The Internet of Things is a significant game-changer for everyone in the mobile industry
Within the next three years, there will be more connected “Things” in the world than there are mobile phones, as the market skyrockets by 23 per cent to 16 billion devices, according to recent forecasts.
Including phones and tablets, 20 billion connected “Things” are predicted to be in use globally by 2020, Gartner claims.
With a market that is expected to almost treble in value over the next four years to more than $3 trillion, there is a great opportunity for resellers, according to Plan.com director Keith Curran, who claims IoT is a “game-changer” for the industry.
Based on figures from the airtime distributor, the mobile industry on average connects a new SIM at a rate of seven connections per second. For IoT to reach the 20 billion SIMs mark predicted, new connections will be made at a rate of 130 per second – almost 20 times the rate for mobile.
Curran said: “IoT isn’t just the next big thing; it’s a significant “game changer” for everyone in the mobile industry. But the challenge for the reseller channel is that it’s still very much the biggest opportunity the majority of resellers don’t know how to realise yet.”
But what exactly is the Internet of Things (IoT)?
According to Gartner analyst Jim Tully, IoT is an ecosystem of connected devices with embedded technology that allows them to interact with the environment. This differs from machine-to-machine (M2M) communication, another term often attributed to IoT.
“IoT encompasses the entire ecosystem around the technology needed to communicate information, the applications, the analytics and the services around it,” Tully explained.
“You have this thing containing the embedded technology. That thing is machine-to-machine, because usually there is no human being involved it is interacting with an app, or with another machine. It is autonomous. All communication is M2M communication, but that is just that side of it.”
In 2015, that market included 4.9 billion devices, a figure set to rise to 6.4 billion by the end of this year. Two-thirds of these products will be consumer focused devices, but this will make up just over a third of all the $1.4 trillion expected to be spent on IoT ($546 billion), with most money spent on specific business verticals ($667 billion).
It is big money stuff, but getting to grips with the Internet of Things is a tough challenge for any business, according to CCS Insight analyst Martin Garner, who divides the market into five categories: wearables, automotive, industry, smart home and smart cities.
“The automotive side and utilities are out in front when it comes to IoT,” Garner said. “They have the business case, and they are doing very significant volumes already. There are a lot of sectors below them doing various ideas, such as retail with smart advertising and smart industry with connected diggers, but mostly speaking, they are in trial mode right now. We’re in the early stages in a lot of industries determining how the IoT can fit with their existing systems, with a lot of experimentation. Adoption from here on will be quite vertically driven.”
Vodafone speeds ahead
Many of the industry’s biggest players are getting involved in IoT in some form. According to both Gartner and Analysys Mason last year, Vodafone is leading the way in the operator space in terms of M2M connectivity. The latter found Vodafone was the top M2M provider for the fourth year in a row, based on factors including number of connections, partnerships and scale and execution of their offering.
Vodafone head of M2M business development Phil Skipper said: “M2M is the closed end-to-end process between two machines, where typically the person who owns the asset is the recipient of the data. They can then take the value from that asset. The IoT is more like a marketplace where assets and data can be transferred between individual parties so other people can get more insight as to what is happening within the ecosystem.”
Core to Vodafone’s strategy in automotive, Skipper explained, was the £115 million acquisition of Italian telematics firm Cobra in August 2014.
Cobra has car solutions including feedback for manufacturers, a crash alert system, and in-built mobile hotspot.Manufacturers Vodafone has worked with include Tesla, Porsche and Audi.
“We’re doing a lot to help our partners monetise IoT,” Skipper explained. “We have a new solution called Internet in the Car, which puts a SIM in the car, feeding back information to the manufacturer.
“But it also serves a secondary purpose because it can be used as a mobile hotspot, allowing the driver and passengers to connect to it. So there is an M2M connection back to the manufacturer, but also a SIM that can be used to push services down to the car, such as mapping services, petrol hotspots etc. To support that, we’ve developed that technology that works on a pan-European basis, but it also provides payment, and a B2C call centre service as well.”
Other solutions that Vodafone has unveiled range from connecting seals in the Orkney Isles, so they can be monitored by Sea Mammal Research Unit (SMRU) at the University of St Andrews, to providing assisted care solutions for the elderly, and forming a connected light-bulb partnership with Phillips.
