Against the backdrop of an M2M market expected to grow from 142 million device connections in 2012 to 2.2 billion by 2020, Sprint and Orange Business Services (OBS) have struck an important partnership. This partnership forms the basis of a more deep relationship between the international business-to-business arm of Orange and a US-based carrier that has a long-standing record of first mover advantages.
Figure 1: M2M device connections, 2010-2020, worldwide [Source: Analysys Mason, 2012]
What is the primary advantage of this partnership for Sprint?
This partnership helps Sprint compete on a global level for M2M business. The massive OBS roaming relationships--180 countries--give Sprint tremendous international footprint for M2M customers requiring multi-national solutions. This partnership puts Sprint in a position to compete against global powerhouses AT&T, Vodafone and Telenor Connexion. For more information about these carriers and more, please see Analysys Mason's M2M scorecard for communications service providers: 2011
What is the primary advantage of this partnership to OBS?
Sprint gives OBS a conduit to working with the US operator that often has first-mover advantage in the US market. Sprint, smaller than AT&T and Verizon, prides itself on speed-to-market and customer satisfaction above all. Those two traits bode well for Sprint in the fast changing M2M world, and we think these attributes will match nicely with OBS' and Orange's approach to enterprise sales.
What are the advantages of this partnership to both carriers?
Both carriers have strong M2M platforms. We believe Sprint and OBS--including Orange's M2M team at Mobistar in Belgium--will benefit by active discussions about M2M OSS and platform development. M2M device management is only one layer of the OSS that requires refinement, although this will likely be the first area of discussion between the two partners. We expect future emphasis on M2M SLAs, M2M application development platforms, M2M authentication/security and M2M managed connectivity services. Both Sprint and Orange have thoughts on these key issues.
Some complain that Sprint's network is CDMA and Orange's network is GSM/GPRS, thereby yielding a sub-optimal M2M solution for enterprises. This is a red-herring for two reasons. First, this partnership between Sprint and Orange re-emphasizes to us that the core underlying technology costs of the M2M module--whether GSM/GPRS or CDMA--have become much less relevant than the ancillary services costs associated with an M2M deployment. While the module may cost $30-$150, the ARPU associated with connectivity, platform management, applications development/management, systems integration and on-going support services dwarf the initial cost of the module. Second, to complete its international sales mandate, OBS relies on the Orange network and networks of other operators as well. M2M customers that insist on CDMA-based solutions can rely on OBS to serve their needs as much as customers that insist on GSM/GPRS-based solutions.
Overall we find this partnership between Sprint and OBS a position for both companies and we look forward to hearing about their joint work in OSS/platform development, marketing initiatives and sales execution.