On the Hot Seat with T-Mobile's John Horn
T-Mobile USA has been quiet about its burgeoning M2M division--at least until now. FierceWireless editor-in-chief Sue Marek talked with John Horn, T-Mobile USA's national director of M2M, about his definition of M2M, what he thinks it takes to have a successful M2M business and how T-Mobile is trying to make it easy and affordable for different verticals to enter this space.
FierceWireless: Tell me about T-Mobile's strategy in the M2M space.
Horn: We believe that we are in the place to own this space. We are going to be the easiest to do business with. We take the hurdles that companies are facing to get into the M2M space whether they are module companies, device companies and solution provider and make their life as simple as possible. We are trying to create an open marketplace as much as we can. We are supportive of Android. We were the first with the Google phone and we are trying to do the same with M2M by creating an open environment.
We have done some things with our certification process. If a provider is out there and they built the solution, they build the device and put it through FCC and PTCRB [a certification for GSM devices] they are going to go on our network. We will not charge them many thousands of dollars and months of testing to slow down that process.
That is a challenge in the open world. There are so many verticals and T-Mobile is not going to come up with the many thousands of solutions that are going to come up in this space. This makes it easier for the people that create niches within the verticals and verticals we haven't even heard of yet, to get to market easier.
Another thing we have done is created a very flexible, user-friendly activation platform for the activation of the subscriber to happen at any place in the process. If they need to activate in manufacturing to test, make sure everything is working, and suspend it until it goes through distribution, we can do that. Do they need to activate it at point of sale through someone's point of sale solution? Or do they need to activate it in the warehouse as it is hitting the shelves, it doesn't matter. They can put the interface on their site that works for them and then we will take that and feed it into our activation system.
FierceWireless: How is your M2M strategy different from other operators?
Horn: We have separated our business unit out. We are not trying to be like everyone else. Does it fit in telematics? Does it fit in data? Does it fit in wholesale? We have M2M as a separate business unit within T-Mobile and we realize we won't be bound by the same constraints of ARPU and CPGA. We have a completely different model.
I don't have to meet the metrics of the company because they are looking at me differently. I have low ARPU but I also don't have to have a customer care rep sitting there to answer the phone eight times a month or a year with questions about the service. It's a completely different financial metric and should be looked at that way. I have a self-contained business unit and my management team has been together for six years. We have a stable group with historical knowledge and institutional knowledge in this space. I think that bodes well for us.
We know what to do. We aren't consumer people trying to figure out machine. We are machine people.
FierceWireless: I think the definitions are getting confused. You are defining it as M2M, but some are differentiating M2M from embedded and embedded is the consumer side. Do you differentiate between the two?
Horn: There will be products within M2M that will have a consumer focus. We launched the Cameo picture frame in the holiday season which allows you to download pictures from your device. It's sold in our retail stores but it's an M2M product. You will see other things that will happen out there with the T-Mobile brand that will support our "Stick Together" branding that's about connecting people with those who matter most. If there's a particular product that fits into that brand that's M2M we will support it and will bring it to market but it's still a machine play even if it's brought to the consumer.
FierceWireless: I guess you would differentiate that by determining which group's metrics will apply. A picture frame will probably not have the ARPU of a regular subscriber.
Horn: That's correct. $10 for a picture frame is not a $50 ARPU but it allows people to stay connected and that is what we are trying to do here.
FierceWireless: How does WiFi play into this mix?
Horn: If you look at M2M, there are a lot of multi-connected solutions out there. You might have WiFi to GPRS using WiFi to get there and GPRS as a collector. We have a solution with Orbcomm that is satellite and GSM. WiFi is just one other part of the equation.
FierceWireless: How are you reaching out to the non-traditional device makers? When you talk about the different verticals they are not the usual device makers.
Horn: You have the different pieces of the equation. We have the modules makers like Motorola or Sierra Wireless and you have the device makers, such as a laptop OEM. We are working with all of them.
FierceWireless: The vision that I am hearing people refer to has wireless embedded in everything--i.e. digital cameras, picture frames, game players, etc. These are different types of companies. How do you bring them in and get their devices tested?
Horn: The challenge is we are trying to bring people from the non-wireless world into the wireless world. If you look at it the old way, here is your $40,000 bill and your six month delay for certification, that doesn't go over big. We are trying to take those barriers down for transitioning to a wireless world for those non-traditional players. We think by being the easiest to do business with we will draw those people in.
FierceWireless: There seems to be a lot of debate over the customer relationship management. Is that an issue?
Horn: The customer relationship can be managed at all different places in the food chain. We are managing and supporting the Cameo at T-Mobile. We manage it, our customer care supports it. If I have someone out there that has a great solution supporting hundreds or thousands of trucks, they are supporting the solution and the customer. They will have interfaces with us to make the network piece easy for them. That call is not coming to us. Who owns that branded customer relationship? It could be us or it could be someone else.
FierceWireless: When you look at different types of devices, would you subsidize embedded devices?
Horn: It depends on the vertical. If someone has a laptop and is going to spend $50 per month on all-you-can-eat 3G data, it's a lot easier to subsidize that than some M2M device with a user that's going to spend $2 per month. It depends on the ROI of the application.