Vodafone is operationalising its hyperscaler ambition in IoT, putting the US and the wider Americas at the heart of a new growth phase. Dennis Nikles, newly-appointed MD for the region, explains how deeper MNO partnerships, platform investment, and a drive to simplify complexity are reshaping the company’s strategy.
In sum – what to know:
From scale to hyperscale – with 220m IoT connections, Vodafone is focused on widening the gap to rivals through platform upgrades, profitability, and orchestration.
Partner, don’t compete – in the US, Vodafone is working with AT&T, Verizon, and T-Mobile to serve globally-minded US-based enterprises, particularly in automotive.
Simplification as strategy – investments in its platform, including in AI, are designed to cut complexity and costs as SGP.32 approaches and consolidation accelerates.
Vodafone’s IoT strategy has been edging toward this moment for some time. In July, during a previous conversation, it framed its approach in terms of the inherent complexity in the IoT market – more networks, more platforms, more partners, more profiles – and a belief that scale and orchestration, rather than control, is the right response, to win in the market. Vodafone IoT was “embracing the chaos”, wrote RCR Wireless, leaning into the market fragmentation by building the platform, partnerships, and processes to manage this complexity and disjointedness at global scale.
Towards the end of last month, RCR Wireless caught up with Dennis Nikles, new managing director at Vodafone IoT in the Americas region, and an IoT veteran of its grand European rival Deutsche Telekom. Nikles goes further – to discuss how the UK-based firm’s strategy is now being operationalised, particularly in the US and wider Americas. Vodafone is no longer just talking about global reach as an abstract advantage; it is actively reshaping its structure, go-to-market model, and partner strategy around its long-held conceit about being a ‘hyperscaler’ for IoT.
For Vodafone, hyper-scale means more than just adding multi-millions of new connections to an already market-leading IoT base (of “more than 220 million”, says Nikles). It is about widening the gap to its biggest competitors with smarter technology, neater operations, deeper partnerships, and better business returns. The US, and the whole Americas region, sits at the centre of its new phase of growth, it reasons. Europe is already mature for Vodafone IoT; new growth hinges on serving US-based enterprises with global connectivity needs.
It means working alongside – not against – domestic mobile operators, notably AT&T, Verizon, and T-Mobile. Relationships with these companies are positioned as foundational (and all different), with varied engagement models depending on the customer and use case, particularly in automotive and other globally distributed industries. Vodafone is investing heavily behind the scenes, including with a potential doubling of its headcount on the ground in the Americas, and with a swathe of tech upgrades to its GDSP platform.
These include the integration of partner technologies (notably Simetric) and development of new (AI) technologies. In the end, all of it – whether developing new channels and propositions, or reworking the underlying technology – is aimed at one thing: to simplify IoT in a market where margins are tight and complexity is rising. And with SGP.32 on the horizon and consolidation in the market, the emphasis goes way beyond just the network proposition, towards simplicity, service, and scale. This Q&A with Nikles captures all of that; all the quotes are from him.
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Talk through what Vodafone’s plan is with IoT in the US. We caught up with Eric in July, and you’ve been in position for a couple of months (at the time of the conversation, late November) – so what is changing?
“The Americas is one of the most crucial regions for Vodafone IoT’s hyperscaler strategy – which is to be the first IoT hyperscaler, globally. Our start position, right now, is very good. We have over 220 million IoT connections, and a lot of customers – and not just in Europe, where we own networks, but also in APAC and the Americas. And we are putting focus on these regions, especially, because our share in Europe is already quite high. So the big growth opportunity is elsewhere – including here, in the Americas.
“The US team – Eric, plus everyone – has done a great job over the last year. We have three-digit million revenue, roughly, and a lot of very good and very well known customers, especially in healthcare and automotive. The focus is to accelerate growth. We are ramping up our presence. We have around 50 people; mostly in sales. We will expand the team to a three-digit number – hiring especially in sales, but also in technology and portfolio. The timeframe and the final number will depend on our mid and long-term planning, which will be mapped-out over the next quarter.
