Showing posts with label Market Dynamics. Show all posts
Showing posts with label Market Dynamics. Show all posts

Sep 19, 2014

Pricing M2M to drive sales revenues

Over the past few years, technology suppliers and service providers have become increasingly optimistic about the market prospects for M2M. Much of this is attributable to the promise of multi-billion unit sales as yesteryear’s M2M sector is absorbed into today’s, broader IoT classification.

M2M has broken out of its historical, niche thanks to a shared industry vision to evangelize the M2M opportunity. Return-on-Investment (RoI) arguments for M2M applications have no doubt been persuasive in fostering the adoption of new applications. However, two other developments have arguably had a greater influence over adoption and RoI outcomes. One is the introduction of simpler, standard operational procedures tailored to M2M (e.g. life-cycle provisioning). The second is the year-on-year reduction in hardware and connectivity costs which have resulted in lower prices to customers.

There is a risk however that these developments and the price-led strategy, in particular, will pose a longer term threat to existing M2M business strategies.

Aug 3, 2014

Do consumers trust mobile operators, Internet and media companies?

The Royal Statistical Society (RSS) in the UK recently launched its findings from a survey of the UK population. The study examined the attitudes of individuals towards the use of (their) data and the appeal of data sharing. The study is based on a survey carried out by Ipsos MORI for the RSS and covered adults in the ages 16 to 75 age range in Great Britain.

The RSS study found that media, Internet, telecommunications and insurance companies, all come at the bottom of a ‘trust in data’ league table. Is any of this relevant to companies in the M2M and IoT markets?

Jan 11, 2014

Trust in Identity

The 2014 CES show is currently generating a lot of consumer technology related press-headlines as different corporations reveal their stakes in seeking to capitalize from the emerging IoT market. IBM/Technicolor got the ball rolling with their IoT/M2M monitoring offering. They were soon followed by Google and AT&T/Ericsson with their connected car ambitions. Intel and Sony also registered on the IoT radar with their messages about miniaturized and wearable connected device offerings.

These companies and the many others that have latched on to the M2M/IoT phenomenon share a vision of a sharp rise in the total population of connected devices.

As this trend develops, users will become ever more dependent on their connected devices. This will give rise to three interesting industry developments each of which represents a potential commercial opportunity.

Nov 17, 2013

The IoT Gets Real as Corporates Commit

2013 has witnessed a strong growth in the number of corporate initiatives that make explicit reference to the Internet of Things (IoT) in contrast to terms such as M2M and “embedded solutions”. It seems that large companies are committing to a market where much of the recent activity can be attributed to start-ups and academia.

A few weeks ago in early November, Intel demonstrated its commitment to the IoT market by creating a special division called the IoT Solutions Group, combining its Intelligent Systems Group with its Wind River acquisition. This development seems like the product of a progressive evolution in Intel’s strategy for the ‘connected devices’ market dating back to its mid-2009 acquisition of Wind River for almost US$900m.

It will be interesting to see how well Intel’s internal re-organization efforts now proceed as it develops more of an IoT market presence, especially as one of its main rivals in the mobile computing market, ARM, has also been active with its own IoT plans.

Sep 5, 2013

Smart Home Platform Innovator Strategies

Early in 2012, I completed a study for the GSM Association (GSMA) on the topic of new business models that would be linked to innovative, connected-device applications. This study laid out a sequence of value propositions, as companies seek to move up the value chain. In order to bring these new value propositions to market, new and innovative business models would need to be designed.

In the early days of M2M, the value proposition was all about connectivity. This would make stand-alone devices ‘smart’ and the business challenge was largely about how connectivity could be ‘embedded’ inexpensively. Later on, the market evolved as companies started to care about deployment, reliability and the user-experience issues. This ushered in a new value proposition around managed connectivity and several specialist platform providers have emerged in their own right or as partners to mobile operators.

The final two sources of value that were identified included the delivery of ‘platform innovator’ and ‘stewardship’ services. The connected devices market has been moving in these directions with three companies – Arrayent, Deutsche Telekom’s Qivicon and Zonoff – investing their energies in the platforms arena.

Aug 1, 2013

'Place' as an IoT Strategy

As with the case of ‘cloud computing services’ and ‘big-data’, Internet of Things (IoT) applications [1] have been propelled into the business mainstream as companies have jumped on the latest wave of business-press marketing.

For companies that actually want and need to develop an IoT strategy, however, the lack of clarity in distinguishing between IoT services (based on mash-ups of data from multiple and often un-related sources) and traditional M2M services (which involve connected devices within a narrow and well defined industry vertical) constitutes a source of long term business risk.

Jul 14, 2013

M2M Acquisitions and the Price of Growth

The topic of acquisitions in the M2M market has featured in several company announcements and several of my discussions with industry players. In late June Avista Capital Partners completed its $253m acquisition of Telular Corporation, an M2M event monitoring and reporting service provider.

During the month of May, the CEO of Sierra Wireless was quizzed about his company’s acquisition intentions by financial analysts at a Global TMT Conference organised by Jefferies, an investment bank. Following its divestiture of a non-core business unit to focus on M2M, Sierra Wireless holds about $160m on its balance sheet. Of this, about $100m is being earmarked for M&A initiatives. So, what are some of the considerations that will determine how these funds might be deployed?

