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How the Internet of Things changes M2M connectivity business models
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.
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.
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.