Time to get serious about IoT

Ansgar Schlautmann
19 Feb 2014

The Internet of Things has been a hot topic for some time, but no solution provider has really found a sustainable business model to benefit from this emerging market. However, Google's purchase of the smart-home provider, Nest, for $3.2 billion may be a major step that might change the power-game within the overall sector. Google is also engaging heavily with industry players to move into the automotive industry (Open Automotive Alliance) and just showcased an innovative e-health solution (diabetes measurement through contact lenses). With all this innovative ideas, Google seems to be positioning itself as the major force that paves the wave for mass-market IoT acceptance.

There are currently six million smart objects in the market globally. Cisco and Ericsson estimate that number could increase to 50 billion by 2020, extending the "Internet of Things" toward the "Internet of Everything (IoE)", including machine-to-machine, machine-to-person and person-to-person. According to Cisco, between 2013 and 2022, $14.4 trillion of value will be redistributed in this field, but who are the players apart from Google to play in this field?

Bringing smart solutions to life requires a smart object and a network, as well as a wide variety of services. The value chain for smart solutions is cluttered with telco players, product manufacturers, utilities, hardware and system integrators and over-the-top players. In addition, market players are broadening their scope to capture as much value as possible.

Telecom operators are also tempted to expand their current stronghold position as network operators due to increasing price pressure in voice and data services that is reducing their margins dramatically. Services beyond connectivity are a great opportunity to secure additional revenue and capture a larger share of the overall value created.

We expect telcos to target a number of opportunities across the IoT value chain in the midterm to expand their overall scope. Let's look at each of these mutually non-exclusive options.

Option 1: Stick to your knitting as network operator

Operating a network is the core capability of a telco, and logically the first move into smart solutions. The pure bit-pipe model does not create any sustainable differentiation, however, so telcos must rethink their approach to the smart objects market, both in terms of service offerings and differentiation.

Option 2: Exploit core assets to be a service enabler

Global telcos are starting to position themselves as service enablers by successfully employing their various assets. Telcos are generally well placed to manage applications over the network with dedicated quality-of-service levels. They are also able to develop their own application and workflow platforms.

Related content

No Comments Yet! Be the first to share what you think!