Jul 14, 2014

Telenor and Vodafone show ways ‘beyond connectivity’

A couple of recent developments are symptomatic of how the M2M market has matured beyond device connectivity. These developments involve Telenor Connexion and Vodafone. The two companies have entered into partnering and acquisition deals which signal a shift in their historical activities and the basic, subscription business model.

Their actions are a leading indicator of the strategic challenges faced by mobile network operators (MNOs) [1] and other players in the value chain. Put simply, how will companies capitalise on the commercial opportunities that arise from more widespread connectivity (IoT, IoE etc.) and the eventual merging of wide- and short-rage wireless technologies to connect all manner of connected devices?


Telenor Connexion, the M2M/IoT business unit of Telenor Group, began focusing on higher added-value managed applications and professional services some time ago. This strategy builds on its multi-regional network (and roaming) footprint. At a time when platform capabilities were growing in importance, Telenor also took the step of divesting its M2M connectivity management platform to Ericsson, allowing the network equipment provider to edge itself up the value chain. In 2014, Telenor Connexion took another couple of noteworthy steps. It struck partnering deals with Jasper Technologies [2] and ThingWorx [3], which can be considered to go even further in abstracting the issue of device connectivity.

The structure that Telenor Connexion has put in place looks promising to connected devices suppliers that prefer to deal with a single entity to manage a collection of devices that may operate on international networks affiliated with different platform providers. The arguably wider brand recognition, outside traditional M2M markets, of each of these different platform providers – Ericsson, Jasper and ThingWorx - could also be a benefit in its own right, funneling new business opportunities into Telenor’s own business development pipeline.

Vodafone’s approach has been slightly different as it has a more expansive geographic footprint and its own connectivity management platform. Its move beyond connectivity is characterized by a deeper move into two industry verticals that are currently considered to be growth-phase markets now that initial regulatory and user adoption hurdles have largely been overcome. Specifically:

  • Vodafone recently announced an India-focused partnership with Cyan [4]  (utilities expertise in managing distribution and transmission losses as well as a smart metering offer based on a low-cost retro-fit strategy)

  • A more committed initiative is Vodafone’s planned acquisition [4] of Cobra Technologies (telematics sector device and service solution vendor based primarily in Europe). 

Relative to other acquisitions in the M2M market, it is interesting to note that the price to revenue metric for the Cobra acquisition is approximately 1x. This suggests that Vodafone’s automotive vertical strategy is primarily oriented towards the sale of hardware [6]. This arrangement will presumably be structured in a manner that integrates international connectivity to simplify the implementation and product life cycle management challenges facing vehicle manufacturers.

In this context, it is tempting to wonder how far Vodafone’s aspirations extend beyond the vehicle connectivity proposition. To put this in perspective, Vodafone’s acquisition target, Cobra Technologies, recently agreed to sell its participation in Wunelli, a UK-based company offering vehicle-based data services; an example of the type of data service is usage-based insurance. It remains to be seen whether Cobra Technologies retained enough of this class of expertise and channel contacts for Vodafone to extend its automotive sector ambitions beyond vehicle manufacturers.

In the broader scheme of IoT market opportunities, Vodafone has begun to talk about evolving towards the enablement of B2B2C business models [7]. A looming challenge will be to determine how much value it can capture in applications where enterprise customers handle the (consumer) customer relationship as distinct from Vodafone itself. This issue is likely to surface as new service concepts involving multiple devices and user identities (subscriptions) start to become apparent within the connected car.


[1] http://www.more-with-mobile.com/2013/01/building-billion-dollar-m2m-business.html 

[2] http://eurocomms.com/industry-news/49-online-press/9651-telenor-joins-jasper-wireless-m2m-platform 

[3] http://www.thingworx.com/2014/06/thingworx-and-telenor-connexion-launch-collaboration-to-accelerate-introduction-of-innovative-connected-business-solutions/
 

[24 http://www.proactiveinvestors.co.uk/companies/news/69689/vodafone-teams-up-with-cyan-in-india-69689.html 

 [5] http://www.vodafone.com/content/index/media/vodafone-group-releases/2014/cobra-offer.html

[6] http://www.more-with-mobile.com/2013/07/m2m-acquisitions-and-price-of-growth.html

[7] http://www.mobileworldlive.com/vodafone-iot-already-making-impact

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