Connectivity is necessary, but not sufficient for the Internet of Things (IoT). As I discussed in an earlier blog posting, connectivity is one of the elements of an IoT solution: it’s the part that provides LAN and/or WAN communications between the hardware layer (equipment) and the application layer. See Figure 1.

M2M and IoT supply chain

Figure 1: Same layers, two worlds: M2M and IoT supply chains in comparison [Source: Analysys Mason, 2012]

 Connectivity makes IoT possible as do IP-ready devices, professional services, data analytics and applications. But not all connectivity is equal. Today there are plenty of connectivity options for enterprises wishing to launch an IoT solution. Moreover, suppliers of connectivity – including mobile connectivity – are implementing many changes in their businesses to support current and future IoT opportunities. Analysys Mason just completed a careful analysis of seven mobile network operators’ M2M businesses. See Figure 2. These connectivity suppliers are focusing on their IoT strategies and prioritizing opportunities; crafting new partnerships that supply technology and channels-to-market; determining where best to participate in the IoT supply chain; refining their organizational structures and the placement of people in their organizations to support opportunities; and redefining their enterprise personas or brands to match the future IoT world.

M2M scorecard for Communication Service Providers

Figure 2: Strategic and tactical ranking categories covered in M2M Scorecard for Communication Service Providers: 2012 [Source: Analysys Mason, 2013]

But what are the consequences of those changes? Let’s address some of the questions I frequently get about IoT changing the M2M world.

Question: How will business models change?

We will start to see new, innovative business models. We will see product-centric enterprises start selling services. We will see IoT suppliers engaging in wholesale, rather than retail businesses. We will see models where enterprises will sell IoT solutions to other enterprises that will in turn sell those IoT solutions to consumers. We will also see the coupling of multiple IoT solutions to provide integrated solutions that rely on mash-ups of data. Enterprises will jointly market, sell and support these new IoT solutions.

Question: How will partnerships between providers of different layers of the M2M supply chain change?

Partners must provide each other complimentary, high quality technology. This is the basis of good partnerships. However, while it is necessary to have good underlying IoT technology it is not sufficient. In fact, we believe partnerships will be equally focused on providing complimentary sales channels in the future. Good partners will help foster new sales and support channels to help spur the development and deployment of IoT solutions.

Share your thoughts about the changing value of connectivity and partnerships in the M2M supply chain. What do you think companies and operators can do to be successful?

Thanks and stay tuned for next month’s posting of my series here on Bosch´s IoT blog.

About The Author

Steve Hilton

Steve Hilton is the founder and Managing Director of MachNation, an insight services firm covering the future of the Internet of things (IoT). Prior to founding MachNation, Steve has worked as lead analyst for Analysys Mason's Enterprise research program until December 2013. He has also held senior positions at Yankee Group, Lucent Technologies, TDS and Cambridge Strategic Management Group (CSMG). Steve’s primary areas of specialization, which focus on large and small enterprises, include IoT, fixed and mobile communications services, M2M, cloud services, and sales channels. He has 20 years' experience in technology and communications marketing, with an IoT specialization for 7 years. Steve holds a degree in economics from the University of Chicago and a Master's degree in marketing from Northwestern University’s Kellogg School of Management.

10 Responses

  1. Emile Ballard

    IoT Is Not Just A Concept The October 2012 global study, “Building Value from Visibility: 2012 Enterprise Internet of Things Adoption Outlook,” found that the marketplace appetite for IoT implementation over the next two years is strong. Fiftythree percent of respondents, across various verticals, are planning to implement IoT solutions in the next two years as organizations begin to realize the business and operational benefits this interconnectivity can provide. Additionally, respondents noted the biggest benefits from IoT technology solutions include supply chain visibility (71%), loss prevention (70.75%), and improved customer experience (68.5%).

    Reply
  2. Steve Hilton

    @ Emile — thanks for the comment. Those are pretty interesting statistics. Supply chain visibility is usually an after-product of IoT deployments, not seen as a big benefit. What do you think it’s referring to? Loss prevention I completely understand. I’ve written a recent piece of research (currently unpublished) about IoT in Latin America. Loss prevention is almost always the number one reason why enterprises implement IoT in emerging countries. Where did your October, 2012 study come from? Sounds good. Thanks

    Reply
  3. Gerhard Lechner

    The study mentioed by Emilie Ballard is based on a specific INTERNET OF THINGS DEFINITION :
    “Smart interconnected devices (e.g. RFID, sensors, etc.) that businesses
    use to get more visibility into the identification, location, and condition of
    products, assets, transactions, or people, to drive more effective, timely
    business decisions or to improve customer interactions”

    Key findings can be found here:
    http://www.zebra.com/content/dam/zebra/product-information/en-us/misc/iot-key-findings-en.pdf
    Kind Regards, Gerhard

    Reply
  4. Steve Hilton

    @ Gerhard — Thanks for the link to the study. Do you have any thoughts about the various types of connectivity that are relevant to IoT?

    Reply
  5. Gerhard Lechner

    In general we have to differentiate between the access type and the internet connectivity itself, i guess. Internet connectivity for internet of things will use the same networks as the “ordinary” internet, ISP-, telecom and mobile networks.

    I think the (access ) connectivity type depends on the kind of application. Smart home is different from smart factory or industrial internet, as well as sensor networks might be different from smart cities, location tracking or telematic applications. SIM based M2M is in some way a mix of access and connectivity for some applications at least. It might not be the best choice for “Industrie 4.0″, for instance, but might be useful to connect a car with the internet for special purpose.

    However, RFID/NFC, Wifi, Zigbee, (SIM-) M2M and industrial ethernet will play its role, depending on the kind of application and depending on the amount of data to be transmitted, depending on security issues and last but not least depending on the intelligence of the object itself.

    Reply
  6. Steve Hilton

    Thanks Gerhard. I agree with you that it’s helpful to separate the access from the connectivity. It’s also fair to say that different types of IoT solutions (applications) will be best served by different types of connectivity. In our forecasting we do a rather simplistic thing — we separate fixed-line and mobile access. This at least provides us with some thoughts around which areas might grow more or less, and the the underlying implications on the network and various components of the network.

    It’s also interesting to think about the level of “intelligence” that is needed at the edge of networks to make IoT work. Do we need intelligence at the edge of networks to help facilitate IoT? An example might be using network policies to tell a security/surveillance camera to increase the frame capture rate per second if an object comes into the viewing area. If there is no object in the viewing area, the camera will decrease the frame capture rate per second.

    What do you think?

    Reply
  7. Seth K. Rice

    The difference will indeed be on the application layer, and connectivity solutions, such as the one we have built at Sigfox, cover both current B2B requirements, future B2B solutions and the new and upcoming B2B2C solutions.

    Reply
  8. Steve Hilton

    @ Seth — thanks for the comment. I agree with you about differences at the applications layer. It’s almost always the case that attributes of an application distinguish it from competing applications.

    Have you found particular aspects of M2M applications that make them more or less desirable? For example, user interface, API/openness, easy of deployment, easy of customization, various security aspects, etc?

    Thanks

    Reply
  9. Gold Price

    We’ll work together to ensure that you have the exposure, support and tools you need to find new opportunities to sell your products and solutions.

    Reply

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