Mobile IoT and Adjacent Industries

How time flies! Over 10 years ago, I was part of a GSMA strategy team that looked at new growth markets for the mobile industry. Our report – entitled ‘Embedded Mobile: M2M and Beyond’ – identified opportunities for growth in adjacent industries. This would need the GSMA to promote the collective interests of the mobile industry in several ways. One recommendation was to work with supply-side partners. This would lower the barriers to adoption of mobile in non-mobile industries.

A second recommendation focused on stimulating demand by fostering a dialog with non-mobile industries. Besides highlighting the value of connecting assets, it would provide a channel to feed user needs back into the mobile eco-system.

In the aftermath of the 2008 financial crash, the GSMA’s initiative survived and thrived. Soon, senior executives from the automotive and pharmaceuticals sectors became keynote speakers at Mobile World Congress (MWC). And, the composition of MWC attendees changed with an influx from non-mobile industry sectors.

Why does this history matter now?

Looking up the IoT Value Chain

People are so preoccupied with everyday tasks that they often miss out on what is around them.

Walking down the street, how often do you catch people looking up at the features of old buildings or roof-level signage? The same is true in business life. Let’s consider how this plays out in the IoT market.

Recently, I heard a telco executive explain why mobile network operators (MNOs) focus on connectivity. He pointed to two factors. One is that connections and data connectivity are straightforward things to measure, with a well-established legacy from mobile phone sales. In effect, businesses manage what they can measure. The second is that it is easy to look down at the network from the MNO’s vantage point in the IoT technology stack. It takes an effort to lift one’s head and look up. That’s much like missing out on the architectural features and art work when we walk head-down (even without the excuse of a smartphone) along a street.

Occasionally, however, it makes sense to look up, not just to appreciate your surroundings but also to get a sense of whether the world is changing and how you might need to adapt.

Rumelt on 3G: Lessons for 5G and IoT

The consultancy McKinsey recently republished a 2007 interview with Richard Rumelt [1], professor of strategy at UCLA’s Anderson School of Management. Rumelt opened his commentary on strategy by noting that most corporate strategic plans have little to do with strategy. Instead, they typically end up being “three-year or five-year rolling resource budgets and some sort of market share projection”.

What senior managers want out of the strategy process, according to Rumelt, is a pathway to substantially higher performance. That can happen in one of two ways. A firm can either invent its way to success or, it can quickly and skillfully exploit some change in the environment. Examples of such change include technology, consumer taste, resource price or competitive behavior factors.

The telecoms industry finds itself at the intersection of many such changes. On the supply side, the arrival of 5G networks and the standardization of low-power IoT devices provide two industry transition opportunities. These developments will usher in new service concepts and business opportunities.

2018 in Review: IoT puzzle-pieces falling into place

Compared to previous years, the pace of corporate activity in the IoT arena has settled down. This is to be expected in a maturing market cycle. This impression may be at variance with wider industry sentiment where the use of AI/Blockchain/IoT/Machine Learning labelling continues to sensationalize.

As a sign of IoT market reality, the opening event of 2018 dealt with the commercial reality. It took the form of Telefonica O2 withdrawing from the smart home market through the closure of O2 Smart Home. The year ended with a couple of more promising events for the mobile and IoT industries. I’ll touch on these later.

Most activity was concentrated among three groups: technology vendors; network operators (mobile, low-power and virtual); and, platform providers.

Joined-up thinking for smart cities

What are the more common justifications for smart city investments? Citizen-centred service needs, political priorities and a positive return-on-investment (RoI) would certainly feature in the list of possibilities.

All too often, however, individual smart city initiatives are destined to become orphan investments [1]. These are standalone or siloed solutions. They meet a timing imperative or they are designed in isolation from system-wide factors [2].

New IoT opportunities: where's the big deal?

In a recent McKinsey article [1] entitled “What it takes to get an edge in the Internet of Things”, the management consultancy advised firms to focus on three habits:

• Habit 1: Begin with what you already do, make, or sell

• Habit 2: Climb the learning curve with multiple use cases

• Habit 3: Embrace opportunities for business-process changes

A change in perspective reveals new IoT strategies

My last post examined the direction that several MNOs are taking with their IoT strategies [1]. Applying these trends at an industry level, I questioned whether MNOs are approaching the commercial opportunity with a broad enough strategic perspective. Think about it from the perspective that traditional mobile connections will supposedly account for roughly 10% of all IoT connections. That proportion should rise now that low power cellular technologies (NB-IoT family) are firmly on the deployment roadmap. Since this raises the credibility of a vibrant supplier eco-system, more adopters should gravitate to mobile connectivity to take advantage of more compelling economies of scale.

Nevertheless, it’s clear that mobile connectivity will coexist as one of several IoT access technologies. However, unless MNOs find ways to stake an economic role in activities higher up the value chain they will lose out on promising commercial prospects. They will also find themselves dis-intermediated from end customers and their needs. How might this play out?