Telecoms operator strategies for IoT have tended to be tactical and ad hoc. Telecoms operators need to develop a sustainable long-term position with regard to the M2M market and the broader IoT opportunity. This presentation explores the alternative approaches telecoms operators have taken to M2M/IoT and suggests what we believe is a more sustainable long term approach.

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Telecoms operators’ approaches to M2M and IoT
Presentation
Tom Rebbeck
June 2015

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Telecoms operators need to develop a sustainable long-term position with
regard to M2M and the broader IoT opportunity
▪ The opportunity for the Internet of Things (IoT) is extremely large with device connections globally forecast to
reach billions and touching most, if not all, vertical markets
▪ Telecoms operators should be at the heart of this change as many of these services will rely on networks they
provide. To date though, operator strategies for IoT have tended to be, or at least to appear, tactical and ad hoc
▪ Telecoms operators need to develop a sustainable long-term position with regard to the M2M market and the
broader IoT opportunity
▪ We believe that telecoms operators can do this by developing a flexible platform which will act as an enabler for
IoT opportunities by providing a ‘menu’ of services to customers
▪ These slides are extracted from the full white paper, which can be found at:
▪ http://www.analysysmason.com/Research/Content/Reports/M2M-IoT-operators-approaches-May2015
2Introduction

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Amazon and others have successfully built platform models
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Simplified view of the Amazon platform/model [Source: Analysys Mason, 2015]
Amazon’s platform model
1 Marks & Spencer’s entire e-commerce operation was outsourced to Amazon until 2014
▪ The idea of providing a platform is not new and has been
implemented both by telecoms companies and others
▪ Perhaps the best example is that of Amazon
▪ Over time, Amazon has opened up each of the elements of
its platform to be sold as a service, Amazon Web Services
(AWS) being the best example
▪ As a result, Amazon has a mix of revenue streams, such as:
– selling its own products to direct customers
– selling third-party products (Amazon Marketplace)
– and even selling full e-commerce solutions to others1
Direct customers
Own products
(e.g. books)
Amazon’s platform
(e.g. fulfilment, AWS, payments, customer care)
Third-party products
(e.g. Amazon Marketplace)
Other customers
(e.g. Marks & Spencer)
Amazon-controlled Third party-controlledKey:

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Telecoms operators typically add capabilities in phases, starting with
connectivity only
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Telecoms operators selling connectivity services only [Source: Analysys Mason, 2015]
Approach 1: Selling connectivity only
▪ In the first approach, an operator puts together a basic
cellular connectivity package of pricing and service
▪ This connectivity is sold to other companies that use the
operator’s SIM card in their device and application
▪ For the operator, these SIMs generate some additional
revenue for a limited investment, but this model puts the
operator in a weak position as differentiation on connectivity
alone is typically small
▪ As a commodity product, pressure on connectivity prices will
also be high
Direct customers
Own products
Operator’s platform
(connectivity)
Third-party products
Other customers
Operator-controlled Third party-controlledKey:

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In the second approach, operators partner with a provider of IoT/M2M
solutions, reselling the solution
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Telecoms operators selling third-party products [Source: Analysys Mason, 2015]
Approach 2: Selling third-party products
▪ Example applications in this category are fleet management
or ePOS systems
▪ Illustrations include Masternaut’s partnerships with
Telefonica, Swisscom and KPN. In each case, the
Masternaut application and device is sold and supported by
the telecoms operator, which uses its own brand
▪ This position provides the operator with more benefit as it is
adding value and leveraging other strengths (e.g. ability to bill
and support, sales channel), but is heavily reliant on partners
and the partnerships themselves can be difficult to develop
and to maintain
Direct customers
Own products
Operator’s platform
(connectivity, support, billing)
Third-party products
(e.g. fleet management)
Other customers
Operator-controlled Third party-controlledKey:

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The third approach is for an operator to sell its own solution in selected
vertical markets, controlling the service end-to-end
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Telecoms operators selling internal products [Source: Analysys Mason, 2015]
Approach 3: Selling internal products
1 Vodafone and Verizon have followed this approach through acquisition (of Cobra and Hughes
Telematics respectively) and a number of operators have also developed small, often bespoke,
products internally.
▪ In this model the operator wins a greater share of revenues,
which puts it in a stronger position, for example to determine
the product roadmap
▪ However, the downsides are that the operator:
– needs to pick winners;
– may lack vertical market knowledge/funds for acquisition;
– may not be a welcoming environment for new products
Direct customers
Own products
(e.g. vehicle tracking)
Operator’s platform
(connectivity, support, billing, hosting)
Third-party products
Other customers
Operator-controlled Third party-controlledKey:

