Telecos need to get wise to IoT

Telecoms operators need to wise up to the business opportunity the internet of things (IoT) offers for data services, says market analyst Ovum.

The latest forecast from the telecoms analyst projects that the cellular M2M market will bring in a total of $252bn for the 2015–19 period, but operators need to invest in their existing capabilities to take advantage of the IoT business opportunity

“Over the past few years, as the hype around internet of things has taken off – driven by some wildly exaggerated forecasts – we’ve seen operators take a gentle approach to M2M,” says Jamie Moss, senior analyst at Ovum.

Operators have not made the major commitment to invest in the data network which the IoT opportunity will need.

“Staying within their main expertise, most have taken on management of the connectivity layer, yet as conventional wisdom tells us, only minor returns will be made here. Instead, operators need to leverage their other capabilities, namely their ability to aggregate large amounts of data around their customers,” said Moss.

According to Moss, device and application management is the new focus in M2M, and this means networks must have the capability to collect vast amounts of data.

“Data itself has intrinsic worth, but it is the business decisions made based on the aggregation and analysis of that data that are the greatest source of value for enterprises and their connected service provider partners,” said Moss.

Ovum’s cellular M2M forecast foresees global connections growing 162% over the next five years to reach 530 million.

According to Ovum, operator revenue share of the total cellular M2M market stands to rise to $25bn by 2019. As of 2013 operator revenue was largely comprised of managed connectivity (43%) and network-level data transport (36%).

As the M2M opportunity continues to develop, so will the business models that operators are adopting to gain a greater share of the revenue.

“In order for the M2M market to realise its potential, operators must educate enterprises in the utility that connectivity brings. Enterprises should never have to become experts in connectivity, however, as that knowledge is part and parcel of the managed service that the operator must provide for them,” concludes Moss.

richard wilson

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via Yuichun