“We are structured to scale on all levels. We have a great platform with GDSP, which is very scalable. But we need to adjust our go-to market and structure a little to really scale the business. That is the plan; and my job is also to implement strategic partnerships with the local MNOs. We have good partnerships with all three, already – AT&T, Verizon, T-Mobile. I have a good relationship with T-Mobile, as well; Srini Gopolan was my old boss at Deutsche Telecom. And we are in good discussions around deeper go-to-market cooperation.”
What’s different at Vodafone versus Deutsche Telecom? What are you finding that is good/bad versus your old employer?
“Well, from a scalability perspective, Vodafone is way ahead of any competitor, including DT. Vodafone has 220-plus million connections, like I said; DT [has] roughly 50 million. That is a huge difference of scale, which enables Vodafone to also be more competitive in the way it provides IoT services. Vodafone has a roaming network with more than 700 roaming partners in more than 180 countries, and it owns networks in the main countries in Europe. Which means it speaks telco-to-telco with the local MNOs in the US – and not as an MVNO, for example.
“It means we offer something great back, as well – for AT&T, Verizon, T-Mobile, and for their customers. So these MNO partnerships go deep. It is a big advantage. We also have a global go-to market in all regions – which is a [major draw] for any [channel / sales partnership activity] and as part of a global value proposition for customers. So we have this perfect starting position. But Vodafone has work to do, as well. Beside [investment in the] Americas, we are modernizing our IoT platform (GDSP), and implementing cloud native elements and AI to provide better service.
“So there is lots going on, and the target is always to be in front of the industry and in front of the customers – to be, and to remain, the market leader in IoT.”
Just explain about the Vodafone pitch to local MNOs in the US? Are you not going after the same IoT customers?
“No. We are not there to compete with the local MNOs; we are there to cooperate with them. The Americas market – including Canada, Mexico, Brazil – is big enough for all of us. So there is room for good cooperation. Our target customers are completely different customers than the local MNOs. We are focusing on US-based customers with global demand for connectivity outside of the US. So a pure domestic business is not what we are looking for.”
How might that work? Would you go jointly with one of the US MNOs to a big US-based car maker to jointly negotiate a global proposition – where AT&T or Verizon or T-Mobile serves its domestic IoT business and Vodafone takes everything else? I mean, does it work like that? Is this a scenario that happens, typically?
“Yes, it could be that the local MNO supports them in the local market, and we supply the rest of the world. It is a win-win-win – because the customer gets the best service all over the place, we get [the US customer] outside of the US, and the local MNO partner has a global value proposition – with Vodafone, to provide the best connectivity. That could be one of the setups, but there are other cooperation models as well – maybe they bring their profiles onto our platform, for example. Which is currently under evaluation. There are lots of possibilities and opportunities.”
All the US carriers have slightly different profiles in the IoT market: AT&T, like Vodafone, has a legacy M2M business, which informs its position in IoT today; Verizon is very active internationally with private networks, which is like a branch of private industrial IoT networks; T-Mobile has entirely reworked its enterprise proposition is a bid to catch up. Do they each present different opportunities, or require different strategies?
“Yeah, that’s probably a fair summary of them. And so we are not following a single MNO strategy in the US. We want to keep our relationships with all of the three – because, yes, the types of business you can do differs with each of them. So we are striving to have good relationships with all of them. We work closely with AT&T, and also with Verizon, especially on global automotive deals. But we have a great relationship with T-Mobile, as well. Our strategy is to be a partner of choice for all three of them, and not to limit ourselves to any one.”
What about with MVNOs, offering to take some of the complexity out of the IoT mix for MNOs? Are MVNOs a part of Vodafone’s partner vision going forward?
