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Mobile Operators Building a New Channel for IoT
Two overriding wireless technologies will likely power the Internet of Things (IoT), and one of those is entirely under the control of the mobile operators (MOPs).
WiFi has become the preferred wireless technology for in-home IoT applications, but for wide-area IoT device access, cellular service is really the only game in town. Satellite might be a wide-area option for some classes of applications, but it falls short in terms of low power draw and low device cost. While the MOPs have been ramping up availability of IoT-focused network services like LTE Cat M1 and Narrowband IoT (NB-IoT), their bigger role in IoT might be in providing a sales channel for what I call “packaged IoT solutions.”
I’ve written about IoT network services in two previous No Jitter posts, “Twilio Wants to Open the Door to IoT” and “IoT Starts with ‘Network.’” While connectivity is the obvious contribution from the MOPs, each also commands a massive salesforce with contacts among the key wireless buyers in virtually every company in the U.S.
While the MOPs may have the network and the contacts to sell IoT, they don’t have the apps -- with the exception of Verizon, which bought Hughes Telematics back in 2012. However, hundreds of smaller companies have recognized the value of coupling cellular network services and either smartphones or specialized IoT endpoints (e.g., IoT devices that connect to vehicle onboard diagnostics ports to create high-value IoT services). What those app suppliers lack is a big-time distribution channel.
What’s shaping up here is a match made in heaven. Recognizing the slowing growth in smartphone sales, the MOPs are looking to recharge the wireless industry with IoT lines. These lines might not generate the monthly revenue of smartphone lines, but the numbers could be massive, and the revenue stream far more stable than consumer lines that can easily flip with the next carrier promotion. To help get the wheels rolling to IoT, the MOPs have been adding any number of third-party IoT apps to their product lines.
IoT for the Masses
I recently completed an extensive comparison, was absolutely floored by the sheer number of IoT apps offered by the four Tier 1 MOPs; by a rough count, I found more than 70 product offerings. The offerings fell into a number of task-specific categories, including fleet management, mobile dispatch, mobile forms/mobile data collection, mobile workforce management, mobile device management (yeah, that’s an “IoT app”), and the list goes on. In some cases, the offerings address a single application, while others may combine related functions like fleet management and mobile dispatch.
From a customer standpoint, these offerings hold significant appeal. First off, the services constitute a packaged deal, where the monthly per-device price includes the IoT application (typically a cloud-based solution), endpoints (or compatible smartphone apps), and network services.
Buyers get the added benefit of a “carrier endorsement,” as the MOPs are in the mobile business and will ultimately be responsible for the overall customer satisfaction. We reviewed the vetting processes, and the buyer can safely assume the MOPs have done some serious assessments of any third-party providers before adding them to their product lineups. At the very least, customers can assume the MOP conducted a more thorough assessment than they would likely have the time to do on their own.
From long experience I know how difficult it is to strike a deal with a mobile operator, so for a small IoT supplier, hooking a distribution deal with a Tier 1 MOP should be like hitting the Powerball.
The types of applications the MOPs are offering aren’t the be-all-and-end-all in IoT, but they are an important stepping stone. These aren’t the earth-shattering, paradigm-shifting kinds of things the futurists project, but focused, limited-function solutions that businesses can implement quickly with minimal disruption and clear measurable results.
The MOPs all offer design and consulting services that can help customers develop those wide-reaching solutions that integrate with existing applications and offer transformative impact, but all of that raises the degree of difficulty substantially. And it greatly limits the potential buyer pool.
These packaged apps are geared for the masses. The MOPs are offering targeted solutions for addressing particular problems with measurable impact. In doing so, they can bring this revolutionary idea of IoT within reach of even small and mid-sized enterprises.
A Matter of Execution
The MOPs have extensive sales resources, but those salespeople need an incentive to pursue this opportunity over others they have in their bags. Salespeople instinctively stick to what they have been successful with, and they have all cut their teeth on “devices and plans.”
App sales are a different animal entirely. When you sell a smartphone and a data plan, you pretty much don’t care what the buyer uses it for. You cash the check and move on to the next prospect. With app sales, you’re providing a solution and that solution has to fit in with the customer’s needs, business processes, and overall operations.
The MOPs have done a good job setting themselves up to be a key distribution channel and a launching pad for IoT. To capitalize on that opportunity, they’ll have to identify the most-promising markets, pick the right partners, and confirm the integrity of the solution. More than that however, they’ll have to develop a sales strategy that incentivizes the salesforce and gets the right people with the right knowledge in front of the right buyers and make sure they understand the needs of the market their solutions support.
Most of that expertise today exists within the MOPs’ partners, which developed those solutions based on needs they recognized in particular industries (e.g., fleet management) or use case (e.g., mobile workforce management). Some of those partners have signed distribution deals with multiple MOPs.
From a network standpoint, the irony is that the vast majority of these apps utilize the traditional smartphone data services (i.e., LTE Cat 0) the mobile operators have been selling for years rather than new wave IoT services like Cat M1 or NB-IoT. Hopefully as time goes on, we’ll see the MOPs get their network plans in sync with their app aspirations, and we’ll see more real-world examples of IoT paying off for business.