M2M: Operators vs. IT Service Providers

K. Weldon

K. Weldon

Summary Bullets:

  • Operators note that the annual increases in their M2M connections are running in the 25-40% range, which aligns with their own predictions and with overall industry growth estimates that would lead to a market of several billion connections by 2020.
  • As connectivity commoditizes, however, value-added services are the real ‘meat,’ estimated to generate as much as 70-80% of the total M2M revenue base over time.  What are the IT service providers doing to get some of this service revenue for themselves?

IT service providers are not standing idly by as operators start to offer consulting, advisory, and managed services for M2M.  In fact, many of them are actually empowering operators to gain M2M revenues through their telco vertical practices.  For example, Accenture and Tech Mahindra empower operators by offering assistance in making telcos’ business models more profitable, and by providing custom application development for the carriers’ enterprise customers.  However, there is an increasingly blurry line between what operators need to do to go up the value chain and what IT service providers traditionally do themselves.  How aggressive are companies such as IBM, Accenture, Logica, and Tech Mahindra in M2M; which areas provide partnering opportunities; and which areas do they want for themselves?  A few examples:

Accenture Mobility Services (AMS) marries solutions for mobile wallet, mobile ticketing, mobile payments, vehicle tracking, mobile health and safety, mobile data collection, and smart metering with its own OSS/BSS and service delivery platform that deals with subscriber management, content management, campaign management, device connectivity, service management, and security management.  It will provide services directly to enterprise customers or partner with operators to create white-label M2M ‘stores’ and help both enterprises and operators with mobile strategy, business models, sales channels, vertical BPO services, and mobile marketing.  In Accenture’s case, it is both a competitor and a partner to operators.  Presumably, there is no direct channel conflict in this model, since each party would not target the same enterprise to offer competing services.

Tech Mahindra provides end-to-end M2M integration for telematics, logistics, remote asset monitoring, security and surveillance, and smart metering/smart grid applications.  It will do network planning, design, and integration; provide OSS/BSS middleware; and perform device testing, validation, and certification.  It will also design and build industry-specific devices.  However, it also partners with vendors such as Aeris and Axeda to put together solutions for its operator customers.  It also has a strong telco vertical practice, as well as an enterprise mobility practice through its acquisition of Mahindra Satyam.

Logica is more likely to empower its operator customers than compete against them, and it has been involved in development of several prominent service delivery platforms on behalf of operators.  It also sees analytics as a huge opportunity where data collected from machines and sensors can be harvested and potentially brokered to a variety of interested parties.  Analytics has come up often as one of the areas where an IT services company is likely to play strongly in M2M, but a few operators are also starting to see this as a possible area of expertise.

IBM’s Smart City initiative naturally brings it into M2M software, design, and implementation as it targets city management, infrastructure, buildings, energy, water, transportation, healthcare, education, and social services with the aim of using technology to improve management in these areas.  For example, smart buildings benefit from  software which combines real-time systems monitoring with facilities and event management to help analyze and optimize facilities operations, reduce energy expense, and improve asset management and reliability.

As in most areas of technology, the IT service providers have natural strengths in the advisory, business case development, custom application development, and analytics side of M2M.  However, operators are eyeing these areas to grow their revenues in M2M.  There will continue to be interesting partnerships as well as competition between the two kinds of service providers, as M2M is considered such a strong growth area.

About Kitty Weldon
As Principal Analyst for Enterprise Mobility at Current Analysis, Kathryn is responsible for analyzing events, companies, products and technologies within the wireless and converged wireline/wireless enterprise services and solutions space.

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