“We know there are others in the market with good strengths as well. Which is why we are implementing an indirect channel [strategy], especially in the US. So we are open to cooperating with MVNOs if it makes sense. And some of the MVNOs like 1NCE, Kore, Wireless Logic have advantages from a platform perspective and also from a go-to-market and service perspective with long-tail customers – smaller, with fewer connections. And we respect that, and we do business with them – by giving access to our networks, or by entering into go-to market agreements
“So we would never exclude those kinds of cooperations with MVNOs, but we are also aware of our own strengths, and that we are not dependent on MVNOs in our global hyperscaler strategy going forward. They offer a good way to fill some gaps, but they are not a major part of our strategy going forward.”
So what does that mean, exactly – to be a ‘hyperscaler for IoT’? If you’ve got 220 million connections now, then what does hyper-scale look like? Does that mean double that number? Or am I looking at it the wrong way?
“No, not exactly. But of course hyperscale has different levels as well. From a platform perspective, 220 million is a huge number, but we want to strengthen – to increase the distance to our main competitors. That is our target with regards to scalability. The percentage is not important, but we want to significantly increase that distance. And hyper scaling also means strategic partnerships. Because no company in this world can address the full IoT market on their own. We need partnerships – to sell locally and deliver globally. We can’t do it on our own.
“Which was one of the targets, also, when we carved out the IoT business: to be open for strategic partnerships. Of course, connections are nice; but profitability and revenue are also important. So we will continue to develop our business to be very profitable, or even more profitable, and to reduce costs and provide the best service in the most cost efficient way. So there is not a single answer; that this is hyper scaling. It has different elements, and those are three of them, for sure.”
IoT is a notoriously hard game with low margins. Is Vodafone delivering that profit already and is it easy? How easy is it? Is it getting easier?
“Yes, it is [a hard game]. If it was easy, they wouldn’t need us, right? So, no, it is not easy. But IoT is a profitable business.”
You have mentioned investments on the platform side, and you mention efficiency there: can you place the relationship with Simetric in that context, and explain other work you are doing at platform level with AI?
“Simetric is an orchestration layer above the CMP. In IoT, it is always a challenge to migrate from one CMP to another. It takes a big effort on the customer side, and carries a high technical risk that something goes wrong. So you try to avoid it. Simetric, already integrated into the GDSP platform and already connected to other platforms, has a perfect opportunity to provide a single pane-of-glass and reduce complexity. That is what we are targeting.
“The AI part has two dimensions: we are implementing AI internally in the GDSP platform – in chatbots, but also in predictive maintenance and machine learning algorithms, perhaps to manage latency issues or additional capacity – to improve customer experience and increase service levels; and we are supporting AI externally for customers, because IoT is an enabler for AI. Right? Because AI applications all have the same prerequisite, which is that they need a ton of data. AI never just learns by itself. You need data to feed the AI, and so there is a perfect fit with IoT.
“The focus is to help customers to integrate GDSP, and the IoT data stream out of it, into their AI applications. Because most complexity in the market comes with the integration of connectivity into customer applications. We are simplifying that, and therefore we are the perfect partner for AI companies going forward.”
Explain to me Vodafone’s psychology at this moment in time – with this hyperscaler talk, your own appointment in the US, the rollout of SGP.32 in the wider industry, the company’s separation from the mothership. Can you pinpoint a moment where Vodafone is looking differently at the market – where its approach has necessarily changed, and for these reasons? Can you talk around that – where Vodafone’s up to in its own head, and what is happening here?
“The reason for the carve-out was exactly as you said: to give IoT more freedom, and to scale up with partners. IoT is part of the core strategy at Vodafone. But the market is also consolidating. You see that everywhere – with SoftBank acquiring Cubic; the way Telenor is putting its business together; plenty of other examples as well. We have an eye on all of these developments. But we think we have this great starting position, as the leader in a consolidating market, and as someone who might force this consolidation, and who might benefit from it.
“Because the value proposition is changing, as well, with the new SGP.32 technology. In the past, the network was the main value proposition; and it’s still important, but now customers can switch between profiles very seamlessly, which reduces the best-network value proposition. So we are taking care to build up our broader value proposition – global customer service, global customer experience; a real global portfolio for customers; less complexity and more simplification. The partnership with Simetric is an example. That is the strategy.”
