Communications Service Providers in IoT in 2017: where unicorns fear to tread

Matt Hatton, Founder & CEO, Machina Research

Every year Machina Research puts together a set of predictions for what we expect to see in the new year in the Internet of Things. This year is no different. These predictions span everything in the ecosystem including enterprise end users, consumer products, regulation and device trends. One of the key client groups for Machina Research are Communications Service Providers (CSPs), and this article gives a taster of the predictions we’re planning for CSPs in 2017.

Clearly, it’s not possible to talk about CSPs in IoT without addressing networks. And what is also evident is that Low Power Wide Area (LPWA) networks are the most exciting development for 2017. Machina Research’s view is that during 2017 the 3GPP technologies (i.e. LTE-NB1 and LTE-M1) will emerge as the winners and the focus of growth in LPWA. The alternative access network technologies have created a problem by focusing on fund-raising or constantly squabbling amongst themselves about their relative merits. They needed to present a common front that possibly there are valid alternatives to what is served up by traditional mobile operators, who present a more-or-less consistent message regarding networks. Our view has never been that only one technology will dominate to the exclusion of all others. But the 3GPP family looks set to dominate.

At the other end of the spectrum, 5G won’t really matter a great deal. We expect someone will launch ‘5G’ (as pure marketing hype) and no-one involved in IoT will care. 5G has always needed IoT to justify itself more than IoT has needed 5G. Even when it’s properly launched 5G as a radio interface will be focused on dense geographic areas making it largely irrelevant for the bulk of IoT.

Another area where CSPs need to focus some attention is professional services, where we expect to see much more action from the CSPs in 2017. CSPs are not, and will never be, IoT unicorns. As a result, they can and should concentrate on those elements of IoT which might be uncharitably described as ‘dull but worthy’, but which generate real profit rather than hypothetical valuations. The wannabe unicorns, of which there are hundreds, focus on scalable, software-based and largely horizontal opportunities. If one of them fails, another arrives to take its place. More like a hydra than a unicorn if truth be told. CSPs don’t have that luxury. Therefore, they must focus their attention on those spaces where the unicorns fear to tread, specifically with high barriers to entry. Running networks is an obvious space. Professional services, or consulting as it may be termed, is another. It’s not scalable, but it is profitable and it’s important. Almost every enterprise needs its hand holding through the deployment of IoT and CSPs are in a good position to take a lead courtesy of their extensive customer base. It’s no surprise that, for instance, Deutsche Telekom’s IoT approach is now much more led by T-Systems.

Finally, the other area where the IoT unicorns get uncomfortable is in end user services. We’ve seen quite a lot of M&A in 2016, including a USD3 billion bet by Verizon on the fleet management sector. We expect 2017 will see even more focus on end user services as a way to drive up revenue. In particular we think 2017 will be a break-through year for smart home, courtesy of significant improvements in UI and general product offerings.

The full set of predictions about all aspects of IoT in 2017 will be held on the 19th January, with a replay available for those not able to tune in live.
Details of how to register can be found here: https://machinaresearch.com/news/live-webinar-machina-researchs-iot-predictions-2017/

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