Jul 7, 2013

M2M Corporate Initatives - Strong H1-2013

Over the first half of 2013, there has been strong evidence that companies in the M2M market are continuing to implement a range of business strategies to capture new M2M service and revenue opportunities. Specifically:

  • the number of corporate initiatives is more than double that for the corresponding period in 2012

  • the market is no longer entirely driven by supply-side companies; several enterprises have strategically embraced M2M connectivity and have either partnered with mobile network operators or they are taking the lead role in developing new services

Jun 19, 2013

Prices and Value of Consumer Data

The topic of personal data has interested me for a number of years because it is at the heart of new approaches to marketing and service development based on connected devices. I have written about the commercial potential of personal data from a business model perspective [1] for the GSM Association and introduced the concept of Stewardship and Platform Innovator strategies for companies in the mobile eco-system.

I was therefore pleased to see the Financial Times (FT) publish a series of articles on consumer data. Accompanying this series is an interactive calculator [2] that allows readers to determine a price for their personal data based on pricing benchmarks supplied by a data broker. After filling in the options for my own profile - in terms of demographics, family and health, property, activities of interest, and consumer behaviors - it appears that the price for my personal profile is about US$0.80.

Apr 16, 2013

Competing for In-Home Services

Late last year, in the course of some project-related research, I took a look at the home security market in the context of 'smart-home' service concepts. Fixed- and mobile-network operators view this as one of several promising market opportunities to offer home automation and home security types of service.

A great deal is made about mobile operators pursuing new opportunities such as these in what are referred to as ‘adjacent markets’. However, it is as well to recognize that incumbent providers from those 'adjacent' markets may also have ambitions of their own in the communications arena.

Apr 9, 2013

IoT Business Models

A few weeks ago, I had the pleasure to be a stimulus speaker at a New Digital Economics event in San Francisco. I spoke about IoT Business Models during a full day session - entitled Digital Things – which was devoted to new opportunities from the ‘Internet of Things’.

Digital Things ran in parallel to sessions on Digital Commerce and Digital Entertainment so there was definite competition for conference delegates. As a measure of how seriously Silicon Valley is taking the IoT market, the Digital Things session drew by far the largest audience.

Since the IoT market is still comparatively underdeveloped in commercial terms, my presentation focused on lessons learned from the M2M market. In particular, I highlighted several insights from the business strategies that service suppliers and providers are implementing.

Jan 31, 2013

Sierra Wireless reinforces its M2M strategy

I have been tracking corporate developments in the M2M market over the past few years. They are useful for performance benchmarking while also providing insights as to how companies are implementing strategy and committing to this market.

To date, every initiative has been expansionary involving a mix of acquisitions, distribution agreements, innovation and partnering. The divestiture by Sierra Wireless of its AirCard business, announced on 28 Jan 2013, therefore triggered something of a database classification challenge. In essence, the company sees a tremendous growth opportunity in the M2M market while also acknowledging that the data-card business is on the decline, especially as increasing numbers of Internet enabled devices already include ‘embedded mobile’. Sierra Wireless has therefore chosen to exit this business and to direct its investment capacity towards more promising M2M opportunities.

Jan 22, 2013

Building a "billion dollar" M2M business

Over the past 1-2 years, the concept of a “billion dollar” business has often arisen in my project related discussions concerning multi-national operators. Indeed, Matthew Key (Head of Telefónica Digital) recently set a target of Eur.0.5-08bn (almost US$1 billion) for its M2M revenues by 2015. A billion matters in the frame of reference for most large operators because anything smaller often does not warrant management attention. This is understandably the case when resources are being requested of Group-level decision makers who have to weigh competing market opportunities.

So, what does a billion dollar business look like? How might an MNO reach this level of revenues within a 3-5 year interval of time? And, what are some of the business model implications for operators pursuing a “billion dollar” goal? 

Jan 8, 2013

M2M Corporate Initiatives 2012

Please check the Corporate Initiatives navigation tab for the most recent market developments  
2012 proved to be another strong year for the M2M/Connected Devices market with a significant rise in corporate business ventures. The nearly 100% increase in activity during 2012 – a total of 114 corporate events – easily surpasses the rate of market development in 2011 according to our database tracking M2M corporate ventures.

The two strategies showing the greatest amount of activity during 2012 were:
  • The creation of commercial partnerships across the M2M value chain to supply integrated M2M offerings to the market

  • Market entry and expansion initiatives by companies targeting new and different M2M segments.

Nov 26, 2012

Finance as a Telco M2M offering

The role of telecommunications service providers in the M2M market is typically associated with the provision of wide-area data connectivity. This narrow perspective ignores the other capabilities - technical and non-technical - that service providers can bring to bear in new application scenarios.

In November 2012, Telefónica announced a cooperation agreement with Generali Seguros in Spain to pilot a new, automobile insurance service. The service will allow users to pay for their car insurance policy based on how they drive. The service will also provide information about how users can drive responsibly and tips to improve their driving habits. The overall service concept is not new; it has parallels with an offering such as 'In Drive' which is available in the USA from State Farm Insurance and Verizon's recently acquired subsidiary, Hughes Telematics.

However, what is interesting in the Spanish case is the three-party business model that Telefónica has put in place to capture a share of the wider commercial potential of this new service.

Nov 1, 2012

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.

Oct 12, 2012

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.

Aug 1, 2012

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.

Jul 2, 2012

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.