May 23, 2012

The Next 20 Billion Nodes Survey Update: Carriers Bridesmaids? Proceed with Caution.

As posted in the CW Blog on 5.21.12

This is part one of a two-part series. Carriers are NOT the center of gravity of the M2M markets. As such, they are not primarily responsible for good, bad, or ugly market development or value creation. But they could be …

Our partner from Connected World, Chief Editor Mike Carrozzo, wrote about AT&T and its commitment to the residential automation market earlier this month on the Connected World blog. He raised a number of great points, but the one that prompted this blog post was his question on the market development impact of the AT&T brand in the home-automation segment. It shined a light on two issues:

  1. Seemingly ‘brilliant’ solutions are not finding expected footholds in a number of markets. In Mike’s piece he elevated the residential automation segment of the B2C M2M markets.
  2. Carriers are turning over rocks looking for profitable new segments to open for themselves and their partners—yet the results are mixed.

For as long as the idea of M2M markets has been around, it has been coupled with the notion that wireless carriers, or wireless carriers and their MVNO (mobile virtual network operators) partners and their growing ecosystem would make M2M markets succeed. And for as long as we have had the idea of M2M markets to tantalize us, we have been stuck in the barrel, surrounded by cool, clean, crisp water with only the occasional taste. Better than Tantalus’ position, but not much.

But anyone’s frustration is NOT the fault of what the wireless carriers have done, or not done.

We believe this is especially true in the B2B M2M market segments, where we are less sanguine on the capacity of wireless carriers to ‘make M2M markets.’ The chart below is a snapshot of some of the data INEX is developing with Connected World magazine. It depicts a collection of B2B solution specifiers, buyers, and operators and their perspective on WHAT MATTERS and WHAT DOES NOT when they are selecting wireless carriers for their M2M solution(s).

Key Factors Influencing Network Service Provider Selection
Survey Respondents Citing Each Factor As ‘Most’ or ‘Not’/‘Least’ Important

Source: Connected World/ INEX ADVISORS. The Next 20 Billion Nodes Survey. 2012.

High Level Takeaways: The B2B markets show a lot of ‘motherhood and apple pie’ in there—reliability, security, and price. But there is more …

  1. Carriers would do well to continue investing in and promoting of their results in network reliability. However, those conversations need to take place within the operational frameworks, technical requirements, and performance specification expectations of the B2B wireless machine-to-machine solution operator—not the consumer smartphone operator. For while those worlds are converging in some ways, they are light-years apart in others.
  2. Carriers should lead—or co-lead—the discussion on network/digital/cyber security in M2M markets. They will be connecting all those nodes that will be threatened with myriad attacks for M2M networks worldwide. Threats will only multiply and intensify as we profile, case, and press release our way to sharing with the world the basics of our next-generation information architectures—and the role of clouds in that.
  3. Carriers MUST continue to be aggressive in their pursuit of flexible, value-based pricing for these solutions. Paramount to this is the clear difference between delivered cost/price, and price/package options. The former is critical, the latter maybe worthless without ambient context.  Too many deployers have long, painful memories of ill-fitting plans.

This is what the markets say they want. Perhaps this is what the markets should get?

Our advice: Make carriers ONE centerpiece of your market development ecosystem, but perhaps not THE centerpiece. Not every business model in the M2M solution development ecosystem requires an intimate relationship with a carrier—technically or commercially.

For companies whose positions require an intimate relationship with a wireless carrier, the answer is obvious: Conduct the due diligence. Make a rational selection. Commit.

For every company in M2M technical and commercial value chains: Define the parallel channels to market that the market is looking to for their M2M solution development and deployment. Those channels may be working with carriers, or they may not be. Either way, you will not have overcommitted market-development resources to a carrier channel that the B2B market does not look to for their solution development partner ecosystem.

In fact, I am not sure just how much the wireless carriers can do. For most of what needs done, is, in my humble opinion, beyond their purview. In other words, assuming the reader and I are part of the M2M solution developer community—modules, antennas, hardware/firmware platforms, business logic application development frameworks, database engines (federated and not), business intelligence platforms (applied/small data and not), integration tools (IC and IP)—and the myriad professional services providers gluing it all together, then we might bear some responsibility for the performance of the global M2M markets.

Take the survey.  Access the results.  Make better decisions.

May 23, 2012