Mar 18, 2015

IoT is not the end game

Over the past few months, I have been working with the Telco2.0 initiative who originated the concept of a 2-sided telco business model. Our collaboration focused on the evolution of the M2M market. Where is it going? And, what strategies can companies apply as M2M evolves into the Internet of Things (IoT). Here is a link [1] to their recent research report which includes extracts from some of my previous essays.

The central theme of the report is that M2M service providers need to adapt to an IoT world as characterized by:

  • billions of devices, connected via a variety of (short- and long-range) technologies which interact with applications that draw data from a variety of sources including other applications.

  • a convergence between ‘Digital’ and IoT which arises because many M2M/IoT devices will rely on smartphone/tablet interfaces and associated identity-mapping relationships.

How will mobile network operators (MNOs), who are at the nexus of these changes, react in relation to the new addressable market opportunities and the organisational models necessary for commercial success?

MNOs have three choices.
 

One choice that MNOs have is to align their established M2M activities with their Enterprise business units and focus on supporting IoT strategies of their enterprise customers. Cloud hosting and platforms to enable IoT services are two example offerings. However, these opportunities depend on exploiting economies of scale and supporting customers flexibly (‘elastic’ business models) and with a high degree of responsiveness.

A second possibility is to establish a separate business unit that is free of the operating habits and success metrics that are typically associated with Enterprise and Consumer (handset) business units. Such an outcome offers greater scope for customer-centric innovation.

The third possibility results in a closer alignment with the Consumer business unit(s) to target new, consumer-segment opportunities. New, addressable markets are showing up in connection with short-range appliances (e.g. in the connected home) and mass-market price point devices (e.g. wearables, personal health monitoring etc.). MNOs have the opportunity to integrate services related to payments, identity- and security-management with bare-bones IoT service offerings.

The majority of mobile operators have expanded their M2M activities in partnership with other companies. Typically, these partners provide devices, channels to market or systems integration services that complement MNO connectivity services.

In some cases, however, partners are an integral part of an MNO’s own operational set-up as in the case of specialist, subscriber-activation and M2M-provisioning service providers. How these internal service partners feature in the eventual business unit structure represents another business-design decision. This is because of the impact on operational viability (is there adequate internal operations and innovation expertise to bring business-critical IoT enabling services in-house?) and financial profitability (what is the optimal share of revenue that can be retained by working with partners?).

I will be addressing many of these topics over the coming months. If you would like a copy of the full report I wrote with Telco2.0, send me an email (ken 'at' more-with-mobile.com) with some information about yourself and your interests.

[1] The Internet of Things: Impact on M2M, where it’s going, and what to do about it? Telco2.0 in partnership with More-with-Mobile (March 2015)

2 comments:

  1. 27 July update

    It's reassuring to see that O2's IoT strategy builds off its M2M heritage (managed connectivity offerings) while experimenting with innovative, 'Digital' propositions.

    O2 reveals Internet of Things strategy: O2 Digital Director David Plumb says M2M technology is on the cusp of moving from the “analogue” age to “digital” as more companies take up managed connectivity.

    http://www.mobilenewscwp.co.uk/2015/07/21/o2-reveals-internet-of-things-strategy/

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  2. 11 Feb 2016 Update

    Interesting to see this article from the management consultancy, McKinsey, about how companies can achieve a 'digital' state of mind

    http://www.mckinsey.com/Insights/High_Tech_Telecoms_Internet/Achieving_a_digital_state_of_mind

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