TECNOTREE BLOG

Leading cross-industry business transformation through the IoT, July 2015

The Internet of Things (IoT) – or the Internet of Everything as it has also been dubbed – is one of the most discussed topics in the telecoms industry today. With subscriber growth tapering off even in geographic regions that were late to mobile adoption, and a host of Over the Top (OTT) players creating a challenging outlook for services beyond the traditional telecommunications space, it is understandable that CSPs are looking for new opportunities. But while there is definitely a strong need for connectivity – the bread and butter of telecoms – in the IoT marketplace, the ecosystem itself is nothing like the ones that telcos have played in before.

While the actual forecasted numbers vary wildly, the consensus seems to be that the number of connected devices will be massive; Gartner, for example, estimates that there will be some 25 billion “things” connected to the Internet in 2020. Out of these, roughly half will be deployed in vertical industries, such as automotive and industrial applications. The rest will be consumer oriented devices, such as health monitors, home appliances and other yet-to-be invented gadgets.

One of the interesting characteristics of the IoT ecosystem is that – possibly with the exception of some simple consumer applications – we are seeing the return of the vertically integrated value chain where the dominant player controls the entire ecosystem. More often than not, these controlling entities are not CSPs or even companies traditionally associated with communications services. Therefore, for all but the most integrated ecosystems, such as medical (which will likely remain extremely tightly integrated for a long time), there is  great demand for open platforms that allow for rapid development and integration of new ecosystems.  

With global IoT platform revenues expected to reach $2.4 billion by 2020, it’s hardly surprising that most of the big players involved in telecoms are investing heavily. For example, Samsung and Vodafone have recently invested in developing industrial IoT platforms. Vodafone’s joint £1.4 million investment with EMC in Infinite, a platform designed for large-scale applications such as manufacturing, machinery, household appliances and fleet management is evidence of the company having recognised the importance of gaining an early foothold in the emerging ecosystems. Equally, Samsung ARTIK is an open platform that has been designed to enable both the faster and simpler development of new enterprise, industrial and consumer applications for the IoT, and to help accelerate development of a new generation of better, smarter IoT devices, solutions and services.

For CSPs looking to become relevant in these emerging ecosystems, the “verticalisation” of the business means that, in most cases, they will have to look for other means than becoming controllers of the ecosystems. Offering connectivity will naturally remain, especially in applications where mobility plays a significant role, such as vehicle telematics and other automotive applications. Beyond connectivity, there are a number of other consumer-oriented applications, such as various tracking and health monitoring cases, where a platform play is a viable alternative. Combined with the required subscription management and charging functionalities, as well as managing the security aspects of the ecosystem, this approach seems to offer a wide range of possibilities for CSPs to compete. However, since the commercial models, traffic profiles and mission criticality of various use cases vastly differ, flexibility and simplicity of the contractual frameworks will be key. CSPs that are out in the market, learning early, with an open platform play, will almost certainly be the ones reaping the rewards from this rapidly developing new business opportunity.

Timo Ahomäki, CTO, Tecnotree

This article was originally published in TelecomsTech

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