On Monday we at Machina Research ran a pre-conference workshop looking at how MNOs should exploit the opportunities presented by M2M. We focused a lot on the healthcare and utilities segments that have been the basis of a couple of our published Connected Intelligence reports. All very interesting and interactive.
Day 1 highlights included a presentation from Larry Haddad of Nissan which I summarised in yesterday's blogpost and Stephan Keuneke of Deutsche Telekom. Stephane's emphasis was that MNOs' focus M2M should be on partnering. He identified the four different go-to-market models that they would be simultaneously adopting:
- 'Sell to' - the customer buys a complete solution from DTAG
- 'Sell with' - connectivity is provided by DTAG and the device elsewhere
- 'Sell through' - where an M2M partner has a strong relationship with verticals they will effectively sell on DTAG's connectivity
- DTAG as a supplier - sales via an MVNO or service provider
At the moment around half of their M2M business is as supplier. He also emphasised that they were addressing M2M in a very different way from traditional services. For example by thinking about lifetime fee rather than monthly fee. Another specific example being not issuing a monthly invoice for connections that barely generate any revenue.
The afternoon saw us all break off into roundtable sessions. The one I ran, covering the impact of EU regulations on smart meter deployments, was a pretty cut and dried discussion. The EU has said member states will probably have to roll out smart electricity meters to 80% of households by 2020, with slightly less stringent requirements for gas. It's not definite until September 2012 and details depend on the member state. The only real stumbling blocks are ensuring that the meters have the right funtionality and issues of privacy, i.e. a conflict with the EU principle that a person should be able to opt-out. Can you opt out of smart metering? These sorts of issues are dealt with in our recent report: Machine-to-Machine (M2M) Communications in the Utilities Sector 2010-20.
The more interesting discussions seemed to be in the other groups. Not sure I should admit that! They were dealing with business models. Again the message came across loud and clear. The key is to partner.
Day 2 saw a diverse bunch of presentations. Mila Milenkovic of Telekom Srbija presented some really interesting case studies across a variety of verticals including fleet management, security, public transport, home automation and healthcare. TS has clearly done some thinking about M2M and is already making progress, even breaking out of the traditional M2M verticals of transport and security. The message from Mila was clear though: the key is to partner. TS handles the connectivity, marketing and sales while the partner looks after devices, maintenance and administration.
DTAG popped up again in the form of Markus Breitbach who also talked about partnerships and the way in which the new M2M competence center can act as an aggregator for application developers in the M2M space. The center provides support to all local entities (of which there are 50+) with M2M-specific knowledge, resources and solutions. In so doing it can bring together an application developer for a particular M2M service from Slovakia with an end customer in the US. The benefits of partnership very clearly work both ways.
And if you want to know more about the DTAG M2M competence center check out the June/July issue of Mobile Europe. There's an Insight Report supplement in the magazine focusing on M2M, compiled by Machina Research, including an interview with Jürgen Hase, VP of the center. The supplement should be out soon and available on the Mobile Europe website here.
Markus also talked about DTAG's expectations with regard to the value chain, indicating that about 15-25% of the value was in the devices, 15-25% in the communications and 50-70% in the applications. The message from that is clear (and echoes what we were talking about in our pre-conference workshop): there's not much revenue in carrying traffic. If anything, we think that he might be a bit ambitious with regard to the comms element, certainly in future.
Krzysztof Kwiatkowski of Comarch put it quite neatly when he described how MNOs can adopt one of three approaches: in-house, partnership and licensee. He was discussing M2M management platforms specifically but this applies equally across almost all elements of the value chain from channels and marketing to billing and SIM-management. On this note, Krzysztof provided the quote of the day about how telecoms service providers could not become "civilisation service providers", which is effectively what they're trying to do if they try to cover all of M2M themselves.
There were numerous other interesting presentations on day 2 including Marc Overton of Everything Everywhere on the ways in which MNOs can help freight management (including one client who said that better knowledge of its stock in China can reduce stock in channel by 50%) Davide Pratone of Telecom Italia setting minds at rest about OTA provisioning, Tom Gardner from my old employers 3UK talking about the sweet spot for a 3G-only player and David Boswarthick talking about the role of standards bodies, particularly with regard to smart metering.