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?

Review of M2M Corporate Events in 2013

2013 as a whole was another year of strong corporate activity in the M2M market. A total of 147 events easily surpassed the 115 events that were recorded in 2012. These events include: announcement of an industry changing technology breakthrough; market entry/expansion initiatives; strategic partnering; investment-related acquisitions or divestitures; distribution agreements along the value chain; product innovation and outsourcing of key service delivery capabilities.

While 2013 saw many more companies taking to the press wires to publicize their sales wins, these are not recorded here as corporate initiatives. If anything, sales wins are the consequence of one or more corporate strategy commitments made in prior years.

An important development that occurred over the course of 2013 was a shift in sentiment to promote IoT in preference to M2M. This began with a raft of announcements at the Consumer Electronics Show (CES) in January 2013. Momentum continued to build around the IoT theme due to significant publicity drives and business commitments by large organizations such as ARM, Bosch, Cisco, GE and Intel.

Managing M2M inside an MNO

France’s Orange has a long history in the M2M market and was one of the early pioneers in establishing an M2M competence centre, leveraging the deep expertise of its M2M team, notably in the Belgian market. It was therefore interesting to see Orange Business Services’ announcement of a strategic partnership to use Ericsson’s Device Connection Platform (DCP).

Orange has operating companies in several different countries and is also a partner with Deutsche Telekom in the UK’s Everything Everywhere. Orange is separately a partner with Deutsche Telekom, TeliaSonera and Telecom Italia in the Global M2M Association. In light of these different constituents, one interpretation of the Orange/Ericsson partnership is as a neutral platform that many, if not all, of the M2M operating businesses can buy into.

If this is indeed the strategy, it would shift the responsibility for coordinating multiple platforms, capabilities and expertise onto Ericsson. Channel and account management responsibilities would then more naturally fall on to individual operating businesses.

To get a sense of the coordination challenges and operational complexities that arises in enterprise-grade and multi-platform environments, it is instructive to look at another company, Telefónica.

Vodafone and its M2M strategy

In Vodafone's H2-2012 financial results presentation, its CEO outlined Vodafone's 2015 strategy including a reference to its M2M goals. In particular, Vodafone's M2M business unit will be a part of its Group-wide Enterprise unit. This raises important questions about Vodafone's longer term goals especially in the light of a growing consumer M2M market and the reorganisation plans of several of its competitors.