Where are the opportunities for CSPs in the Internet of Things?

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Communication Service Providers’ (CSPs) are looking to be leaders in the Machine to Machine (M2M) and Internet of Things (IoT) revolutions. Their M2M businesses have been growing rapidly in recent years and many see expanding their strategies into IoT as a natural extension that will allow them to capitalise on an even broader opportunity.

As such, numerous CSPs are gearing up for IoT (please see Communications Service Providers gear up for the Internet of Things). CSPs are however not the only ones looking to be central to the opportunity. A recent conversation with an IoT solution developer was especially telling. The observation was made that rarely, if ever, did the developer encounter representatives from a CSP when roaming the floors of a manufacturing plant or industrial complex they were designing an IoT solution for. In fact, the developer felt that CSPs were rather absent from general discussions with customers about the benefits of IoT (the developer specialised in industrial IoT solutions). Despite all the marketing and media hype from CSPs around their M2M and IoT services, where were the CSPs in these instances?

The simple answer is that there are several focal points emerging for the M2M and IoT opportunity and for each of them, different and different types of companies are vying for leadership. CSPs are focused on delivering integrated solutions in segments where their technologies and capabilities give them a competitive advantage. Automotive is one obvious focal point for CSPs (applications such as connected car, fleet management, etc.). I have always said that focus is essential to any CSP’s strategy – and they all know that. No CSP, no matter how large or global, has the resources to pursue the full breadth and depth of M2M and IoT. Sales cycles can also be very long (for example, one Chinese mobile operator described to me how it took nearly two-years and a huge ecosystem to win the connected car business of a European automotive manufacturer entering China). It is critical to pick your battles. Besides, does it make sense for a smart building IoT solution built on technologies such as Wifi or Zigbee to come from a CSP? Or is a GE, Philips, IBM, Cisco or some other company better positioned? To be sure, partnerships are evolving. It makes sense to tap into complementary competencies (e.g. IBM with AT&T for Smart Cities or GE with AT&T for the Industrial Internet).

What is important for companies vying for leadership in M2M and IoT is that they unify and simplify solutions – while at the same time offer a vision to their customers. As an executive from a Fortune 500 company with massive retail, logistics and manufacturing operations shared with me not too long ago – while they see the benefits of IoT, the challenge in accelerating adoption is in the diversity of devices and solutions being offered. They need a partner who can bring relevant solutions together and simplify it for them. Trying to do so internally is difficult and often not feasible. They also need a partner who can offer a vision of the benefits beyond the individual solutions. This is what will further strengthen the business case for IoT. Be it a CSP, network vendor, system integrator, or industrial giant, the important point is that there are companies seeking to deliver simplified solutions and vision. This is what will help push M2M and IoT forward. We already rate leading CSPs. What other categories do you think are worth rating? And who do you think are some of the early companies leading and their focal points?

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