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Operators could have a more flexible approach in which they open up
capabilities to different partners [1/2]
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Telecoms operators providing a broad menu of services [Source: Analysys Mason, 2015]
Approach 4: Providing a broad menu of services
▪ Rather than focusing all of its attention on the end-user
vertical markets, an operator could concentrate on the
common elements it can provide for multiple vertical markets
▪ These elements could include traditional operator strengths,
such as connectivity, but also reach into different areas, such
as hosting, support and application enablement
▪ This approach does not preclude Approaches 2 or 3; the
operator can provide complete solutions to the most
attractive targeted vertical markets.
▪ Approach 4 expands an operator’s role where it does not
want to provide the complete solution
Direct customers
Own products
Operator’s platform
(connectivity, support, billing, hosting, application enablement etc.)
Third-party products
Other customers
Operator-controlled Third party-controlledKey:

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Operators could have a more flexible approach in which they open up
capabilities to different partners [2/2]
▪ The benefits of this model are that the operator:
– does not face an either/or choice. It can provide end-to-
end solutions in some verticals (Approach 3) and enabling
capabilities in others
– gains access to customers that are not interested in an
end-to-end solution but want a white-label offering
– can build on its scale and strength. The operator can focus
on the aspects where scale matters (e.g. hosting) without
getting into the detail of specific niche vertical market
solutions
– moves the focus away from vertical market solutions to
common elements. This moves it to areas closer to an
operator’s traditional strengths
8
▪ The downsides of this model are that:
– Operators will need to think differently. Historically,
operators have been used to providing end-to-end
solutions, and with M2M the trend is to also think that end-
to-end is the best model
Benefits of approach 4 Downsides of approach 4
Approach 4: Providing a broad menu of services

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Operators have multiple elements that could be included in a broader
menu of services
9Approach 4: Providing a broad menu of services
1 e.g. NTT DoCoMo with ThingWorx, Deutsche Telekom with Cumulocity, Telecom Italia with PLAT.ONE
2 See http://www.gereports.com/post/99494485070/everything-you-always-wanted-to-know-about-predix
for discussion about GE’s definition of a platform for Predix.
Connectivity
Hosting
Billing and support
Application
enablement
Professional
services
We already see many examples of these individual elements being sold as part of an operator’s M2M deal, but
not of operators packaging together these items as a menu of services that could be provided to customers
An operator should provide customers with connectivity, even if this connectivity is not
using its own network. This may involve international roaming agreements, fixed,
satellite and LPWA connectivity
Telecoms operators typically have environments suitable for hosting applications.
Hosting environment may be especially important when data needs to be stored
locally (e.g. for legal reasons), or where latency could be an issue
Few other organisations have the mechanisms to bill and support millions of
customers. Telecoms operators do, and can provide it as a service to others
Many operators are assessing application enablement providers, some already have
deals1 or have developed platforms internally. This fits with the model – using the
operator’s scale to provide a more complete solution
These are not scalable and reusable, and so do not formally qualify as a platform
capability2. However, for those with professional services teams, systems integration
and even managed services could be included as part of the list of capabilities

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Telecoms operators already have the capabilities to play a major role
in IoT
▪ We should not underestimate the challenges facing M2M and
IoT teams within telecoms operators
▪ On the one hand, these teams are confronted by the
enormous expectations surrounding IoT
▪ On the other hand, the near-term impact on the operators’
business is limited as most provide M2M connectivity for just
a few hundred thousand M2M-enabled devices, and these
are often in low profile vertical markets (e.g. fleet
management) rather than consumer IoT gadgets (e.g. smart
watches)
▪ That said, growth rates are high (typically 20–30% year on
year) and are expected to keep growing
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▪ To position themselves for long-term growth, telecoms
operators need to develop a more mature, sustainable
positioning
▪ We believe this can be achieved by bringing together existing
capabilities (e.g. cellular connectivity, sales, support,
hosting), adding some new ones (e.g. LPWA, application
enablement platforms) and providing a horizontal menu of
capabilities for their own and partner solutions
Conclusion