A vital part of the operator’s plans for IoT, Skipper said, is the development of a Narrowband Internet of Things (NB-IoT) network.
This low-cost, low-powered solution can be deployed over 3G and 4G and is currently being trialled in Spain with water provider Agua de Valencia ahead of a global rollout.
Skipper added: “The strategic decision made almost two years ago on what technology Vodafone would use for low-powered wide area networks, went for network operating license spectrum using existing LTE network. Upgrade a lot of network through software to enable NB-IoT. Live operational network in Spain – Agua de la Valencia. We want this to be an open standard for the IoT across multiple MNOs.
“Second will be Australia, Turkey and a deployment plan, which we cannot discuss. There’s a big drive to get this tech out to our existing networks, and it will act as a catalyst to the wider adoption of IoT technologies.”
Vodafone has also been involved in offering IoT services for elderly care, a market elderly handset manufacturer Doro also specialises in.
In 2014, Doro completed the £20 million acquisition of digital care solutions and services provider Care Tech, which was re-branded as Doro Care earlier this year.
According to UK&I MD Chris Millington, the Internet of Things is revolutionising the telecare industry, in 1.2 million houses in the UK.
“The telecare industry is the most archaic, old-fashioned, slow-moving industry you can find. The vast majority of the industry is still analogue.
“We are changing things in Scandinavia, and now Doro is the largest telecare provider in Sweden – that is all digital. We can deliver information, alerts, monitoring that makes sure people are safe in their homes.”
Home solutions offered by the Swedish manufacturer include a fall sensor, smoke detector, door alarm, sensors that can be put in a bed to detect movement, and even pill dispensers.
“This is our biggest growth opportunity in Europe, because most devices in this industry are analogue. We’re going to be a game-changer for this industry, but it really needs that.”
A “messy” smart home
IoT in the home, also known as the smart home, is one of the key growth areas that will drive the number of consumer connected devices to include 13 billion devices globally by 2020 (Gartner).
CCS Insight’s Garner claims that the current smart home market is “a mess” due to incompatible technology and a lack of industry standards.
This, he added, has left a major opportunity for the biggest brands to come in and develop a smart home ecosystem, claiming the likes of Apple, Google, Samsung and Amazon are expected to dominate in future years.
“To really step this up to the mass, there is an opportunity for the big brands to come in and set up a unified system. We have identified four companies who can do this: Apple, Google, Amazon and Samsung. If they do that, we expect them to ramp up marketing budgets at very high levels, and this will force the smaller players to align themselves with one ecosystem.
“This is more or less what happened with the smartphone market – it is the same playbook with similar players, and we expect this to change quickly.”
At IFA 2015, Samsung took wraps off its connected home offering, called Smart Things. The starter kit, which retails for £199, includes a connected home hub that controls all of the IoT devices, a presence sensor, a power outlet, which can be programmed to turn on and off automatically based on other sensors. These can all be controlled from a smartphone.
Google was one of the first major manufacturers to get involved with the smart home when it acquired smart thermostat maker Nest Labs for $3.2 billion in 2014. It now offers its own IoT platform called Brillo, which is based on Android.
The market is still small, though. According to Kantar Worldpanel, penetration in the UK is just five per cent, with the same amount of people currently planning to buy a product.
Nearly 40 per cent of those with these products have chosen them specifically to take advantage of the additional services and benefits they bring, with 15 per cent citing convenience specifically as a primary driver.
Despite this, over a quarter have told the analysts that these features happened to come with their replacement and they didn’t actively seek out a smart version.
Kantar consumer insights director Imran Choudhary said: “The IoT is still in its infancy, but it has the potential to enhance consumers’ lives. The idea that most devices will in the not-too- distant future be connected with each other and the consumer will in time become common place.
“For brands and retailers the gains could be considerable. Manufacturers of home products would gain valuable real time data based on behaviour and usage, allowing for better manufacturing processes, inventory systems, new product development, and ultimately helping to achieve a better user experience, which is key to driving long- term growth and loyalty. “
Though the opportunity is huge, resellers can face a frustrating time getting to grips with the sheer diversity in IoT products, according to Plan.com’s Curran. “As a reseller, despite IoT being relatively new, you’re already frustrated that the only thing anyone ever seems to be able to tell you, is how big it’s going to be,” he says. “When what you really want to know, are what are the specific opportunities, how do I fulfil them, and how do I commercialise the opportunity to a level that works for me?
