Carrier IoT Not So Promising Now Is It?

This morning over coffee I saw what is maybe the most sanguine view of cellular IoT prospects thus far here. The analysis from a firm in the UK called Analysys Mason is probably setting off a few email threads this morning with its revenue forecasts:

But what is most striking are the operating recommendations from the analysts, which mirror my own:

Create an independent entity to target the IoT opportunity. An IoT business unit should be able to make decisions independently of the legacy business. Its performance metrics should be commensurate with a new growth area, and it should be granted a fair degree of autonomy to make its own investment decisions. Investment in hardware and application services should be focused on growing the IoT business and should not be hindered by legacy business considerations (for example, Bouygues Telecom and Vodacom have demonstrated how operators can use separate units to develop IoT solutions).1

Leverage in-house capabilities to build IoT enablers and applications. Operators need to build platforms and enablers to operate in new areas of the value chain. Some operators have separate R&D and ICT divisions that focus on developing new capabilities and solutions that target specific industry sectors. For example, Deutsche Telekom’s ICT business, T-Systems, developed a healthcare platform (e-Health Connect), which supports IoT applications such as remote patient monitoring. In addition, Verizon has developed ThingSpace, and Indosat has developed NexThing to build the developer ecosystem to support their initiatives.

Foster partnerships to bring IoT propositions to market. Not all mobile operators have all the skills required or in-house expertise to develop hardware and application solutions. Even those operators with an established IT division (such as Deutsche Telkom) will depend on partnerships for certain components. Most operators will need to build partnerships to enter new areas of the value chain, either in capabilities such as application enablement platforms or by bringing end-to-end solutions to market.

Make bold moves in investment and acquisition. Mobile operators have been relatively cautious in terms of acquisition in the IoT space. There have been a couple of major exceptions: Vodafone acquired Cobra to compete in every part of the automotive IoT value chain. Similarly, Verizon has made a spate of high-profile acquisitions totalling USD3.5 billion to compete in fleet management. On a smaller scale, Telia has invested in Springworks to enable its connected car platform, and it recently acquired Fältcom to compete in smart-city applications.

As I’ve written here and here and here, cellular’s prospects are weaker than their marketing teams would have you believe. Cellular carriers have a role to play in the IoT, it’s just been wildly overhyped and mythologized to the point of paralyzing parts of the IoT industry particularly as it relates to LPWAN’s in the enterprise/industrial sector.

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