monthly basis. 

In a similar vein, mobile operator executives were intrigued by another company - Cardionet - which offered a remote patient monitoring service. The fact that the company earned over $2,000 per month for each connected device was another attention grabber in a mobile market where average mobile phone ARPUs were closer to $50/month.

These two connected device designs actually delivered an elegant service that masked a great deal of technical complexity. They exemplify the revolution that was about to transform the traditional M2M market. 

Since 2008, the mobile industry has journeyed along the connected devices highway. Initially, the focus was on embedded mobility and measures to bring down the cost of integrating mobility in new and existing devices. Opportunities to apply mobile connectivity in different vertical markets such as automotive, healthcare, smart cities and utilities shifted the market focus on 'Connected Experiences'. Now, the proliferation of different types of wireless devices using technologies such as mobile, Bluetooth, Wi-Fi, Zigbee etc. is shifting industry attention to the Internet of Things market. 

I have been involved in the growth of this industry since its inception having contributed to a strategy project that was initiated by the Board of the GSM Association to identify new growth markets for the mobile industry. Most of my current work is for companies that are developing their business plans to launch new services in this market. I advise on strategy, market analysis and business model issues. And, as more and more companies factor connectivity in their business, product and service strategies it will become evident that they will accomplish a great deal more with mobile.