M2M Corporate Transactions Q3-2012

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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.

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.

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.

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.

Reference framework to analyse and design business models

A ‘business case’ for a particular business venture quantifies its financial profile and net present value taking account its inherent level of risk. This is essentially an exercise in projecting future costs and revenues based on assumptions about products and services offered to targeted customers, and the investment in equipment and operations necessary to achieve this.

‘Business model’ is a term that describes the how an organization captures commercial value from a particular business opportunity. In other words, what are the different elements that an organization employs to deliver a valued product or service to a target customer group in a commercially sustainable manner?

Origins of "More With Mobile"

In 2008, the mobile industry started to pay serious attention to new types of connected device. Amazon's Kindle played an important role in this process. Unlike the traditional M2M market, the Kindle was the first mass-market device with embedded connectivity. 

The Kindle also introduced a new payment model to the industry in the form of a $9.99 charge to download an eBook. At that time, mobile operators were selling airtime plans for data cards and USB dongles to a consumer base that had little notion of how many mega-bytes they needed on a monthly basis. 

In a similar vein, mobile operator executives were intrigued by another company - Cardionet - which offered a remote patient monitoring service. The fact that the company earned over $2,000 per month for each connected device was another attention grabber in a mobile market where average mobile phone ARPUs were closer to $50/month.

These two connected device designs actually delivered an elegant service that masked a great deal of technical complexity. They exemplify the revolution that was about to transform the traditional M2M market. 

Since 2008, the mobile industry has journeyed along the connected devices highway. Initially, the focus was on embedded mobility and measures to bring down the cost of integrating mobility in new and existing devices. Opportunities to apply mobile connectivity in different vertical markets such as automotive, healthcare, smart cities and utilities shifted the market focus on 'Connected Experiences'. Now, the proliferation of different types of wireless devices using technologies such as mobile, Bluetooth, Wi-Fi, Zigbee etc. is shifting industry attention to the Internet of Things market. 

I have been involved in the growth of this industry since its inception having contributed to a strategy project that was initiated by the Board of the GSM Association to identify new growth markets for the mobile industry. Most of my current work is for companies that are developing their business plans to launch new services in this market. I advise on strategy, market analysis and business model issues. And, as more and more companies factor connectivity in their business, product and service strategies it will become evident that they will accomplish a great deal more with mobile.

Prior Work in the Public Domain

This post will be updated as new materials become available.

The following items refer to reports, White Papers and presentations that I have delivered in the public domain. Items are presented in reverse chronological order for ease of access to the latest knowledge. Contact me at ken@more-with-mobile.com to obtain a copy of specific documents.

2016	IoT Solutions World Congress	Intelligent Transport Systems: Lessons from a Large-scale, public-private sector trial

This presentation outlines the challenges that organizations will face in building and delivering IoT services on a large scale. It draws on early trial experiences involving the InnovateUK-funded oneTRANSPORT trial and the role of standards in the form of oneM2M service enablers - https://www.youtube.com/watch?v=bOHsmq7RCpY/.

2015	IoT Slam '15 Virtual IoT Conference	A Road-map for IoT Strategy & Business Model Innovation

I was invited to take a commercial focus on the IoT market opportunity for this virtual conference (http://iotslam.com/session/a-road-map-for-iot-strategy-and-business-model-innovation/).

My presentation mapped out the IoT landscape with the objective of providing companies, both solution suppliers and buyers of IoT solutions, with a road-map that they can use to develop their IoT business strategies.

The road-map highlights three avenues of growth: support for more connectivity technologies beyond the mobile (cellular) which is the main-stay of M2M; movement up the value-chain into platforms, applications and risk/reward sharing business models; and, support for interoperability in ways that permeate the silo characteristics of present-day applications.

By referencing this road-map and revenue potential from following different paths, companies can work out how to make the transition from the (M2M-silo) value chain and into the partnering ecosystems, platforms and interoperability touch points that characterize the IoT market.

2014	IoT Day 2014 web-conference	Event-closing conversation with Alicia Asin Perez (CEO Libelium)

For this on-line event (http://iotday.org/2014/) to celebrate IoT through events around the world, I interviewed Alicia Asin Perez, one of the co-founders of Libelium which provides an open-source sensor platform for IoT applications.

2013	Telecommunications Industry Association	Future of the Network Documentary: the Internet of Things

This interview for the TIA's Future of the Network documentary series focuses on the IoT market opportunity and its key characteristics - http://www.tianow.org/videos/ken-figueredo/11241. 

2012	Market Review for the GSM Association's mEducation Initiative	mEducation - New Business Models: Innovation in Practice

Digital content allied to mobile delivery are two important ingredients in the emerging market for mEducation services because they allow traditional and modern-day approaches to enable a "blended" educational experience. 

Between July and September 2012, I analyzed the market for mEducation services and innovative business approaches that different organizations are using to enter this market. Education content and service providers, policy makers and mobile operators from around the world contributed their insights and ideas on new sources of value, the role of mobile and emerging business models. 