“Many resellers have been able to provide the connectivity for the customers required solution. This is a relatively easy and straightforward way of entering the M2M/IoT market because in the vast majority of cases it involves the simple supply of a SIM card and the appropriate data tariff connection to the mobile network. And, invariably, the reseller knows these customers as they may already supply their mobile phone solution.”
IoT is also offering a great opportunity for the distribution channel, both in airtime and hardware. Exertis is offering a smart home platform while airtime resellers such as Plan.com want to drive SIM sales through IoT.
Pangea Group also offers airtime, but on 650 networks worldwide, including EE, O2, Vodafone and Three in the UK. MD Dan Cunliffe claims the chances for the channel in IoT are huge.
“We offer solutions from small machines to connecting fleets of cars. We see the potential of connecting any device and that means resellers can boost their revenues by getting involved.”
One example of a solution Pangea has developed is a GPS-location advertising platform for taxis through a marketing company. This means ads sat on top of the cab change depending on where the taxi is, using GPS, mapping tech and ad content to find the most relevant advert and increasing value for the taxi.
Pangea launched its own IoT partner programme in May and works with a number of other distribution partners, including the likes of Nimans, Converged Comms, Entanet and WRD Systems. It has over 45 partners on the programme worldwide, though a number of these partners offer Pangea’s solutions to reseller partners themselves.
He added: “All of the analysts claim IoT is going to grow massively, so we know there is going to be a big number of connected devices, whether that be through cellular or other means. We think the market is about more than just how many connections you can offer. A much more important indicator will be ARPU.
“The telecoms channel will see the increased ARPU, which we can help drive through offering the right, more financially rewarding M2M products, as a real positive of getting involved in IoT. M2M Connectivity is a fully managed service and therefore is easier to set controls and make amendments than traditional high street data.”
The scale of the opportunity is best highlighted by the names getting involved. Network manufacturers such as Huawei are getting heavily involved in smart city programmes, while software providers such as IBM, Cisco and Microsoft are all looking to be the IoT platform of choice.
Microsoft is aiming at enterprise IoT with its cloud-based suite, Azure IoT, which was announced last year.
Azure offers data management services for connected products.
Microsoft IoT senior product manager Peter Cooper said: “Line of business technology decision makers are using technology in different ways, and the challenges they face are around getting started quickly and having a simplified approach. Azure is about the primary challenges we find with IoT: remote monitoring, active maintenance and asset management. These are all pre-configured in the system.
“IoT has many different entry points, and each of our customers has a different set of areas they focus on. The approach to IoT is so wide that we felt it was necessary for us to help these companies begin the journey, but also to expand beyond traditional opportunities.
“The potential of IoT goes beyond device connectivity. It is the ability to get value from the information that is on the endpoint – be it a mobile phone or a piece of heavy machinery – accessing that data. That’s where people can do new and creative things. They can take so much information about that device that can benefit the business.”
Azure partners include the likes of Samsung, Dell, Intel and HPE. It is also used to support numerous solutions. Cooper gave the example of Rolls-Royce, who use Azure to support an IoT solution in 90,000 of its jet engines.
The Internet of Things can range from a connected fridge to a self-driving car, from sticking a SIM-card in an assembly line machine to plugging a dongle into a vending machine, and so much in between. This can make entry into the marketplace daunting for resellers and retailers.
Curran claims resellers need to focus on the business case, and the rest will fall in place, with lucrative rewards in reach.
“Many resellers avoid conversations around M2M/IoT solutions because they feel that customers will ask questions that they cannot answer. It is rare these questions are based around the SIM connectivity solution, as this is an area that most resellers already understand.”
Key to this will be the existing relationships and understanding the reseller community has with its customers, according to CCS’s Garner. Who else will be better placed to get to grips with the needs of businesses than a base of dealers who already speak to them on a regular basis?
“The great thing resellers have going for them is the existing relationships with their customers,” he claims. “They know and understand the verticals they serve. The resellers are in a very strong position because of that,.If they want that role, they can add a new revenue stream.
“It might not be that simple, but it is definitely a good position to get to.”