Editor’s Note: Welcome to our weekly feature, Analyst Angle. We’ve collected a group of the industry’s leading analysts to give their outlook on the hot topics in the wireless industry.
Service providers that prioritize opportunities, place their teams properly, participate knowledgeably in the supply chain, form partnerships effectively and establish credible personae are bound for success in the machine-to-machine services market. We refer to these five concepts – prioritisation, placement, participation, partnerships and persona – as the five ‘Ps’ of M2M. Service providers that address the five Ps of M2M will better align their growing M2M business units with the demands of the market.
We glean many of our findings from our report: “M2M scorecard for communications service providers: 2011.” This is based on the responses of 12 service providers – AT&T, Deutsche Telekom, Everything Everywhere, KPN, Sprint Nextel, Telekom Austria Group, Telefónica, Telenor Connexion, TeliaSonera, Telstra, Verizon Wireless and Vodafone – to a 33-question survey of their M2M strategy, size of business, research and development commitment, partnerships, platform insights and network insights.
Figure 1: The five ‘Ps’ of M2M [Source: Analysys Mason, 2011]
The five Ps in more detail
1. Prioritization: Service providers have myriad opportunities in M2M, but only careful prioritization of these opportunities will yield healthy, profitable businesses. Analysys Mason has found that some of the M2M applications generating the highest revenue can be relatively unprofitable for service providers. Opportunities abound in sectors such as automotive and transport, energy and utility, security, government, retail and industrial. There are opportunities for wireless, satellite and fixed-line service providers to profit from these, but profitability metrics will vary according to the M2M application, the country of operation and the cost characteristics of each service provider.
2. Placement of teams: The decision whether or not to centralize M2M human resources is a critical driver of M2M success. No doubt certain resources – including R&D, partnership management and OSS/BSS support – should be centralized. However, there are nuances associated with organizational design that are unique to M2M. For example, where should technical pre- and post-sales resources be placed? Centralized in a corporate role or in a local field role? And what should be the relative size or head count of each M2M functional area?
3. Participation: There are three distinct routes to market for service providers offering M2M solutions: co-selling partners’ solutions, selling or reselling their own solutions and acquiring solutions. We believe that service providers should form partnerships to provide M2M hardware (modems and modules, and equipment) and that they should sell or resell their own connectivity, platform and integration services. The application layer presents the greatest conundrum in a service provider’s route-to-market strategy: successful service providers will conduct a thorough analysis of their application capabilities before determining their best route to market for this challenging aspect of the supply chain.
4. Partnerships: Partners are necessary for service providers’ M2M go-to-market approaches. Service providers must review the partnership landscape systematically, by geography and application, in order to find those best suited to their needs. It is important to keep in mind that the best partners in providing M2M services to the utility and energy sector may be different from the best partners in offering services to the healthcare sector. To complicate matters further, the best partners can often vary by the region of the world or country.
5. Persona: A service provider must establish an identity or image of itself in the M2M market that must be credible in light of its existing brand and of awareness of its services in the enterprise market. A service provider can use its existing brand to build its M2M marketing image. We suggest that they engage in market research in order to determine enterprises’ perceptions of their M2M and other enterprise technology capabilities.
Steve Hilton is the lead analyst for Analysys Mason’s Enterprise research programme. His primary areas of specialisation, which focus on large and small enterprises, include fixed and mobile communications services, M2M, cloud services, and sales channels. Hilton has 18 years’ experience in technology and communications marketing. Prior to joining Analysys Mason, he managed the Enterprise and SMB team at Yankee Group. He has also held senior positions at Lucent Technologies, TDS and Cambridge Strategic Management Group (CSMG). Hilton is a frequent speaker at industry and client fora, and publishes monthly articles in several respected trade journals for the enterprise and channel partner community. He holds a degree in economics from the University of Chicago and a Master’s degree in marketing from Northwestern University’s Kellogg School of Management.