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Further reading
▪ These slides are extracted from the full white paper, which can be found at:
– http://www.analysysmason.com/Research/Content/Reports/M2M-IoT-operators-approaches-May2015
▪ Other related articles:
▪ For IoT, CSPs may need multiple networks, each optimised for a different use case
– http://www.analysysmason.com/About-Us/News/Insight/For-IoT-CSPs-may-need-multiple-networks-each-optimised-for-a-
different-use-case-/
▪ Scenario planning for M2M and IoT can help telecoms operators position themselves for success
– http://www.analysysmason.com/About-Us/News/Newsletter/M2M-IoT-scenario-planning-Mar2015
▪ Telecoms operators need to maintain relevance in M2M/IoT by building on their strengths
– http://www.analysysmason.com/About-Us/News/Newsletter/IoT-M2M-operator-strengths-Jan2015
▪ Operators’ strengths in M2M and IoT may lie beyond ownership of network or spectrum assets
– http://www.analysysmason.com/About-Us/News/Insight/M2M-operator-strengths-Nov2014
▪ The IoT and M2M market is experiencing vibrant M&A activity, but telecoms operators are curiously absent
– http://www.analysysmason.com/About-Us/News/Insight/M2M-operator-acquisitions-Jul2014
11Further reading

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How Analysys Mason can help with your M2M and IoT strategy
▪ Through our client projects and published research, Analysys Mason has considerable experience of M2M and IoT. Our first M2M
client project was over a decade ago and we have been publishing on M2M and IoT since mid-2011
▪ In the past three years, we have done over 30 M2M and IoT related projects, including market sizing projects, strategic advisory
work and white papers.
▪ Recent project performed by Analysys Mason include:
– A series of workshops for an operator group to develop its strategy across a number of areas (e.g. product, marketing,
partnerships)
– A discussion paper to help a client decide on its approach to low-power, wide area (LPWA) networks
– An assessment of different vertical markets, including market sizing, to help our client select which to enter and with which
partners
▪ If you would like to discuss further how Analysys Mason can help you with M2M and IoT please contact Tom Rebbeck on
tom.rebbeck@analysysmason.com
12Analysys Mason’s M2M and IoT capabilities

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Analysys Mason has considerable experience undertaking M2M and IoT
assignments across varying markets
13Analysys Mason’s M2M and IoT capabilities
Countries of M2M projects
We developed forecasts of M2M device connections and
revenue for Brazil, the Caribbean and Latin America
region (CALA) and worldwide
For a leading mobile operator, we identified and sized
quick-win opportunities in the international M2M market
and helped it develop its long-term M2M strategy
Development of a cost-benefit model for
operators and enterprises for Ericsson
We provided an assessment of M2M
market opportunity for a software vendor
For a Japanese operator, we
produced a report on the sales
channel for M2M/IoT services and
the role of MVNOs in Europe
Supporting a leading
mobile operator in
developing its strategy for
M2M and IoT services
Research on M2M/IoT
international
opportunities for a
major European
operator
We assessed the regulatory implications
and regulatory feasibility for the
implementation of a new M2M service in
a dozen countries
Industry research and quantitative analysis on
the global M2M market
White paper: Leadership and technology: M2M insights
for mobile network operators
White paper: M2M transforms an
industry: evolution of heavy equipment
and dispersed assets
Overview of fleet
management in five
South-East Asian
countries
On behalf of a major regional
operator, Analysys Mason
conducted a workshop to assist
with M2M and IoT strategy
M2M Client country
Examples of recent M2M and IoT client projects performed by Analysys Mason
We developed a list of
over 100 potential
partners, with key
information for each (e.g.
details of existing
contracts and
partnerships) for an
operator client
On behalf of a major
European incumbent
operator, Analysys Mason
conducted a market
assessment of a new type
of sensor network.
We conducted a research study to
determine the level of demand for a
satellite M2M product and to determine
end-user requirements for hardware
and software
Countries of other projects

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Contact details
14
Tom Rebbeck
Research Director
tom.rebbeck@analysysmason.com
+44 (0) 7990 784 752
@tomrebbeck
0)1223 460866
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