Exploring IoT strategies – paths to wider IoT capabilities
With vast potential projected, IoT is perhaps the hottest topic in the tech industry today. While many studies suggest communications service providers are ideally positioned to act as IoT solution providers for enterprises, finding the most appropriate roles along the value chain to maximize IoT opportunities remains very high on service providers’ strategic agendas around the world.
To find out how mobile operators are pursuing IoT business, we have conducted a study entitled Exploring IoT Strategies. Based on research and interviews with 20 leading IoT service providers around the world, the study takes a deep-dive into how they are engaging with customers and positioning themselves on the IoT market.
Exploring IoT strategies – our findings
We discovered that an operator’s IoT positioning is heavily influenced by two major factors. First, the capabilities they already possess, and secondly, the market segments they cover. In turn, these two factors are influenced by the operator’s long-term strategy, which dictates their capabilities and their ability to address different market segments.
Across the board, revenue growth is the key driver for operators entering the IoT market, and multiple strategic paths to that revenue have been discovered. Operators are testing offerings and learning to evolve, while exploring how to create additional value-added services beyond connectivity.
Despite a lack of clear positioning patterns, we have identified an Operator IoT Positioning Framework. The framework is comprised of four main roles along the IoT value chain that operators can pursue. We have also identified four sub-roles in which operators can diversify.
Operator IoT Positioning Framework
Network Provider and Connectivity Provider are the core roles for operators today, and this is where most of their IoT-related revenue is generated. Sixty percent of respondents are solely focusing on the network and connectivity realm at the moment.
Given that most IoT value will be created higher up the value chain, it’s not surprising to see the majority – 80 percent – plan to move up the value chain in the future by becoming Service Enablers or Service Creators in selected areas.
Our study shows that an operator can take on multiple positionings at the same time, depending on their targeted market segments. We also found that the Service Creator role tends to be more actively pursued than the Service Enabler role, since most of the operators interviewed have vertical industry solutions, even without directly offering platform services.
To add IoT value, operators can step beyond core roles
Another way operators are adding value is through the introduction of new, differentiating services on top of the current main roles. We found that even in the core roles of Network Provider and Connectivity Provider, operators are already proactively adding extra value through their sub-roles.
For instance, telecom operators may offer cellular and non-cellular IoT network integration services or device lifecycle management on behalf of enterprise customers. These “integrate” and “operate” capabilities lay a foundation for operators to adopt more sophisticated roles in the future.
At the most sophisticated sub-role, operators can “transform” customers’ business models and operations using IoT as a catalyst. A key advantage in sub-role positioning is the operator’s ability to incrementally build new positions within the main roles, which facilitates an eventual move up the value chain.
Each role requires a unique set of capabilities, and as operators step beyond their core areas of networks and connectivity, their value propositions will need to be sharpened and with new capabilities acquired.
Learn more about the Exploring IoT Strategies study, the IoT Positioning Framework and the capabilities needed here. And if you wish to assess whether your organization is optimally positioned in the IoT value chain – please don’t hesitate to get in contact with me.