In March 2014, M2M research firm Machina Research will publish its latest Strategy Report looking at the key issues related to M2M/IoT channels and routes to market. Over the last three years the M2M market has gone a long way to resolving many of the issues associated with delivering M2M, but it has, collectively, never quite found the optimum way to resolve the issue of channels to market.
Part of the problem explored in the report relates to the fragmentation of the market and a desire by different players to expand along the value chain. At the moment we have the perverse situation where almost every single player in the M2M market wants to own the customer. This can’t continue. What will happen over the next year or two is that the various different solutions providers will identify where they are best placed to deliver solutions, and where it is best left to someone else in the M2M/IoT value chain.
There are four key determinants of M2M/IoT buying decisions: location, technical requirements, scale, and complexity of the application. Between them these factors will determine which of the various vendors, including Communications Service Providers, M2M Service Providers, M2M Module Vendors, Systems Integrators and various others, are best positioned to support that application. For instance, a large automotive manufacturer will tend to favour procuring connectivity from a Mobile Network Operator, whereas a buyer of a complex industrial monitoring solution in a factory will tend to favour a specialist service provider using some form of private network, or even a systems integrator tasked with supporting the entire business process, of which the M2M connectivity is just a small part.
By understanding the ensuing market dynamics, CSPs, for instance, can shape their channels strategies as appropriate, with a direct model for certain applications and indirect elsewhere. In January 2014 Telefonica announced its M2M Global Channel Partner Programme. The focus of this programme is on using direct channels where there are large volumes of connections (with partners where they offer specific essential sector expertise) and indirect channels to mop up the long tail. Deutsche Telekom has a similar approach, building valuable partnerships for addressing key applications/ verticals such as usage-based insurance (Drive Factor), smart metering (Maingate Solutions) and smart cities (IBM), and addressing the long tail as more of a facilitator through its Marketplace and Partner Programme initiatives. Adopting this type of variegated channels approach, combined with the flexibility to identify and pursue new opportunities, is the key to success for CSPs.
For other players in the value chain this type of analysis will also allow them to identify where they have weaknesses in their offerings. Take, for example, Wyless, which this week acquired Netherlands-based Aspider M2M, extending both its geographical scope and its capabilities. Similarly, Telit recently bought ILS Technologies to bolster its application support. Understanding the dynamics of each application and the optimum route to market will allow each of these types of players to gain a wider understanding of how it might enhance its offering to best address the opportunity, and conversely where it is destined to play a subsidiary role in the value chain, or indeed no role at all.
For more information on this forthcoming Strategy Report contact
matt.hatton@machinaresearch.com
