M2M: With new opportunities comes the need for new business models
From the perspective of Mobile Operators, the M2M (and more precisely embedded mobile devices) space is proving to be the next promising avenue to explore in terms of revenue potential. One of the biggest incentives for the Operators to take the M2M route is monetization potential that M2M holds for their Networks. Over the past 5 year or so, most of the operators have invested lots of money in building out their next generation high speed networks and now its time for them to look beyond mobile devices and data cards.
All of us agree that if M2M solutions and applications come into play, millions of new devices and applications will ride on the Operator networks. Moreover, to make this a possibility, they don’t have to invest in infrastructure as it is already readily available. But the Operators have to look beyond their traditional business and operational models when it comes to M2M space.
In this post, I wanted to share my perspectives on a few underlying challenges that the MNOs need to address for them to be able to claim their stake at the M2M market. In his comments on my previous post about the M2M market, Ken had briefly touched upon some of them.
- Business Models are going to be drastically different – In a traditional world, the MNOs cater to one-to-one relationship when it comes to devices and customers. In the M2M world, the MNOs will need to start looking at business models where in they address a many-to-many relationship in terms of devices and in terms of the ecosystem itself (which consists of the devices, the companies that provide services on these devices, the device makers and the end-consumers themselves who will be using such devices). This simply extends beyond a Mobile Phone, a Data Card or a Netbook from a Consumer standpoint and a combination of these from an Enterprise/SMB standpoint. New operational processes and business models will need to be put in place to address this complex ecosystem of devices and stakeholders.
- Billing Models are going to be different too – MNOs are used to charging their customers for Data charges in terms of Slabs, Usage or an unlimited plan. In the case of M2M based communications, the data usage is going to be huge and they can’t rely on their “data pipe” approach. Like Ken pointed out, there needs to evolve “amount of traffic” independent billing models for connectivity and usage. Also, if MNOs more actively participate in this ecosystem, there are a lot of more potential areas of revenues at stake.
- Operational Models need to evolve – Growth in M2M adoption will result in millions of new devices getting attached to the Operator’s network for connectivity. Managing the scale of these new devices, driving operational efficiencies (capacity planning, network utilization, traffic monitoring) and managing the QoS will demand operators to evolve their current operational models. Makers of such devices and the services themselves are not dependent on a single MNO. So there may be applications that require an always-on connectivity which in turn will need seamless roaming of such devices across Operator networks.
The areas outlined above (and many more) offer significant challenges to the MNOs who are looking at embracing M2M and Embedded Mobile Devices for their next wave of new revenues. It will be interesting to see how Operators’ models and the ecosystem in itself evolves over the next few years (we are already seeing many JVs and partnership announcements between MNOs and Technology companies). How soon can the Mobile Operators put together the M2M puzzle and start seeing new revenue streams? Are there any other primary challenges that you foresee for MNOs?
