The next frontier in the evolution of communications technology is generally considered to be embedded mobile connectivity - the use of embedded cellular radio technology to seamlessly link devices ranging from e-readers, to computers, to cameras, to medical devices, home appliances and automobiles. However, the dream of this connected world has not yet come to fruition.
A series of joint 2010 surveys by Accenture and the GSMA targeting consumers, corporations and mobile network operators identified a number of hurdles that need to be overcome to help enable the market to take off.
The surveys show that consumers and corporate users of embedded mobile devices have high hopes for this lifestyle-changing technology. However, these users think it will be a few years until these new services deliver on the promise. Consumers find that devices do not work together as well as they should. And companies cite lack of standards, high cost of the chipsets and issues around business models as hurdles to adoption.
How might service providers overcome this shortfall? A switch in overall thinking is the key. First, let's examine some of the survey findings.
Barriers to adoption
Accenture first surveyed technology early-adopter consumers - those who own at least four networked devices and use multiple internet software services - in 10 countries (US, UK, Germany, France, Italy, Spain, Japan, China, India and Brazil) about embedded mobile connectivity. The results showed:
- 66% believe that most of the electronic devices they purchase in the future will connect to the internet.
- 82% said these networked devices will save them time.
- 86% think connected devices will simplify their lives.
- 82% think that these devices will bring them closer to friends and family.
- 54% believe that multiple devices do not work together as well as they should.
The second study was divided into two parts. The first part was a survey of mobile network operator executives in North America, Europe and Asia. The second portion of the survey included high-level managers - innovators in companies outside the traditional mobile industry - who are applying embedded wireless network technology to their next generation of products and services. This study revealed a similar dichotomy:
- 89% surveyed said that embedded wireless networking technology is important to their competitive future.
- 63% said that the leading barrier to commercializing their embedded wireless products is finding the right business model.
- 53% cited standards issues as a leading barrier to commercialization.
- 53% said choice of technology platforms was a major issue.
- 52% cited interoperability with other devices and services from other organizations as a barrier.
- Although they ranked MNOs higher than anyone else, only 36% said that MNOs are the best partners for developing and deploying new embedded services.
A single ecosystem
The industry has seen significant progress in enabling standalone networked devices (such as Amazon's Kindle), however, the promise of multiple devices working together to deliver innovative solutions is the ultimate prize. An example of this would be a home health monitoring service that integrates data from multiple sensors and home appliances to provide a holistic report on the health and well being of an individual.
To address the interoperability and standards challenges, MNOs have an opportunity to focus on finding open solutions both at the edge, where consumers connect a multitude of devices onto the network, and at the application orchestration layer. Both the industry and consumers would benefit from an easy route for developers to apply MNO assets in designing applications that orchestrate services across multiple embedded mobile devices.
Given the newness of the embedded market, it is not surprising that there is a concern about standards. The early pioneers were focused on getting their products to work and used whatever protocols were convenient to the immediate task. Device manufacturers and service providers now find themselves in the difficult position of adapting their own efforts to accommodate an eclectic set of standards. Even though some providers feel that things will resolve themselves through a natural, evolutionary process, it cannot be ignored that multiple standards not only inhibit interoperability, but actually add to the cost of development and increases product costs.
The business model problem starts with the fact that embedded technology adds cost to a product. Cellular chipsets are still on the high end of the cost curve, and there is an on-going cost for connection to the cellular network. Companies have to offset these costs through new benefits that bolster the value proposition for consumers.
The embedded market is currently characterized by a series of one-off, customized deals. The steady stream of new embedded devices is poised to turn into a flood due to increasing market demand. When the dam bursts, MNOs that are already feeling their resources strained will not be able to provide the level of individual support they have in the past. To flourish along with the embedded market they will be forced to develop processes that are less focused on individual needs and more focused on volume and efficiency. Instead of spending a few weeks on a particular project, they will need to turn around several projects every day.
Another problem is interoperability. As more embedded products come to market what is now an annoyance is likely to become a major irritation. Consumers will want to hold someone accountable for assuring things work together. The big danger to MNOs is that some other group of companies - some well-known internet firms in particular - will pick up where the MNOs left off and emerge as the big winners when embedded fully takes off and becomes profitable. The internet firms already have established a common global infrastructure and have honed an ability to support thousands, if not millions, of developers through highly automated development systems.
MNOs must consider taking the lead in embedded systems, where they are already well-positioned for success. They can use their strong regional brands to market a set of diverse products from multiple manufactures that may or may not have strong brands of their own. MNOs can also leverage their capabilities in sales, marketing, billing, financing (i.e., balancing up-front subsidizations with subscription fees), customer support and field support to create a package that few, if any, competitors could hope to match.
Expectations for a connected world among consumers and corporate users are high. They are hungry for more exposure to the new frontier of embedded mobile connectivity and a seamless technological ecosystem. Device manufacturers and service providers must adjust their thinking and embrace this new open way of thinking if they are to keep up with expectations.
The keys to the connected future are within sight, and right now MNOs are the closest to reaching them. But the race has just begun and some formidable competitors are now leaving the starting line. Anything can still happen, and the MNOs are going to have to draw on all of their resources to make this future theirs.
Lisa Mitnick is a senior executive covering mobility at Accenture