Machina Research Research Report Sponsored by Cisco Service Provider Opportunities & Strategies in the Internet of Things

Transcription

1 Machina Research Research Report Sponsored by Cisco Service Provider Opportunities & Strategies in the Internet of Things Matt Hatton, Co-Founder & Chief Executive Officer, and Godfrey Chua, Principal Analyst December 4, 2015

2 2 1 Executive Summary 1.1 IoT is a huge opportunity and some SPs are seeing rapid growth The Internet of Things (IoT) represents one of the most transformative technological phenomena to emerge in the 21 st century. Its impact will be far reaching, touching practically every aspect of day-today human life and profoundly disrupting business and commerce. Such a transformation also brings with it a market opportunity that will have unprecedented scale one that we see amounting to USD4.3 trillion by There are many different players vying for a slice of that revenue, not least telecommunications service providers (SPs), many of whom have identified the IoT as a significant growth opportunity. Market leading SPs, such as Vodafone and AT&T, have already developed new technological capabilities and business competencies to address the IoT. Many have seen substantial growth in socalled machine-to-machine (M2M) connections over the last three years. With connections and revenue growth typically around 25%-30%, this line of business in connecting new devices is outshining more traditional telecoms activities. However, to truly thrive in the IoT-enabled world, SPs need to look beyond simply connecting devices, to developing a broader set of competencies associated with the wider requirements of the IoT. 1.2 SP strategies for IoT are diverse and evolving fast This report was based on an extensive set of discussions with 26 SP groups around the world, looking at their IoT-related activities, supplemented with Machina Research s ongoing research on the SP environment. The key findings are as follows: Globally there are eight SPs that Machina Research considers to be Players. These SPs have established the key horizontal capabilities necessary to support connecting IoT devices, formed alliances, developed strategic partnerships and generally set the agenda for how IoT connectivity is managed today. There are a further 17 Builders who are on their way to establishing a strong IoT-related offering. The remaining global operators can be considered Learners, watching to identify best practice, in some cases implementing some of the horizontal capabilities necessary for IoT, but not yet really taking the plunge into the IoT. There is a set of horizontal capabilities which have become the baseline for SPs that are seriously looking to address the IoT. These include establishing a dedicated IoT business unit, implementing a Connectivity Support Platform (CSP), having dedicated core network elements for IoT, joining global alliances, and establishing meaningful partnerships with other companies in the IoT ecosystem. Effectively this is a linear evolution path, associated with greater engagement in the IoT, leading from Learner via Builder to Player.

3 3 SPs have a decision to make about how to pursue vertical opportunities. As SPs become more sophisticated in their offerings they tend to turn their attention to the vertical opportunity, developing their own products and services, or establishing partnerships to help bring products to market. This reflects a desire to expand the revenue opportunity beyond pure connectivity. All SPs need to make a decision about how deeply they want to get into verticals. At one extreme some players will develop offerings across a range of verticals, although certainly not all, while at the other end some will prefer an approach of providing a platform for third party service providers and SI partners to develop the vertical element. There is no right answer to where SPs should fit in this spectrum; that decision will be determined by the individual SP s scale, capabilities and appetite for risk. Amongst the 26 SPs covered in detail in this report, all of them were pursuing automotive/transportation, with industrial applications and retail the next biggest sectors, with the latter being noticeably interesting for emerging markets SPs. There are some emerging technology trends that SPs will need to embrace to stay ahead in IoT. In particular we identified four areas: platforms, Low Power Wide Area (LPWA) networks, Network Function Virtualization and Software Defined Networking (NFV/SDN), and data analytics. It is well established that SPs need to deploy a Connectivity Support Platform, however it is increasingly common to see SPs adopting a multi-platform approach in order to both capitalize on different capabilities in the various offerings, as well as tap into various communities of operators. Increasingly SPs are also embracing Application Enablement Platforms (AEPs). Large numbers of SPs are looking carefully at the opportunity presented by LPWA, and 2016 is expected to be a critical year, with the Narrowband IoT standard imminent within 3GPP, as well as lots of LoRa deployments anticipated from SPs 1. NFV/SDN is one of the key broader trends in telecoms, and the capabilities will be valuable for IoT, although the extent to which this has been realized, or is being acted upon, varies tremendously. Finally data management and analytics is a nascent area for SPs. There is a realization amongst some of the leading players that it is at the heart of IoT, but most SPs have yet to seriously address it. 1.3 The evolution to becoming a Next Generation IoT Service Provider The aim of SPs should be to implement the necessary capabilities to maximize the opportunities within the Internet of Things. As noted above, we see an evolution path from Learner via Builder to Player. However, the path does not stop there. We have also identified a number of different capabilities that should be built by a Next Generation IoT Service Provider, as illustrated in Figure 1-1. Specifically these include: Data management and analytics. As noted above, the true value of IoT lies in what is done with the data once it is gathered from these remote devices. 1 For more details see Machina Research Strategy Report LPWA: disruptive new networks for IoT (November 2015)

4 4 Low Power Wide Area Networks. SPs should aim for a degree of network agnosticism if they want to be the most effective partner for IoT. In particular this extends to deploying new IoTfriendly LPWA networks to complement their existing networks. Harnessing the power of their networks to truly deliver the capabilities that IoT demands. IoT devices and applications have an infinitely more diverse set of demands than traditional devices such as handsets and PCs, in terms of bandwidth, latency, geographical distribution, security, reliability and vast array of other characteristics. SPs must harness technology developments such as NFV/SDN in order to properly serve all the requirements of IoT applications, rather than just provide the best efforts service that dominates in the telecoms sector. Professional services offers an opportunity for SPs to own the IoT relationship. Helping enterprise customers along the journey to IoT requires some hand-holding, supporting those companies in the business process transformation as well as the nuts and bolts technology. SPs are in a unique position as trusted technology partners for almost every enterprise in the world. Figure 1-1: Segmentation of SPs, and their capabilities, in IoT [Source: Machina Research, 2015] Service Providers today are broadly positioned in one of the groupings noted above, although as with any attempt to model the real world, there is some diversity. What is clear is that there is an increasingly well-defined evolution path emerging in terms of the capability sets required to succeed in IoT, along with best practice. SPs need to get involved, make the investments, and progress their offering towards that of the Next-Generation IoT Service Provider if they are really to maximize their opportunity in the Internet of Things.

5 5 2 Contents 1 Executive Summary IoT is a huge opportunity and some SPs are seeing rapid growth SP strategies for IoT are diverse and evolving fast The evolution to becoming a Next Generation IoT Service Provider Contents Scope and methodology IoT market growth is an appealing target for Service Providers SPs are seeing rapid growth in what is still a nascent business Segmenting the SP market in IoT IoT Players IoT Builders IoT Learners The path from Learner to Player Technology building blocks for IoT Platforms are a foundation for the IoT business New access technologies emerge as SPs broaden their portfolio NFV and SDN Data management and analytics Vertical vs horizontal approach Which verticals are SPs targeting? Automotive and Transport are key anchors The Industrial sector forms a substantial opportunity Emerging markets highlight retail Healthcare and Smart City are on the horizon Consumer lags, but shows signs of life in China SP approaches to vertical vs horizontal Partnerships are essential Alliances with other Service Providers Connectivity partners Service-oriented partners Solution development enables broader value capture... 25

6 6 9 The path to becoming a Next-Generation IoT Service Provider Conclusions & recommendations Further Reading About Machina Research The Advisory Service Reports and other published content Strategy Briefings Analyst Enquiry Custom Research & Consulting... 33

7 7 3 Scope and methodology This report was compiled between August and November 2015 and is a continuation and extension of Machina Research s extensive existing work on the Service Provider (SP) market 2. It is based on discussions with 26 SPs around the world. Conversations were comprised of face to face, telephone and dialogue with contacts in each of the SPs. The goal of the study was to further deepen our understanding of key market and technology issues facing the SP. In order to broaden the perspective and offer greater context in the state of the SP IoT business today, we extended our research to cover SPs with more nascent and underdeveloped IoT strategies, as well as those from less developed economies. This group of SPs together account for nearly two-thirds of the global installed base of cellular based M2M connections. Discussions revolved broadly around, but were not limited to, the following areas: History, experience, reach and success in IoT (e.g. scale of IoT connections, revenues, ARPUs, etc.) Business models for IoT, including where they operate in the IoT value chain, horizontal and vertical focus areas Organisation of the IoT business (e.g. dedicated business units, scale, etc.) Approach to key technology topics, including software platforms (i.e. connectivity and application enablement), access solutions (e.g. cellular, LPWA, satellite, etc.) and NFV/SDN Key challenges to growing the IoT business Analysis of these discussions were then structured along the following framework: 1. What capabilities do SPs have today in IoT? 2. What capabilities will SPs need in the future to maximise their opportunity in IoT? 3. How can they bridge the gap between the two? Research Stream(s) Keywords Companies IoT Strategies, M2M Strategies M2M, machine-to-machine, IoT, Internet of Things, SP, Service Providers, CSP, Communications Service Providers, MNO, Mobile Network Operator SP discussions were held in confidence, only aggregate results and analysis are being presented. Any mention of individual SPs (i.e. best practice examples) represents publicly disclosed information derived from our ongoing research into SP activities in IoT it does not imply participation in the survey. 2 See, for instance, Machina Research s M2M Communications Service Provider Benchmarking Report 2015 (September 2015)

8 Connections (billion) 8 4 IoT market growth is an appealing target for Service Providers The growth of the Internet of Things (IoT) will be the defining trend in the technology landscape in the next ten years, and it will permeate every vertical sector and influence the majority of business processes in some way. The falling cost of connectivity and hardware is creating an environment in which numerous sectors are exploring the benefits of using the IoT. Motivations are incredibly diverse, including increasing the efficiency of business processes, adding new product features, build closer relationships with customers, and facilitating whole new business models. Historically the focus has been on the more mundane efficiency savings, but increasingly companies are seizing the opportunity to use embedded intelligence and connectivity to switch from selling products to selling services. One way of measuring the explosive growth in the IoT is in the number of connected M2M devices 3, as illustrated in Figure 4-1. Figure 4-1: Global connected devices [Source: Machina Research Forecast Database, 2015] PCs, Tablets & Handsets Connected Cities Connected Industry Connected Car Connected Health Connected Living & Working Machina Research defines these connected devices as machine-to-machine (M2M). The Internet of Things (IoT) is a wider concept incorporating application development, data sharing, analytics and a whole ecosystem. Therefore when talking about connected devices, we refer to them as M2M devices, but they are part of an Internet of Things.

9 IoT Revenue (USD billion) 9 In 2014 there were around 8 billion connected handsets, tablets and PCs, i.e. more traditional connected devices. In comparison, other connected devices across Machina Research s five top level vertical sectors stood at 5.3 billion. This includes everything from connected cars and industrial implementations through to Zigbee connected building lighting systems and WiFi-enabled consumer electronics devices. By 2024 the total number of connected devices in total will have grown to 39 billion, of which the majority (69%) will be in the category of new devices, i.e. not handsets, tablets or PCs. The growth in these connected devices will also, of course, stimulate a significant revenue opportunity. Overall Machina Research forecasts that the total IoT revenue opportunity will be USD4.3 trillion by the end of 2024 (as illustrated in Figure 4-2). Figure 4-2: Global IoT opportunity, 2014 and 2024 [Source: Machina Research, 2015] 5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1, Device Connectivity Platforms and middleware Data monetization and IoT services Installation M2M services Applications Systems integration and strategy Machina Research identifies two main categories of revenue. The first set relates to the machine-tomachine portion, and consists of the up-front cost of devices and installation and the recurring fees accruing for connectivity and M2M services. This part of the revenue is based on end user average spend on hardware and services for each of the multitude of different applications multiplied by the number of connections. The second, and increasingly important, element in IoT revenue relates to revenue that cannot be explicitly associated with an individual connected device. It deals with application development, the integration of IoT data into enterprise back-office systems, data analytics and various other opportunities associated with managing and monetizing the data that comes from connected devices. These elements are accounted for in the chart above in the categories Platforms and middleware, Applications, Data monetization and IoT and Systems integration and strategy. Over the forecast period this element grows from 17% to 42% of all IoT revenue.

10 Cellular M2M connections (million) 10 5 SPs are seeing rapid growth in what is still a nascent business Top Service Providers (SPs) are achieving meaningful scale in their IoT operations today. The business delivers a substantial number of connections and is generating meaningful revenues, especially for global players aggressively pursuing the segment. Leading global players such as Vodafone and AT&T for example reported nearly 20 million M2M connections each at the end of 2014 (we do not include e-readers and tablets in these figures). AT&T indicated over a year ago that revenues for the M2M unit were already in excess of USD1 billion. The fast scaling business is not unique to Europe and North America. In the last few years telecom giant China Mobile has brought the notion of scale to an entirely new level. The SP reported a whopping 43 million M2M connections at the end of 2014, with growth remaining strong as it exceeded the 50 million connection mark halfway through Other large-scale M2M and IoT players include Verizon, Deutsche Telekom, Softbank/Sprint and Telefónica. China Unicom also finds itself in the tier of large-scale SPs with M2M connections well in excess of the 10 million mark. The scale of the top ten SPs in global IoT, by cellular connections, are illustrated in Figure 5-1. Figure 5-1: Cellular-based IoT connections by top ten service providers, [Source: operators, Machina Research estimates, 2015]

11 11 Growth in SIM connections is typically 20-30% per annum (as illustrated in Figure 5-2), with the top ten SPs all delivering solid results in 2014, a trend that has shown no signs of abating in It is also notable that anecdotally SPs are seeing, if anything, an increase in the average revenue generated for each of these connections. SPs reported average revenue per unit (ARPU) generally between USD2 to USD6 per month. A fast growing Southeast Asian SP for example reported an average monthly ARPU of USD3, while another emerging market SP shared one of the highest blended average we ve seen: Despite the highly challenging business and operational environment we are facing, our IoT team is ahead of plan and among the stars in the company. Global SP USD30. For the larger players in more established markets, the figures were typically USD4 or USD5. Growth is where statistics are most stellar. The IoT business for many SPs is well outpacing traditional mobile services, with the upshot that IoT business units are typically the rising stars in the organization. Figure 5-2: M2M cellular connection growth for top ten service providers, * [Source: operators and Machina Research estimates, 2015] 40% 35% 30% 25% 20% 15% 10% 5% 0% *Telefonica figures are based on guidance provided by the CSP. When factoring shuttered connections (over 550k connections in 2014) as well as other items not accounted for in its Annual Report, organic growth was reported to be 27%. Figures published in its Annual Report only show a 14% increase in M2M accesses (please see Section 4.12). Another important aspect of the SP business in M2M and IoT is that it is still nascent. Machina Research estimates there were some million cellular M2M connections at the end of The majority of these connections, 60%, were accounted for by the top ten SPs in terms of connection size (see Figure 5-3). The concentration of M2M connections is in part due to the fact that most SPs have yet to fully embark on building a dedicated business in M2M and IoT. It is not unusual for current 4 The total figure is sourced from Machina Research s Forecast Database

12 12 efforts to be a mere extension of the enterprise division. As was the case of a major SP in the Japan market, a regional player in Latin America and several other SPs we spoke with for this report, many IoT teams and strategies are just being formalized in This certainly speaks to the nascent nature of the business and the notion that growth will be further bolstered in the years ahead as the rest of the world catches up and their respective local and regional markets truly begin to develop. Figure 5-3: Total global M2M cellular connections and share of top major global operator groups* [Source: Machina Research, 2015] China Mobile Other Vodafone AT&T Verizon NTT Docomo Orange Telenor Telefonica DTAG China Unicom SoftBank/Sprint *The Other category also includes M2M connections that CSPs may not necessarily include in their official figures. For example, there are a significant number of active M2M SIMs that generate traffic but do not qualify as active since this traffic is generated in a highly intermittent manner (i.e. it could be several months between data transmissions). 6 Segmenting the SP market in IoT While the research for this report consisted of discussions with 26 Service Providers, Machina Research also gave consideration to (including discussions with) the wider SP IoT landscape. By our estimates, of the 50 major Service Provider groupings in the world, eight fit into our category of Players, 17 are Builders and the remainder Learners. These three general categories of SPs see different phases in the evolution of their IoT businesses (see Figure 6-1). As such, they have varying requirements and necessitate different approaches in building their IoT businesses.

13 13 Figure 6-1: Segmentation of SPs in IoT, with typical attributes and approaches [Source: Machina Research, 2015] Scale (SIMs) Structure Size of dedicated IoT team Connectivity Support Platform App Enablement Platform Dedicated core network elements Membership of global alliance Vertical vs horizontal Established partnerships Learners Builders Players Usually <1 million Usually 1-5 million Usually >5 million Part of enterprise team Dedicated IoT team formed Experienced IoT team < >50 Maybe Yes Yes No Maybe Yes No Maybe Yes Maybe Yes Yes Connectivity only Vertical partnership and/or limited offering Usually strong vertical offering Limited Yes Yes 6.1 IoT Players The SPs with the most sophisticated offerings are the Players. They represents global leaders in the industry, including the likes of AT&T and Vodafone. They have unmatched scale in their IoT business with most of these SPs exceeding the 5 million cellular M2M connection mark. Players are, however, not about scale alone: they all have IoT connectivity platforms as well as application enablement platforms deployed, have dedicated and experienced teams comprising thousands of IoT and vertical specialists, and have invested significantly in technology, companies, partnerships, marketing and human resources to expand their IoT operations. This group also includes China Mobile, which is more oriented towards its local market but cannot be ignored given its tremendous scale, over 50 million connections by mid-2015, and growing sophistication in IoT. However, there is much more to the SP than just its scale, China Mobile is also making meaningful investments in technology, working closely with partners to develop purpose built infrastructure for IoT (critical to enhancing customer value propositions as well as optimizing network costs for IoT applications). Overall, this group of SPs offers the key benchmarks and best practices for SP participation in IoT. 6.2 IoT Builders Builders tend to be more recent entrants into IoT. While most of them will have dedicated IoT teams, operations are still relatively small and likely to be more localized or at best regional. They are either actively developing their IoT strategy or are in the midst of executing it. Companies like SingTel and

14 14 Telstra fall into this category. These SPs have assessed their prospects for IoT and have built teams and aligned resources accordingly. However, teams are relatively small and investments remain tempered. Their scale varies with the majority having less than 5 million M2M connections. Early traction and demonstrated market acceptance of their IoT solutions remain critical factors in order for efforts and investments to be accelerated further. We believe there is much the ecosystem can do to improve the velocity with which SPs in this group pursue IoT as they can be cautious in their approach. They need specific ideas (e.g. IoT solutions with strong market prospects) and go-to-market support (e.g. creative revenue and risk-sharing collaborations in order to encourage these SPs to broaden their IoT offerings). Vendors in the IoT ecosystem must engage with these SPs proactively those that don t risk being left out of the IoT conversation. 6.3 IoT Learners Finally, most SPs fall into the Learner category. As our discussions with SPs time and time again have revealed, most have yet to truly embark on the IoT journey. IoT services, while gaining more attention, still fall within the purview of the enterprise business and are typically connectivity based. Given the recent media and industry attention given to IoT, these companies are well aware of IoT. However, deeper IoT understanding and translation of market opportunities to local conditions remains lacking. None of these SPs exceed the 1 million connection mark with most actually still working on how to best determine and track connection figures for the segment (important to creating appropriate incentives and quotas). Even more so than with the Builder group, the ecosystem can do much to help these SPs amplify efforts in IoT. This can start with a basic education in IoT and, specifically, the potential opportunities it presents to SPs. Learners need We have of course heard of IoT. However, we are still focused on mobile broadband and smartphones. CALA SP encouragement to enter the IoT space as current priorities see them focused on building the traditional mobile broadband business. In many cases, they are in the midst of the smartphone revolution, working hard to transition feature-phone subscribers to the more mobile broadband centric smartphones. This focus also means that guidance from the IoT ecosystem will be extremely useful. Learners do not have the resources nor expertise to evaluate IoT s relevance to them. It will be incumbent upon the ecosystem to help jumpstart such a process. 6.4 The path from Learner to Player In examining SPs in IoT across the world, we observe a clear linear path that transforms an IoT Learner to an IoT Player. This generally sees the SP taking the key steps of team formation, strategy development, investment, and partnership development. This then culminates in an execution phase that sees the SP building the kind of knowledge and experience in IoT that sets the stage for them becoming a Player (see Figure 6-2). This involves implementing the necessary platform capabilities and various other technology elements, as discussed in Section 7. IoT players then have a decision to

15 15 make about what they do about directly addressing the vertical opportunity. This is where the clear linear path splits. More on this in Section 8. Figure 6-2: Building a path towards an IoT business [Source: Machina Research, 2015] 7 Technology building blocks for IoT Network requirements for IoT use cases and applications typically vary from and are much more diversified than traditional mobile broadband and voice communications. Tuning the network to better fit these unique and disparate use cases require platforms and technologies that offer greater flexibility, scalability and improved economics. For SPs aspiring to have a meaningful business in IoT, technology considerations will be critical to long term success. Indeed, as outlined in Section 6 above, putting in place many of these technology capabilities are essential for developing an effective IoT offering. 7.1 Platforms are a foundation for the IoT business Building an IoT business begins with implementation of a baseline software platform that manages the connectivity and subscription requirements of the wide variety of emerging IoT use cases. Connectivity management is then complemented with a platform that enables application development itself. These are critical to speeding and simplifying deployments. The leading SPs in the space, those in the Player group, all have connectivity and application enablement platforms (AEPs) in place. In fact, discussions with them revealed the recent trend of multi-platform approaches (see Figure 7-1). The approach allows an SP to offer their customers greater choice as well as enables them to potentially tap into a pre-existing customer base (delivered via existing users of the platform, such as a Jasper or Ericsson DCP user looking to procure services in the SPs local market). When it comes to AEPs, SPs note they improve value propositions and deliver pre-baked applications that help them

16 16 to more effectively target specific verticals. Connectivity Support Platforms thus enable the horizontal strategy of the SP in IoT. AEPs, on the other hand, can be quite effective in enabling the vertical strategy. We don t have the number of connections to justify a connectivity platform today. However, we are actively talking to platform providers as we see it as essential to scaling our IoT business. Asia SP Figure 7-1: SPs emerging multi-platform strategies [Source: Service Providers, 2015] n = New access technologies emerge as SPs broaden their portfolio When it comes to access technologies, cellular is naturally at the heart of all efforts. This explains the importance of the automotive and transport verticals as outlined in Section 8.1. Cellular is unique in its ability to enable IoT use cases requiring full mobility and wide area coverage. SPs are also beginning to explore technologies complementary to cellular. These include various Low Power Wide Area (LPWA) options, as well as, satellite and short range technologies such as WiFi. LPWA is a particularly hot area as SPs see this as a means to further extend the applicability of existing SP IoT uses cases such as advance meter reading (AMR) for utilities. LPWA s improved economics, long battery life and focus on narrowband IoT makes it an effective complement to cellular. Public announcements were plentiful in the last year, with leading global players such as Vodafone, Telefonica and Orange all announcing plans or investments in LPWA.

17 17 In Figure 7-2 we categorize the approach of the 26 SPs that were interviewed. 15% are actively investing in the space, 19% are exploring the opportunity and a further 39% are keeping a close watch. Just over a quarter are not active in the area at all. Figure 7-2: SP interest in LPWA [Source: Service Providers, 2015] Don't know/too early 27% Investing 15% Exploring 19% Observing 39% n = 26 When asked about which of the technologies they were likely to deploy, there was a diverse set of views. 22% did not know what they were going to do, and a further 26% were yet to decide (see Figure 7-3). Of the twelve SPs who have made up their mind, one is focusing on Sigfox and another two on LoRa, but the majority see their LPWA future as residing within the 3GPP family of standards either in the form of Narrowband IoT or some variant of LTE. The lack of certainty around these network choices, both in terms of how aggressively they are pursuing, and which technology they are picking, is symptomatic of the rapid change ongoing within this space. Narrowband IoT is not yet standardized, and neither are LoRa or Sigfox. Ongoing developments such as standardization, shifts from licensed-exempt to licensed spectrum and changes to technical specifications mean that the landscape is rapidly shifting. Over the next 12 months we expect much greater clarity in all these issues 5. 5 See Machina Research Strategy Report LPWA: disruptive new networks for IoT (November 2015) for more details on the evolution of LPWA.

18 18 Figure 7-3: SP LPWA technology activity (likely) [Source: Service Providers, 2015] Don't know 22% LoRA 9% SigFox 4% Still Exploring (All) 26% NB IoT 17% LTE-M 22% n = 26 When it comes to providing coverage in areas where cellular is not available, SPs such as AT&T and Vodafone have announced solutions incorporating satellite technology. Among the potential complements to cellular, exploration of the key IoT access technology, WiFi, remains relatively nascent. It does find relevance with SPs like Telefonica that are pursuing a more access agnostic approach to the IoT market. Several SPs also noted that, while WiFi was not being actively pursued yet, it was an area of interest and they were especially curious about seeing technology vendors develop more enhanced management capabilities for devices connected via the medium. It is also worth noting that a couple of the SPs did mention WiFi initiatives, but only as they were related to voice and mobile broadband (to enhance coverage, especially in-building). 7.3 NFV and SDN In varying degrees of near and medium term relevance, Network Function Virtualization (NFV) and Software Defined Networking (SDN) are critical enablers for Virtualization will be essential as IoT use cases are hugely varied in their networking requirements and will ultimately demand unprecedented scale. Global SP the SP s IoT business. There are many facets to this, including the fundamental requirement that networking costs need to be significantly lowered and better aligned with the much broader and varied cost structures IoT presents. Additionally, requirements for tremendous scale, flexibility in service offerings, and superfast provisioning means that the attributes most often associated with NFV/SDN architectures are directly relevant to the IoT market.

19 19 The extent to which IoT is driving and will drive the adoption of NFV/SDN however varies from one SP to another. For global players aggressively pursuing the space, relevance exists today and their initiatives clearly show the influence of IoT. For the rest of the SP world however, M2M and IoT traffic remains nascent. It represents such a small proportion of overall network traffic that it does not yet make pragmatic sense to base network investments and architecture on IoT (see Figure 7-4). Figure 7-4: IoT as a driver for NFV/SDN SP initiatives [Source: Service Providers, 2015] n = Data management and analytics Data management and analytics is a nascent area within the SPs IoT strategy. Early efforts fall into the general categories of additive value added services offered to customers, as in the realm of security, and solution enhancement for applications targeting segments such as the smart city. These efforts can be enabled internally or via strategic partnerships. For example, security is a top of mind concern and critical friction point in enterprise adoption of IoT today. Recognizing such concerns, SPs like AT&T have introduced network based security analytics features such as anomaly and threat detection services. Given the many elements that comprise an IoT solution and the inherent challenge in securing each and every element, a network based security wrap should prove appealing to enterprises highly concerned with security (i.e. those deploying mission critical IoT applications such as utilities and smart city transport and surveillance organizations). This is certainly an area that speaks well to the core competency the SP brings into the IoT conversation networking knowledge. When it comes to data analytics for enhancing IoT applications themselves, SPs explore partnerships with organizations possessing strong capabilities in priority segment targets. For example, companies like IBM and Cisco are popular partners for smart city initiatives in part because of their big data capabilities in taking monitoring data, such as vehicle transport flow, parking and congestion statistics,

20 Number of operators (mentions) 20 and analyzing it in order to aid city transport authorities in optimizing traffic and parking planning (such analysis can also be applied to cellphone congestion data, something SPs like Vodafone and AT&T are actively offering). Another area involves a vertical segment increasingly being targeted by SPs: Industrial IoT. Here, a company like GE, who has emerged as a partner to the likes of AT&T and NTT Docomo, proves appealing to the SP as the industrial giant s big data capabilities in the areas such as predictive analytics for equipment maintenance can enhance the SPs overall value proposition to customers in target verticals like manufacturing and agriculture. The real value of IoT lies in how data is managed and analysed. The SP has a much greater potential role to play in providing the building blocks for complex data analytics. Few have yet made any significant in-roads in this area. 8 Vertical vs horizontal approach In the sections above we examined the horizontal capabilities required by SPs to correctly address the IoT market opportunity. However, IoT cannot be simply considered as a homogenous market. IoT comprises a vast array of use cases, applications and ultimately markets. Given the tremendous diversity of opportunities, SPs need to give serious thought to how to address different verticals. In this section we examine which verticals SPs consider represent the greatest opportunity, as well as the different approaches being taken in how to address them. 8.1 Which verticals are SPs targeting? When discussing key business areas, the automotive and transport segment emerges, by a wide margin, as the most prolific connectivity and revenue generator for SPs. Other top verticals include industrial (this includes references to agricultural, utility and manufacturing use cases), retail, smart city, healthcare and consumer (see Figure 8-1). Figure 8-1: Key IoT vertical segments* [Source: Service Providers, 2015] Auto/Transport Utility/Agri/Mfg Retail Smart City Healthcare Consumer *Number of times segment was mentioned as a top M2M and IoT business area.

21 Automotive and Transport are key anchors We cannot emphasize enough the importance of the automotive and transport vertical. In fact, every SP we held discussions with (for this report, as well as from our ongoing conversations with other SPs in general) sees the vertical as critical to their IoT business. For the vast majority, the segment is the largest generator of IoT revenues today. More specifically, The automotive and transport segments have historically been and are our largest verticals today. The connected car is now especially robust, but both continue to grow strong. Global SP use cases such as fleet management, connected car and usage based insurance (UBI) were the most popular. Fleet management is especially prevalent as SPs from both developed and emerging markets highlighted the application. In fact, several SPs even acknowledged that there is probably more fleet management going on in their networks than they know of. This is especially true in emerging markets where enterprises may deploy a fleet management solution themselves and simply procure SIM cards, with traditional data or SMS plans, to connect them. Connected car and UBI, on the other hand, are more commonly cited in developed markets. For example, AT&T is a leader in the connected car, now adding in excess of one million such connections per quarter via a mobile infrastructure and platform developed in partnership with Cisco. UBI, for its part, sees SPs from North America and Europe reporting strong traction The Industrial sector forms a substantial opportunity Industrial IoT is another important area highlighted by SPs. For this broad vertical, the use cases vary significantly but are unified by the broader notions of asset management and monitoring services. Strongest among these is the utility sector, where smart meters have had a long history. Major SPs such as Telefonica report substantial contracts in this realm. This is now being extended to areas such as agriculture, where condition monitoring (e.g. moisture management) use cases are proving to have a strong business case and ROI. Manufacturing, which traditionally has not been a strong vertical, has seen significant growth recently as some SPs seek to diversify their IoT positions (i.e. beyond automotive/transport). For instance, Verizon s fastest growing vertical segment for 2014 was in manufacturing Emerging markets highlight retail One of the more telling regional variations observed was in the strength of the retail vertical in emerging markets. While certainly a notable vertical for most, emerging market SPs were especially enthusiastic. The specific use case in emerging countries is connectivity for retail point-of-sale systems. In the developing world where the wired communication infrastructure tends to be poor and cellular technology is the access medium of choice, SPs have found a strong IoT business in providing wireless connectivity for payment terminals and ATMs. In fact, an emerging market SP even noted that this vertical was larger than its fleet management business (although fleet management is today starting to grow much faster). Unlike what we hear from the rest of the industry, retail is our largest vertical today. Transport is today however growing the fastest. Asia SP

22 Healthcare and Smart City are on the horizon Healthcare and smart city are certainly among the more popular verticals in IoT. For SPs, many discussions mentioned their potential. The verticals account for a tremendous amount of economic activity and thereby present a sizeable foundation for IoT opportunities. However, SPs were cautious in their near term expectations around monetization of these two verticals. Market development is challenged by regulatory (healthcare) and bureaucratic (smart city) challenges. While global leaders such as Vodafone, AT&T and Telefonica have been public about their investments in these areas, the general consensus is that these are important, albeit longer term bets to make. This however does not mean that the two segments are not growing. For example, Vodafone noted strong expansion in its healthcare related segment in the last twelve months. When it comes to smart city, efforts seeking to accelerate market development are actively being put in place. Public and private partnerships, such as those initiated by Sprint with the city of Kansas, Telefonica with Valencia and Etisalat with Dubai, are the emerging model of choice for spurring the market (these are a contrast to China where with over 300 smart city initiatives in the country, local SPs are thus far only playing a minor role in market development). SPs certainly see near term incremental opportunities for connection growth resulting from such smart city initiatives. For SPs that seek to play a lead integration role in the smart city, such as a Telefonica, the opportunity is even greater Consumer lags, but shows signs of life in China Finally, consumer IoT, which often receives the most media attention, only saw modest emphasis. China was an interesting exception as SPs in the country shared enthusiasm for consumer based monitoring solutions. These centered on tracking services for children, the elderly, pets and personal assets such as bicycles. While other SPs around the globe have launched similar services, China was notable for highlighting strong initial traction. Another key consumer IoT segment, the connected home, also saw modest mentions. AT&T is the most public and aggressive with its efforts and investments in the Digital Life offering. However, for the rest of the SP community the connected home is still nascent. In fact, some SPs mentioned having to retreat from it in order to reboot strategies. To be sure, SP efforts in IoT today are largely focused on the enterprise. 8.2 SP approaches to vertical vs horizontal The vertical opportunities, identified in Section 8.1, can be addressed in a number of different ways. SPs, once they have established the base line of technical and structural capabilities as discussed in Sections 6 and 7, have a decision to make: do they operate simply as a horizontal connectivity provider, or do they pursue vertical market opportunities. Horizontal strategies see SPs focusing on broad-based IoT connectivity services that seek to be agnostic of the application and vertical customer base. This allows the SP to address a broad base of potential customers while tempering the investments required in terms of human resources (i.e. vertical specialists) and technology. A vertical strategy, on the other hand, sees the SP looking deeper into application development. It thus requires more significant investments into vertical specialists and go-to-market efforts. This is not a simple binary choice. No SP will seek to address every IoT opportunity directly, and most will look to do something other than simply sell SIM cards, even if this is just to establish a few

23 23 partnerships with a few vertical application vendors. There is also no right or wrong answer; SPs will need to determine the position along the vertical-horizontal spectrum that is most appropriate to them, given capabilities, resources, and appetite for risk. In Figure 8-2, we plot the different approaches of the 26 operators that we spoke with for this study. We plot their approach, either more focused on the horizontal (i.e. provision of connectivity) or on the vertical (i.e. addressing specific applications with own products and services). As we can see, the result of this segmentation is that smaller players tend to favor a horizontal approach, whereas as volumes increase, SPs tend to focus more attention on becoming experts in vertical sectors, launching their own products, and even acquiring assets, with the aim of generating more revenue than the simple connectivity would allow. So, broadly, SPs move from a role of Simple connectors to Revenue optimizers. There are a few exceptions to this general trend, with some operators developing specialist capability in particular verticals in order to address an obvious market opportunity, which tends to give them a more vertical focus. There are also large scale operators that have tended to favor a simple horizontal approach, focusing on their core business. Figure 8-2: SP approaches to vertical vs horizontal [Source: Machina Research, 2015] Based on the trends above, we tend to see SPs, as they grow, focus more attention on developing vertical capabilities. This is largely an issue of scale and available resources.

24 Partnerships are essential Regardless of whether SPs adopt a vertical-focused or horizontal-focused approach, they will need to strike partnerships. SPs cannot do everything in IoT. There are numerous aspects to what partnerships mean in IoT. For example, we see distinct horizontal and vertical based strategies implemented by SPs which in turn have an impact on the types of partnerships they choose to pursue. Choosing the right set of partners ultimately provides a means to fill key gaps in areas such as technology, systems integration capabilities and go-to-market channels. It is also about facilitating and speeding the IoT journey for themselves and their customers. Figure 8-3 illustrates the types of areas where SPs could be striking partnership agreements. In the sections below we explore these in a little more detail. Figure 8-3: Potential target partners for SPs [Source: Machina Research, 2015] Alliances with other Service Providers One of the key features of the global M2M SP landscape is the prevalence of alliances between SPs. The motivation in forming these groupings is typically twofold: technical cooperation for delivering cross-network fault resolution, device certification and localization using euicc/subscription management, and commercial cooperation to establish frameworks for co-bidding for projects requiring global coverage. Both of these motivations were stimulated largely by the perceived demands of customers, and in particular automotive OEMs and multinational companies, for millions of SIMs that could operate globally and with as simple a commercial relationship as possible. Four alliances are significant today: the M2M World Alliance, the Global M2M Association, Vodafone s Partner programme and the Bridge M2M Alliance. All of these continue to attract new members Connectivity partners A further set of partnerships form on the basis of enabling the SP to address a broad base of IoT opportunities. These often start at the module level, with companies such as Telit, Sierra Wireless, and U-Blox being mentioned by SPs. By pre-certifying modules on their respective networks, SPs provide the developer community and their customers readily available connectivity solutions that accelerate IoT solution development. Another important technology partnership in this area is with

25 25 IoT connectivity platforms. These platforms enable effective device and subscription management, critical to the SP being able to scale the scope of their IoT business Service-oriented partners The other set of partners relate specifically to the way in which SPs might seek to address vertical market opportunities. We see this taking form in areas such as Application Enablement Platforms (AEPs), specialist Systems Integrators as well as actual tie ups with major companies from the verticals themselves. In the AEP arena, technology providers do tout their systems as being horizontal. However, what can make an AEP appealing to an SP, beyond simply facilitating application development, are the predeveloped applications and customers the AEP provider may actually be able to bring with them. This is of interest because it can help the SP jumpstart the IoT business in targeted vertical segments. Take for example AEP provider Thingworx. As part of the PTC family, the company has a tremendous presence in industrial IoT. PTC itself has noted that it sees field services as a potential killer application in IoT. With such a pedigree and given the appeal of industrial IoT to SPs, it should be no surprise that Thingworx now ranks as one of most popular AEPs among SPs. Going beyond AEPs, partnerships also evolve with segment companies as both parties seek to develop specific IoT market opportunities. For example, NTT Docomo announced an agreement with GE Japan to target the industrial IoT sector (interestingly, the SP also has a partnership with Thingworx). SIs, such as IBM, are a popular partner for smart city solution and business development efforts. Other areas include provisioning and integration related partnerships with SIs and VARs. These relationships save the SP from having to shore up their own human resources capabilities and the costs associated with doing that. It also allows them to scale up and down as the IoT business demands. SIs help us fill capabilities gaps as well as can provide an effective channel to market. European SP Finally, to address some market opportunities, SPs partner directly with providers of IoT services. A good example is Telefonica s work with fleet management vendor Masternaut. The latter provides the solution which Telefonica rebadges as its own fleet management service, thereby allowing it to offer the relevant service, without having to develop it inhouse. 8.4 Solution development enables broader value capture The question over whether to pursue a more vertical or more horizontal strategy (as outlined in Section 8.2) is determined by how aggressive SPs want to be in addressing more or less of the revenue opportunity in IoT. One aspect of the M2M and IoT business, often highlighted as a negative, is the relatively low blended average revenue per unit (ARPU) realized by market players. To be sure, discussions with SPs across the globe typically see M2M blended ARPUs ranging between USD2 and USD6 per month. These statistics however mask the reality that revenues are highly varied much more so than in the traditional mobile business. Equally important is that these blended ARPUs

