To crack the consumer IoT market, cellcos need a business model that plays to their strengths and a service that’s dead easy to install and use.
The Internet of Things comes in many forms and varieties, but for cellcos, it’s mainly an enterprise play. A growing number of mobile operators have upgraded their cellular networks to support Release 13 standards NB-IoT and LTE Cat M1, but those were developed by the 3GPP to help cellcos to compete against the likes of Sigfox and LoRa in the LPWA space, which is aimed primarily at verticals and enterprises.
So what about the consumer IoT space?
Here is where it gets murky for mobile operators. There’s certainly a lot of potential in consumer IoT, particularly for apps like smart homes, but at the moment that’s being driven more by the OEMs and companies like Amazon and Google developing smart speakers with digital assistants. Cellcos have also been targeting the smart home space, but with mixed results. And truth be told, it’s possible to set up a smart home without any cellco involvement at all unless they also happen to provide FTTH links.
One seemingly obvious consumer IoT play for cellcos is eSIM connectivity for devices, especially wearables – after all, there’s value in enabling a smartwatch or biomonitor to connect to mobile networks, even when you’re overseas. However, as Charles Reed Anderson of CRA & Associates has pointed out here, that’s a potentially bigger opportunity for global operators like Tata Communications who have an IoT platform that knits together cellular connectivity worldwide. Cellcos connecting to that platform would get the data traffic, of course, but they wouldn’t necessarily get to sell the IoT service itself, where the real money arguably is.
But that doesn’t mean cellcos are better off abandoning consumer IoT and sticking to industrial IoT services. In a blog post last week, Northstream analyst Denise Lau cited a report from GrowthEnabler [PDF] that forecasts the IoT market will reach $457 billion in 2020, $110 billion (24%) of which will be driven by three consumer IoT areas: wearables, smart homes and connected cars. That’s a big enough slice of the pie for cellcos to try and get a piece, she says.
Lau says the solution will differ from one cellco to another – but the common denominator to any successful consumer IoT play is twofold: understand the value you’re bringing to the table (namely mobility, security and stability), and make it dead easy to use:
… in order to increase their chances of succeeding, operators should at least better define their value proposition based on their competitive advantages, i.e. cellular connectivity. Moreover, they should focus on making the user experience as easy and simple as possible.
A key example of the latter is O2 in the UK, whose smart home offering flopped in large part because it wasn’t a plug and play experience, Lau says:
… the system offered was not simple enough to use for the end customers. Instead of making it a “plug-and-play” solution, O2 needed to send out technicians to perform the installation at the consumers’ homes. This did not only increase the operating cost for O2, but also disincentivized consumers from buying the product.
You can read the whole post here.