Internet protocol-based broadband wireless is the catalyst that will foster services innovation sparking a second stage (Transition stage) of growth in the cellular machine-to-machine (M2M) industry (see chart). Growth will be driven by rapidly emerging business-to-consumer services. The drivers for this change live outside the operators’ walled garden.
The rapid pace of services growth sprouting from the Internet continues unabated. Wireless operators are realizing they cannot innovate fast enough to meet the diverse demands of enterprise and consumers.
This awakening is forcing them to reassess how business is conducted, when services are brought to market and what it means to create value.
Time to rethink business models
Operators today are being forced to rethink business models. Marginally performing media services running up against the onslaught of unabated Internet technology evolution is a central point of disruption. As operators re-evaluate strategies, open-access networks will help them find the growth in core subscriber services that are evasive today. A beneficiary of these strategic maneuvers is the accelerated innovation that will take place in the M2M services space.
Through the early part of the next decade (Emergent stage), cellular enterprise M2M services will continue to serve the businesses market with measurable success. Despite the lack of significant participation by network operators, the U.S. enterprise M2M cellular service market will reach nearly 20 million connections by 2011. Steadily increasing average annual growth rates will keep connections pegged close to 20% over the same period.
Time to embrace the unknown
Like the electric industry that began its history well over a century ago, innovation will accelerate once the network is opened up to garage startups, entrepreneurs and behemoths of all industries. Unforeseen inventions and breakthroughs will be discovered, giants will fall, change will occur, and fortunes made.
To position themselves for the expected changes that will occur, wireless operators need to embrace the unknown and accept that the next stage of growth is a brave new world. Following the existing paradigms, performance metrics and service development processes will ensure opportunity loss. Embracing the unknown establishes favorable odds on long term gains.
Wireless operators need to open the networks by way of strategy – technology will only give them an option to be open not a mandate to do so. An open-network policy is simply a starting point. Operators must weigh the benefits of working with competitors to establish standards to support devices, business models and service assurance. In the absence of competitive cooperation, North American operators will fall prey to the same go-it-alone strategy that has restricted services growth.
The open-access era will benefit from an industry strategy predicated on growing the revenue pie on billions of machine connections rather than owning the entire pie of a few million connections.
Marcus Torchia is a senior analyst in Yankee Group’s Enterprise Research group with an expertise in enterprise mobility. Torchia focuses on emerging enterprise wireless/mobile application areas, including strategic WLAN initiatives, remote asset management, machine-to-machine communications and enterprise location aware applications. For more information, visit www.yankeegroup.com.
