MachNation: What will be the M2M carrier legacy?

Steve Hilton - MachNation

Machine-to-Machine (M2M) has become synonymous with 2G or 3G SIMs slapped in non-traditional devices. Carriers add on a cheap 3 ($3.75) per month tariff with a 48-month contract, provide some basic connectivity management and offer some limited service level agreements (SLAs). I have now described the de facto M2M solution that sustains 95 per cent of most carriers' M2M revenues.

Carriers are fighting over deals and market share by dropping rates. They are seeking to sell broader solution technology stacks, but are hampered by SIM-centric account management teams.

The traditional vendor community has not aided carriers in meeting their M2M goals. Traditional OSS/BSS vendors like Amdocs and Convergys, and hardware vendors like Alcatel-Lucent, Huawei, Nokia Networks and ZTE that have traditionally served carriers, have been fiendishly slow to innovate their own businesses to better serve carriers' M2M needs. Instead, a whole new crop of hardware and software vendors--some good, some not--have partnered with carriers to bring to market new solutions.

It is easy to understand why this type of M2M carrier business has become legacy within a four-year period. But we have recently seen a glimmer of carrier light shining in the darkness.

MachNation published its 2014 Next Generation IoT Carrier Scorecard this month. In this document, we found that some of the world's most advanced carriers are trying new tactics as they transition from legacy M2M to next generation Internet of Things (IoT) services. Carriers are using different sales channels and approaches; horizontal and vertical segmentation; technology partnerships; acquisitions strategies; retail and wholesale models; and organisational structures. Anyone who says that carriers are innovation-starved laggards needs to look at the new accomplishments of the leading IoT business units to see the contrary.

The best next generation IoT carriers pay attention to five attributes (see figure 1, below).

Strategy: Carriers will have an independent business unit focused on IoT opportunities with appropriately sized sales, marketing and operational functions. They will have partnerships to cover top industry sectors with both technology and sales channels. Carriers will show a willingness to partner, acquire or build a viable technology stack to support opportunities. They will have tactics in place to expand partnerships and channels to penetrate the growing focus on operational technology-centric IoT deployments. Finally, they will focus on industry sector solutions with relevant vertical technology stacks and platforms.


Figure 1: Five attributes of successful next generation IoT carriers [Source: MachNation, 2014]. Click here to see a larger version of this image.

In the vehicle: Carriers will have a vertical technology stack and sales channel uniquely focused on automotive sector (consumer and commercial) opportunities. They will have a multi-application platform to support top automotive applications including usage-based insurance, e-call, i-call, infotainment, geo-location, security and vehicle tracking. Finally, carriers will focus on after-market automotive opportunities with device-to-application solutions.

In the home: Carriers will have a vertical technology stack and retail-centric sales channels uniquely focused on connected home solutions. They will focus on key applications of security/surveillance, energy management and home automation. Carriers will have an IoT application store and user-friendly application and device delivery.

In the business: Carriers will have a horizontal technology stack focused on asset management (and relevant sub-applications) within the enterprise environment. They will place emphasis on automated platforms and applications to best handle massive device proliferation. They will focus on the extension of IT security paradigms into the Operations Technology environment. Finally, carriers will use partners--integrators, vertical-specific solution providers and hardware vendors--to penetrate these opportunities with a solution including connectivity and other services.

Extra-organisational impact: Carriers' IoT teams will have responsibility for product development, partnership management and sales revenue associated with non-IoT connectivity solutions. IoT leadership will have direct line responsibility and sales revenue responsibility for analytics solutions, security management solutions and application development solutions.

Top-performing IoT carriers over the next two to three years will focus on their evolution from providing legacy M2M connectivity services to offering a solution that extends IT-based technologies into operational technology organisations. We anticipate carriers will successfully incorporate additional IT technologies into their solutions. These solutions will include edge computing, fog-based cloud for analytics and applications, database federation, security management and others.

Carriers that choose to ignore enterprise requirements for a more holistic solution will find themselves marginalised by solution providers, IT vendors and integrators that are positioning themselves as powerful actors of IoT change. Enterprises will prefer to extend commonly adopted IT systems and approaches to their IoT deployments. Carriers must have the solutions, tools, integration capabilities and partners to meet these enterprise needs.

Steve Hilton is managing director of MachNation, the only dedicated insight services firm for the IoT and IoE industries. MachNation specializes in understanding and predicting the IoT and IoE industries including developments in hardware, platforms, communication services, applications and deployment services. Steve has over 20 years experience providing guidance in the technology and communications sector. For more information, visit: