Vodafone Sets Sights on Vertical Services in IoT, but Which Ones Will Take Priority?

J. Marcus

Summary Bullets:

  • Vodafone stated at its analyst conference this month that its IoT strategy will focus on vertical services.
  • It has picked five verticals so far, but some reflect future potential rather than previous successes.

At its annual analyst conference, Vodafone’s enterprise business presented updates across its portfolio and associated strategy, and when it came to the Internet of Things (IoT), one thing was clear: a new determination to focus on a set of priority verticals to deliver sector-specific IoT services. The idea is that, if it is to access the biggest market opportunities, it must become more of a technology solution provider in order to maximize growth potential as a trusted, ‘go-to’ supplier in digital industries.

To be sure, the general provision of IoT connectivity will maintain its place as a core building block of all enterprise services. Today, Vodafone serves 75 million connected devices, up 28% from a year ago. Looking at annual IoT revenues of EUR 747 million (reported in May 2018), a large chunk of those were the result of non-connectivity services.  This is where the vertical solutions are being developed and delivered, and where Vodafone aims to differentiate with value that goes beyond its underlying network, the purpose of which is building broad scale.

Which verticals are we talking about?  Unsurprisingly, given its previous acquisitions, automotive is first on the list, followed by insurance, digital buildings, healthcare, and logistics.  When it came to customer case studies at the conference, only the latter was represented, with logistics company Toll presenting alongside customers from the banking, retail, and agriculture sectors. But, most of the other priority verticals made their presence felt in the conference exhibit area, where partners like Medisanté, Deloitte, and Thyssenkrupp demoed joint Vodafone solutions for connected medical devices, healthcare services, and elevator maintenance.

Has Vodafone picked the right verticals based on its acquisitions, its installed base, or overall market trends and potential? Clearly, it’s a little bit of each. Since the beginning of 2017, GlobalData’s IoT Innovations Tracker has identified 30 new healthcare deployments and 32 new logistics deployments across multiple solution providers and mobile operators. Insurance has not been quite so hot, with only nine deployments tracked over the same period. (Note: The tracker database of IoT deployments is based on public information, so it is indicative of trends and not necessarily a complete picture of market activity.) The IoT Innovations Tracker doesn’t have an automotive vertical category since connected car use cases are largely consumer rather than enterprise focused, and while ‘digital buildings’ is not a vertical, it is a core IoT use case. Our cross-vertical tracking of deployments which focus at least in part on building management included a whopping 120 different projects since January 2017 (many of which, unsurprisingly, featured Vodafone as a supplier).

These five industries will most likely continue as priority IoT verticals for Vodafone over the long term. And, rather than seeing verticals drop off the list, it will probably change by having others added to it as time goes by and additional opportunities are fine-tuned through partnership, acquisition, and/or customer co-innovation. Time will tell whether that translates to success in Vodafone’s efforts to leverage vertical solution strengths to transcend its role as a connectivity provider and become a trusted innovation partner to the digital enterprise.

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