TECNOTREE BLOG

2016’s key industry trends: IoT hype and big data disillusionment, December 2015

The past year has seen an increasing need for operators to adopt new methods, learn from their customers in the market, and provide an excellent customer experience globally.  With demand from operators to provide customer-centric care continuing to rise, 2016 will see communications service providers (CSPs) face several fresh challenges.

Here is how CSPs can seek to remain competitive and profitable in the midst of new technological and commercial developments:

Big data disillusionment

After a lot of hype over the past five years, and despite serious investment by many CSPs, the advertised benefits of big data have by and large failed to materialise, leading to disappointment for everyone. This may be partly due to the fact that the data held by CSPs is not that great after all, and partly because the success of ‘traditional’ big data approaches (by Google et al) assume some level of serendipitous discovery. The CSPs, on the other hand, are looking more for answers to more specific questions, where a different approach may be called for.

In 2016, this will lead to many CSPs returning to more grounded approaches to analytics and we will see much more talk about “small data” or “smart data”.  In practice, this means analysing the behaviour of individual customers using almost-real-time event data and using generalisations to moderate the findings against trends, as opposed to trying to predict (or influence) individual behaviours from generalisations of the entire population.  

IoT hype reaches peak intensity

At a time when the IoT (or IoE) hype in general still keeps rising, the relative lack of concrete success stories in the CSP environment will also require a re-adjustment of approach. While industrial players are concentrating on making their respective end-to-end ecosystems viable, especially from the point of view of smooth deployments, CSPs with a few exceptions have been relegated to the role of providing access to a marginal segment of the market.

In 2016, global CSP players will continue to form partnerships and joint ventures with the major industrial players, while the smaller CSPs will be looking to adopt a more focused approach in locally relevant areas such as the connected home. The few significant independent service aggregators will either end up forming close partnerships with the big boys or will end up being acquired, possibly by the global software giants, some of whom still lack an offering in this space.

Competition for control of the home intensifies

While the industrial side of IoT (driven by vertically integrated ecosystems across sectors including transportation and logistics) marches on in terms of transformation, it is the connected home that is receiving the most focus in the consumer IoT ecosystem. Given that all of the biggest “internet companies” are deep in the game, the connected home sector is receiving lots of focus and is expected to be a hot talking point at MWC 2016.

With the recent introduction of Amazon’s Echo & Buttons, Google’s Nest and Apple’s Homekit each taking a slightly different, experimental approach to leading the way and whipping up hype around the connected home, many smaller players will be rushing to the market to follow in the footsteps of these giant players. With all CSPs looking to solidify a position in this crowded area as well, we can expect a wealth of M&A activity in the connected home sector during 2016.

Payment system confusion

In the western world, 2015 has seen a massive increase in interest around the area of payments from traditional financial institutions, Internet players and CSPs alike. Unlike mobile money in emerging markets and previous attempts at “e-cash” in the west, the focus this time round has shifted from a banking/government perspective, and will not look to replace, but rather will seek to amend existing mechanisms.

With a number of players pushing their own mechanisms, 2016 will see banks, credit card companies, internet companies, CSPs and a host of other specialised players  flock to this space, either alone or in various, sometimes not so obvious, partnership arrangements. Due to the rather small overlap between systems, we may also start to see the emergence of a single, mainstream crypto currency, between now and 2020, as a potential successor to Bitcoin.

With lots of activity in this space, the initial result may see major confusion in the minds of consumers that are trying to make sense of all the alternative mechanisms to use. New partnerships and acquisitions should clear the field towards the end of 2016, hopefully allowing each market to converge towards a limited number of feasible models, both technically and commercially.

This piece was originally published in TelecomsTech.

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