Recipes for Success in the Internet of Things
Pretty much every wireless operator knows the large numbers being predicted for the Internet of Things (IoT)– the billions of things and the billions of dollars. In fact, many operators have taken some kind of action and a lot more are in the process. However, success has been elusive.
“Wireless operators must bring Big Data mechanisms to customers so that monitoring and alerting on expected behavior can be automated”
The elusive part is how to make money on monthly ARPUs (average revenue per user) that are sometimes dimes instead of tens of dollars. The network and cost basis of the infrastructure created for consumer handsets often means IoT connections are provided at a loss. That business case doesn’t get better with scale. Even when the connectivity for IoT is profitable, it is sometimes difficult to convince the rest of the company that it matters. Making a few dimes per device requires millions of devices to move the revenue needle at most wireless operators. Surely effort and capital can be more optimally spent on other initiatives. Go figure out how to reduce consumer churn.
On the other hand, we’re starting to see the recipe for success come together. Here’s what we see so far.
One Part Optimized Connectivity
Connecting things is different from connecting consumer handsets. First, these things have a much higher signaling to data ratio. A propane tank business case works perfectly well sending a few bytes of data every day. Second, the supply chain requirements of things often dictate that connectivity must be available during manufacture, demonstration, and on through multiple owners. Third, quality of service is much more important, a sleep apnea device can’t walk into the other room to get a better signal. Lastly, thing makers don’t mind paying when they are getting value, but charging and rating has to match up to whatever their business model is. It’s not a one-size fits all.
Wireless operators must find the win-win scenarios with customers and suppliers. Get a billing system in place which is flexible enough to handle the vast array of business models emerging in the Internet of Things. Get core network elements in place which are capable of handling the scale of IoT with a reasonable cost basis and costs which are aligned with customer success rather than just entries in a database. Ensure there are options available to customers which favor quality of service over particular spectrum utilization.
One Part Big Data
In the world of IoT, a family plan is not the parents and a few kids. A single customer may be trying to keep track of millions of things. Traditional systems available to customers don’t cut it. Wireless operators must bring Big Data mechanisms to customers so that monitoring and alerting on expected behavior can be automated. In some cases that means alerting when the charging station is using too much data; in other cases, it’s alerting when the propane tank doesn’t connect for its daily update. Sometimes, data reads from the connected car can be used to tell the operator that connectivity by the charging station is just fine so there must be a device problem with the charging station.
The bonus ingredient for Big Data is bringing not just connectivity analytics but application analytics to customers. Around the world, customers are racing to take advantage of the latest technologies and techniques for turning their connected things data in actionable intelligence. Many of those customers don’t have the means to actually do that. More advanced wireless operators are in a spot to help if they can bring up data management and analytics infrastructures that customers can use easily and cost-effectively.
Two Parts Simplified Solutions
Getting an IoT solution in place is still way too complicated for mass adoption. From the customer perspective, it involves having competencies in device hardware, embedded software, connectivity, scalable data management, analytics, and mobile and desktop application interfaces. Wireless operators are in a great spot to deliver simplification to customers who are looking for the ROI without all the complexity. We recommend a two-part strategy where the wireless operator is putting together a suite of ready-made, end-to-end solution partners for many common use cases and then also putting together an ecosystem of devices, application platforms, and analytics capabilities which all work together. The second combo is essential for accessing all the use cases which continue to emerge and also for getting an even larger slice of the revenue pie.
For many wireless operators, connectivity is the only ingredient they have in the pantry. However, that’s not good enough to be successful in the Internet of Things. Connectivity represents only 10 to 15 percent of the total value of IoT. Being successful means going beyond delivering SIMs and getting access to the rest of the IoT value proposition.