We need IoT business models – now!

Written by on April 29, 2015 in BillingViews, Opinion with 0 Comments

Help concept of a hand stretching out of the water in the sea

We have been used to things taking a long time in telecoms – at least in relative terms. New technology, so conventional wisdom goes, takes 10 years to become ‘invisible.’ After 10 years ‘technology’ simply becomes the way we run our lives. Follow that old conventional wisdom and the Apple Watch will be normal, invisible, in 2025. But things are speeding up, dramatically.

Telcos cannot do what they have done in the past, which is to wait and watch the market and then buy successful companies. Those companies can now buy telcos, not that they would want to, given the level of regulation that they would have to take on.

The Internet of Things (IoT) is happening faster than any conventional wisdom could envisage. And yet we are still trying to work out where operators can add value and what the business models look like. The IoT will become so embedded, so quickly, in our lives it will ‘disappear.’ It has happened before. The Personal Computer (PC) was a revolutionary device. It, like the IoT, had huge numbers of critics and cynics. Yet trade shows and conferences abounded. Shows that rivalled the current MWC in size. It was a genuine revolution. And then it disappeared. Trade shows closed, conferences were cancelled. And all because the PC became ubiquitous. In 10 years it became how we ran our businesses, and then how we ran our lives.

The same will happen with IoT. In fact, it is happening at an astonishing rate. The problem is that we have not figured out the business model and so we will end up doing what we always do – give stuff away and hope to make money in the future, somehow.

Already predictions are that the IoT will consume almost all capacity in current data centres very quickly. A study by IDC predicts that the ‘installed service provider datacenter capacity consumed by IoT workloads will increase nearly 750 percent between 2014 and 2019.’ And IDC conclude that ‘the industry needs to be ready.’

It is more urgent than that because the industry is not ready. As guest Tracy Monday said, the “Connected World is substantially being driven by players outside the telecoms market who perceive great benefit to themselves from delivering it.” Yet, it falls to the network providers to deliver the capacity, without really knowing how to make money.

Something urgent needs to be done and operators are very aware of that urgency. The question is what, and how to differentiate their offerings. The cynics are already questioning where the profit lies – if it lies at all – even in areas where a lot of energy has already been spent. Smart meters are the current classic example.

The hope is that while operators try to control the fire hose of traffic being generated by devices being connected to their networks they can at least find one or two business models that will justify the investment. The trick is differentiation. As one senior product design professional said, “we spend days coming up with some new angle where we feel we can add value. We go to a conference or seminar to see whether it might work and find everyone else has come up with the same idea. It is frustrating.”

It will quickly become more than frustrating, it will soon become a major drag on investment in other areas (where the answers might be found) such as BSS.

This drive for differentiation is part of the reason why so much focus and energy is being directed towards the car. Whether you are designing a driverless car, or a connected one, that is one area where everyone involved sees a ‘greenfield’ opportunity. As the same product design guy said, “there are three phases to people’s lives: home, work and the piece in between. We understand the home, and know how we can add value, we understand work and how we can enhance efficiency and productivity, but we are only now getting to grips with the opportunities in between.”

There is urgency in this issue now, and we need to identify some profitable business models, and work out how to charge for them, very quickly.

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About the Author

About the Author: Alex was Founder and CEO of the Global Billing Association (GBA), a trade body focused on the communications sector. He is a sought after speaker and chairman at leading industry conferences, and is widely published in communications magazines around the world. Until it closed, he was Contributing Editor, OSS/BSS for Connected Planet. He is publisher of DisruptiveViews and previously BillingViews. .

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