IoT – The Next Bold Move for Mobile Operators

Life in the mobile world is extremely dynamic: things keep moving all the time. In the big picture, each business development wave takes some years to be born, grow and enter the maturity stage. At this moment, that business growing phase for mobile operators is IoT (Internet of Things). This new challenge presents itself differently from previous ones – now that almost every person is connected with a mobile device, operators want to expand that connection beyond traditional communication devices.

Developing IoT Business Models

IoT is so vast and can be applied in so many different ways that mobile operators need to develop new business models to help them grow revenues and profit. Telecommunications companies striving to develop IoT have an important question to answer: what model and vertical market will they focus on?

Services targeting individuals are mostly mature for mobile operators. Although the market is not exhausted, a significant growth is not expected. IoT could be the next services mine to be exploded.

Sometimes operators will have to decide what business are they going to be involved in depending on the companies they will partner with.

Next-Gen Partnerships

The next big decision is who mobile operators are going to work with. In this kind of endeavor, technological partners are a key element for success. These third parties are strategic players in the chosen vertical market, providing expertise in areas that are new to mobile companies. Operators will probably have to work with a different technological partner in each vertical market. This means a radical change in everyday life for these companies. Fresh organizational structures will arise. The type of association that will arise will disrupt ‘business as usual’. Some rules and processes will need to be transformed. Interesting opportunities for agreement with local companies may appear. Spin off companies could be created to satisfy specific needs.

Making IoT work

IoT business environments include so many actors that finding a profitable role in the value chain for everyone could be really difficult. First off, IoT solutions need to prove themselves valuable for customers by reducing their OPEX, for example. Then, mobile operators and other partners need to agree on how much of the value created they will retain, and in which proportions. Connectivity – quickly becoming a commodity and with little differentiation possibilities – brings little profit. So there are two points in which operators will need to work: volume and value.

For volume, daring moves could be made: reaching new associates in order to create new opportunities in unexplored areas such as agriculture, logistics or even mining. And to add more value in the IoT business chain, operators must broaden their core competencies and sometimes take the first step; possible, moving from connectivity to application hosting and data analytics.

IoT could be for Telcos the driving force to enter the business of information.

Although some big players among US and European operators have already created their IoT business units, most telecommunications companies are still trying to consolidate a vision for their future in this area. It’s a consequence of the so called success myopia. But companies looking to play a significant role in the knowledge economy will make their next bold move to IoT.