A more tightly knit IoT value-chain
A snapshot of the 2009 industry covers a relatively well defined mobile-industry ecosystem. This largely centered on mobile operator initiatives, driven by leading operators and supported by GSMA efforts to develop a new market for the mobile ecosystem.
In looking at 2019 initiatives, the biggest change is the higher number of references to entities across different sections of the IoT value chain. In other words, organizations in other segments of the value-chain were visibly more active with their corporate initiatives. Within any given segment, the three groups stand out. These were the hardware vendor segment (covering network hardware, modules and end-use device providers), IoT platform service providers and the mobile network operators (MNOs).
Vendors were involved in initiatives with other organizations in different parts of the value chain. Examples include ARM’s partnering agreements with China Mobile and Vodafone. The network equipment vendor, Nokia, was active through its Nokia WING business unit. This unit targeted key industry verticals through off-the-shelf solutions for agriculture, livestock management, logistics and asset management applications. Nokia WING also expanded its distribution channel capabilities and geographic reach through agreements with AT&T, Microsoft and TIM-Brazil.
Platform providers play an important role, acting like glue to bring segments of the value chain together. Their involvement spanned initiatives with MNOs, solution providers, users and vendors. Microsoft’s Azure platform featured in initiatives with Eurotech, ExpressLogic and Nokia. It also partnered with BMW while Schneider’s platform capabilities featured in a partnership with BP in the user category of the value chain.
MNO initiatives involved partnering arrangements with large and established integrator businesses such as IBM, Microsoft and Software AG. 5G, AI and automotive sector initiatives also featured in corporate announcements. There were also several interesting channel extension initiatives including announcements from Deutsche Telekom (co-creation toolbox for smart cities), Vodafone (launch of an IoT-focused app development platform) Telus (launch of an IoT Shop for businesses) and AT&T (launch of an IoT Studio in Munich with Nokia).
In comparison with 2009, the picture for 2019 features many more corporate initiatives across neighboring segments in the IoT value chain. There was also a larger ecosystem in the sense of visible activity in new segments of the value chain.
Relative to 2009, the active segments include investor, solution provider and systems integrator corporate initiatives. The appearance of the latter two types of organization characterizes a maturing industry where the focus continues to shift up the value chain. In the past, technology and connectivity elements were important. Now, users of IoT technologies care more about operational solutions that are properly supported. That requires technology vendors to make their hardware easier to improve their channels to end-users (by partnering with solution providers) and to integrate with IoT platforms to ensure a higher quality of operational support.
Active players and disappearing names
Vodafone, Microsoft and ARM accounted for the most appearances over 2019. Vodafone focused on large-corporate partnering (with America Movil, ARM, AT&T and IBM) in addition to working with AT&T to target automotive sector opportunities. A noteworthy development was its launch of an IoT app development platform in Ireland.
Microsoft looked to expand its distribution channels through agreements with BMW, to build an Open Manufacturing Platform for the industrial sector on top of Microsoft’s Azure offering. Microsoft entered into agreements with BT, Eurotech, Nokia and Telstra as well as acquiring Express Logic, a provider of real-time operating systems for micro-controller units. A stated objective of this acquisition is to enable devices to connect seamlessly to its Azure platform. This is an example of the integration theme, this time between hardware and platform segments of the value-chain.
ARM’s initiatives included partnering with China Unicom (geographic expansion into China) and Vodafone (strategic partnership to enable open, remote provisioning of IoT devices). One attempt to expand up the value chain involved a partnership with Reflexis, a provider of retail software, to enable sales associates to make decisions based on access to real-time IoT data. Another initiative involved partnering with NOS, a Portuguese communications and entertainment group, which plans to migrate its IoT subscriber base to ARM’s Pelion connectivity management platform and to expand operations outside of Portugal.
Wireless Logic has been a dynamic operator in the IoT platform segment since its acquisition by an investment firm in 2011 and subsequent backing from private equity groups. Over the course of 2019, Wireless Logic made three acquisitions across Europe (Netherlands-based M2MBlue and SIMPoint as well as Matooma in France). Its continued growth stands in contrast to many smaller organizations with established names and M2M pedigree from a decade ago (e.g. Cinterion, Jasper, nPhase, Numerex). Many analysts touted these candidates as possessing the right expertise to play a role in corporate roll-ups of smaller platform and service providers.
Where next?
In 2009, mobile network operators (MNOs), through the GSMA, were central to the development of an emerging market and the opportunities from scaling up M2M approaches to address the needs and economics of the wider market. During the latter stages of 2019, the GSMA made a fresh push to promote the potential of the IoT and associated opportunities for mobile operators [1].
Ten years on, mobile operators continue to have an important role, but their influence is not as powerful. This is due to several factors. One of these is that the opportunity to capture value lies towards the upper layers of the IoT solution stack. Connectivity (a lower layer capability) continues to dominate the MNO proposition and there is no industry-wide attempt to create common (i.e. standardization for global scale) solutions higher up the stack. Instead, efforts to standardize IoT platforms and common data models tend to be driven in industry groups with little or no MNO representation. Even within 3GPP, the home of mobile standardization, anecdotal information indicates that industrial organizations outnumber mobile operator delegates. The licensing regime for 5G spectrum allied to 5G technology capabilities gives industrials good reason to targets industrial and IoT applications related to 5G standardization.
A second consideration is that IoT technologies represent one of several interrelated elements required to deliver viable IoT solutions. Artificial Intelligence, Big Data, Machine Learning, Digital Orchestration and Platform business models are some of the technical elements in the mix. Others deal with commercial and operational support factors. What that means is that it won’t be enough to promote IoT technologies in isolation. That is because adoptive industries and end-users care about business solutions. This will favor solution providers that know how to orchestrate the appropriate mix of technologies and delivery partners. A handful of the large MNOs might achieve this in a few verticals. However, this won’t be enough to constitute an industry-wide solution that delivers scale, trust and, most importantly, affordability from scale economies.
The change from 2009 to 2019 reveals a more detailed and a more active value-chain. It highlights an ever more dynamic eco-system, brought about by new entrants and collaborative strategies. Collaboration and partnering in the form of vertical integration are important strategies for the delivery of higher quality and value-added IoT solutions. Over the coming decade, this trend will continue. Advances in IoT technologies will become special as they commoditize and blend into the infrastructure required to support data-driven solutions, at scale.
[1] GSMA highlights the opportunities abound in IoT and the operators exploring them https://www.iot-now.com/2019/12/13/100376-much-potential-iot-gsma-highlights-opportunities-abound-iot-operators-exploring/
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