A summary of this work can be found at the GSM Association's web site. It includes some innovative and early stage approaches from BhartiAirtel (India), SFR (France) and Tata DOCOMO (India). 

I presented highlights of this work at the GSM Association's Connected Living Summit in Gothenburg with several communications service providers and technology vendors in attendance. This turned out to be an interesting discussion and several attendees remarked that the scope and value of mobile in the education sector was more promising than they had originally considered.

2012	Presentation at New Digital Economics Conference	M2M Strategies and Business Models

The advent of new value propositions and business models will have an impact on suppliers to the mobile industry, mobile operators and other businesses that are implementing connectivity strategies.

I discussed the drivers of change and implementation challenges linked to these new business model concepts at the New Digital Economics panel on Digital Things 2.0 (San Francisco, 2012). Some of the key implications for companies in the mobile eco-system are the need to:

• think creatively about new value propositions beyond connectivity
• deploy processes and platforms to manage populations of connected devices
• explore partnering as a business strategy to bridge expertise and cross-industry knowledge gaps
• master new skills to orchestrate multi-party supply chains in order to deliver more innovative connected device services
• develop trusted brands which will be essential in a future of multi-sided business models where a core set of device and sensor information can be simultaneously used in services for for multiple customer groups.

2012	Strategy Paper for the GSM Association	Connected Life - The Need for New Business Models

The new application opportunities that connected devices and sensors make possible occur at the intersection of mobile and non-mobile industries. For these ideas to become a commercial reality there needs to be a corresponding level of innovation in business models.

Early in 2012, I prepared a paper on new business models as part of the GSMA's Connected Life campaign. The paper made the point that mobile operators are in a central role to accelerate the connected devices market beyond basic connectivity into areas that: 

•  add a layer of quality to connectivity services via a managed connectivity business model

• expand the portfolio of goods and services offered through a retail entity that functions in the role of a customer stewardship-service model

• facilitate services innovation by encouraging new, data-intensive applications across business silos through a platform innovator business model.  

This work featured at a panel session for Mobile World Congress (Barcelona, 2012) and also at Mobile Asia Congress (Shanghai, 2012).

2011	Strategy Study in collaboration with Beecham Research	M2M - Service Enablement Services (SES)

In order to elaborate on the business opportunities beyond basic connectivity, I co-authored a study in 2011 with Beecham Research on the market for service enablement services. These services allow businesses to launch and manage connected devices through the use of over 110 SES elements which are defined in the study.

The research for this study was based on discussions with SES platform providers and over 200 companies from 7 industry verticals that were in the process of designing connectivity into their products and services. As such, it was the first ever demand-side analysis of this market.

A forecast of the future market opportunity for connectivity subscriptions and service enablement services projected a higher growth rate for SES. This  was due to the fact that companies adopting connectivity were much more aware of the capabilities required to support devices in the field. In addition to valuing these services they also expressed an interest in outsourcing these services.

2010	Report & Conference Presentation for the Telco2.0 Initiative	M2M - Beyond Connectivity

By 2010, the idea of extending wireless connectivity in different types of device was taking hold in the market. Mobile operators were using a variety of approaches to expand their presence in the M2M market including the launch of dedicated business units, changes in their distribution channel strategies, vertical integration initiatives and mobile to non-mobile partnering. At the same time, analysts were forecasting declines in the average monthly revenue per connected device, raising doubts about the commercial appeal of M2M offerings.

I was invited to speak at the Telco2.0 Executive Brainstorm in London about the business opportunities of M2M, beyond connectivity. My presentation outlined the different operational and scale challenges of M2M compared to the handset business model. It also highlighted the importance of processes and platform tools to manage large populations of connected devices and closed by outlining incremental revenue opportunities by extending into new markets beyond basic M2M connectivity.

2009	Report & Conference Presentation for the Telco2.0 Initiative	M2M - mobile panacea for the health sector?

In 2009, the Telco2.0 initiative prioritized developments in the M2M market. In particular, the broadening scope of M2M offered the potential for M2M to enable new business opportunities at the intersection of the health care and mobile industries.

My presentation described $1.2trillion in wasted expenditure that could be targeted through three types of mHealth solutions:

• encouraging changes in patient behavior
• information and operational-efficiency services in clinical environments
• and, operational savings from the improved use of IT.

A video of this presentation is available for viewing here on Telecom TV.

2008	Market Strategy Study for the GSM Association	Embedded Mobile: M2M Solutions and Beyond

The earliest work on new opportunities for connected devices was a 2008 strategy study I carried out for the GSM Association. 

The key conclusion of this study was that the mobile industry needed to move beyond traditional M2M market opportunities and into adjacent industry segments. In particular, connected consumer electronics, health care and smart meters were three key categories that could drive device volumes to levels that would rival the mobile handset business. 

This would focus greater industry attention on innovative service opportunities while the economies of scale from high-volume designs would improve device and service affordability.