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The traditional definition of machine-to-machine is communication between two remote machines controlled by a central server. Now, mobile operators are viewing M2M on a broader scope by including the extension of connectivity to consumer electronic products, specifically where the role of the network operator is to not only provide connectivity but also deliver consumer specific M2M applications.
The number of connected devices has been growing exponentially and it is a given that M2M will become a major growth driver for mobile operators. However, operators realize that they will need to partner to generate profits from a low average revenue per user environment and monetize M2M services. Operators had a “go-at-it-alone” attitude about M2M for years because they were the ones who possess the core mechanism for M2M to be successful – a robust network which can handle demands of M2M traffic – but they rarely had the full set of skills required to provide an end-to-end M2M offering. M2M is inherently a partnership-driven market. Realizing this, operators have been revisiting their M2M strategy with an increased desire to make it work with a more structured approach and to turn it into yet another revenue stream.
More operators are recognizing that to make M2M initiatives a success they need to partner with specialists across the entire M2M value chain. The vast amount of knowledge and management required to create quality M2M services has compelled operators to start forging partnerships across the M2M ecosystem. And it’s not a case of when will these partnerships occur, but more with who, depending on their focus and needs.
Vertical or horizontal partnerships
The fragmented nature of M2M has been accredited to why growth in the market has been glacial. By forming partnerships, whether it is vertical or horizontal, operators will be able to offer a better experience to their customers.
Vertical partners are those who have complementary, non-overlapping skills and are relatively equal in their contribution – the driving force of integration in the value chain. Horizontal partners are those who have overlapping skills such as one where two service providers partner to offer better geographic coverage.
For carriers, both types of partnerships have obvious benefits. For example, in a vertical partnership the link with a developer who is specialized in a target area of M2M will mean that their ability to provide a more catered and relevant M2M service for that niche is greatly improved. If carriers want to improve their entire M2M service offerings across various M2M applications, horizontal partnering will come into play, enabling M2M to be applied in all areas of the value chain and improving user experience across the board.
Partnering across the entire value chain
If an operator chooses to take any role in M2M, partnering will be essential. This is true across the entire value chain – at the network level, the applications level and at the business level.
Network: Even at the core, if an operator wants to focus just on connectivity, they must still have healthy and robust relationships with device manufacturers. As simple as it may sound, embedding a SIM card is no easy job and it will be essential to work with manufacturers and module providers to see this task successfully completed. Operators will also need to form partnerships to establish their connectivity delivery platform to enhance automation and drive efficiencies in delivering M2M services.
Applications: In the business-to-business market, operators must develop partnerships in specific verticals since an M2M application which works in one industry may not translate well into another. Operators should work with partners to develop applications that can be deployed in more than one industry. At the same time, they need to create a robust M2M application ecosystem in order to provide compelling offerings to customers.
Business: Most operators know that the most valuable part of the M2M value chain is in integration, though not all operators have the requisite system integrator skills or partnerships in place. At the same time, not all operators want to be known as end-to-end players. If an operator indeed wants to be recognized as an end-to-end player, partnerships are even more critical.
Delivering a true end-to-end M2M solution
Operators are just one, albeit large and vital, part in the M2M value chain. To deliver a truly end-to-end M2M solution, expertise is required at every segment of the value chain. Partnerships allow operators to divide the responsibilities of end-to-end M2M offerings so each party manages their core expertise. For example, operators can be responsible for connectivity, billing and reporting, customer care and connectivity support. Partners can be responsible for hardware and various component manufacturing. Mixed responsibilities would include hardware customization and testing, applications development, applications support, device provisioning and installation and integration of M2M solutions.
It’s easy for operators to become unfocused and put attention into other core areas while neglecting M2Ms’ significance. They must realize that they are positioned to become the driving force behind M2M’s growth, helping the market progress and evolve. M2M has the capability to change how consumers use and interact with technology. The verticals in which M2M can be utilized continue to grow, from automotive and utilities to manufacturing and healthcare – its applications are limitless.
Successful M2M partnerships
Mobile operators are positioned to take a leading role in the M2M value chain. They can establish and execute strategy; identify priority verticals, applications and approaches; and lead the building of a broad ecosystem of M2M partners necessary to support M2M implementation projects. Various operators have already established successful partnerships, including:
–AT&T: Offers M2M service through reseller Axeda’s application development platform. This partnership is designed to help businesses go-to-market faster with innovative M2M applications.
–Deutsche Telekom: Launched the M2M Partner Program to bring together key players across the value chain deliver enhanced M2M products and experiences.
–Global Operator Alliances: Recently KPN Telecom, NTT Docomo, Rogers Communications, SingTel, Telefonica, Telstra and Vimpelcom formed a global alliance to simplify and reduce costs of International SIM services by leveraging Jasper Wireless’ Control Center.
–Telstra: Offers end to end solutions through partnerships with Trimble Moble Asset Management solutions and Navman Wireless (GPS fleet tracking and fleet management solutions).
–Verizon Wireless: Partnered with Sierra Wireless to offer the cloud based AirVantage platform for faster deployment of M2M applications and purchased remaining 50% of NPhase (acquired by Qualcomm) to enhance M2M management capabilities.
As a technology, M2M is securing interest in large global corporations who are interested in establishing close relationships with M2M service providers, aiming to add additional offerings to their product or service portfolios. As a global market, M2M is a major revenue opportunity for mobile operators, as analyst firm Analysys Mason predicts that M2M device connections will increase by 20-fold worldwide in the next 10 years. Now is the time for operators to establish the appropriate partnerships and grasp M2M opportunities by the horns.