26 26 represent only what is being mostly captured by SPs today connectivity service revenues for M2M. SPs also report that while these figures may be low, profitability is often high. The broader opportunity for SPs in IoT is in going up the value stack. This means delivering the application itself, the associated services around it, and even going as far as amortizing or financing device costs into the solution offering. In doing this the SP can capture a greater portion of the IoT opportunity and thus Shifting our offering from connectivity to an actual solution or application can help us derive between 5-times to 10- times more monthly ARPU. European SP realize even more meaningful revenue growth. When solution development is done effectively and successfully targets the right use case or application (that is one with significant unmet demand), SPs report that they can realize additive revenues as much as 10-times greater vis-à-vis the base M2M connectivity service revenue (see Figure 8-4). In one example case quoted by one of the emerging market SPs interviewed, its focus on a high value segment, in the form of fleet management, has led to an ARPU for its M2M line of business of USD30 per month. This level of revenue depends on the provision of a full solution offering (including amortization of the device). However, it does demonstrate that IoT can be incredibly valuable for SPs if they are successful in capturing the full value of the solution. Figure 8-4: Value capture in IoT [Source: Service Providers, Machina Research analysis, 2015] Value capture is not unique to the global market leaders or SPs in the more developed economies. SPs, regardless of their maturity in the business or geography, confirmed that solution development broadened the revenue potential for them in IoT. Value capture is therefore a function of the SP s approach to M2M and IoT whether they choose to simply provide connectivity services or commit to the more complex process of IoT application and solution development.

27 27 While the reward for IoT solution development can be high, there are significant risks as well. The most fundamental of these is that the solution may simply not sell. Solution development requires significant financial and human resources. The market opportunity and customer targets must be ever so carefully evaluated. IoT solution development is a high risk, high reward scenario. 9 The path to becoming a Next-Generation IoT Service Provider In the sections above, we examined the broad based strategies that SPs are adopting in pursuing the IoT opportunity. The underlying reason for preparing this report is to identify the assets and capabilities required by SPs to maximise their opportunity in IoT and identify strategies for bridging the gap with what they currently have. To explore this in further detail, in Figure 9-1 we present our scorecard for SPs, illustrating how far they have progressed to date in their goal of becoming a Next Generation IoT Service Provider. It illustrates how well the average SP is doing vs. best practice, and the potential for SPs to really perform a vital function in IoT. Figure 9-1: Where are SPs in bridging the gap from the traditional role to the next-generation IoTenabled Service Provider [Source: Machina Research, 2015]

28 28 Breaking down the different categories: Networks If there s one thing that SPs do well, it is run networks. However, the legacy cellular networks that worked well for mobile handsets, PCs and tablets are not appropriate for all IoT use cases. What is required is a more heterogeneous approach, in particular embracing LPWA networks and other complementary technologies. Many operators are adopting a wait-and-see approach here, while others are set to wholeheartedly embrace it. The other aspect of networks that will help with IoT deployments is the use of NFV/SDN. Again, there is variable pace of change with SPs generally moving to embrace it. Leading IoT SPs such as Vodafone and AT&T are aggressively transforming their networks (i.e. virtualization) as well exploring the portfolio of access technologies available (i.e. LPWA) in order to further enhance their value propositions. Much consideration is given to these areas in the sections above. Billing and monetization 6 Service Providers are able to bill for IoT solutions, a capability that immediately sets them ahead of most other companies in the space. However, IoT covers a diverse range of enterprise and consumer use cases, each with its own requirements for monetization. Some will be simple, based on the transmission of data, but over time we expect the business models associated with IoT devices to become ever more complex. For instance we will see the emergence of multi-sided business models where IoT devices support multiple services charged for in different ways including ad-funding and sponsorship (we already see early steps into this in the connected car, where basic telematics services are paid for by the automotive manufacturer while at same time services are also offered to the car owner). We also expect many enterprises to take advantage of the opportunity presented by connectivity to move to servitisation business models, i.e. the move from product-based, one time sales to a services based offering around the product). Even more sophisticated will be the business models based on data analytics and data exchange, all of which will require complex settlement between multiple parties. While SPs are better than most today, there is still an opportunity associated with being able to support the more complex monetization models implicit in IoT. Channels SPs have another great asset in IoT in the form of channels to market. They have retail stores for selling connected devices and establishing relationships with virtually every business. Converting that into an IoT-based relationship is another challenge. AT&T has for example exerted great effort and made significant investments in re-designing their retail outlets and re-training staff in order to better present and sell Connected Home services. There is also clearly an opportunity on the enterprise side to reach out to existing customers, using the valuable asset that the SPs have in the form of their enterprise customer base. To be sure, no-one can argue that most SPs are not already a significant technology supplier to enterprises and consumers worldwide. Dedicated business unit One of the most common developments amongst SPs deploying IoT in the last 5 years has been the establishment of dedicated business units (BUs). These BUs tend to pull together technical and product experts with specialist sales teams. Establishing such an overlay team is one of the key criteria for success in IoT. These business 6 For more on monetization of the IoT see Machina Research White Paper Successful monetization of the Internet of Things will bring a $1.3 trillion opportunity (November 2015)

29 29 units tend to have the benefit of some degree of autonomy within the wider business, perhaps even with their own P&L, and are responsible for technical assets such as dedicated IoT core network elements and platforms (see below). All the global SP leaders in IoT have such teams in place. Standard platforms One of the major steps that SPs have undertaken in supporting the IoT has been in implementing IoT-related software platforms. These help significantly in simplifying the process of deploying IoT, and generally speed deployment. Most SPs today have deployed some form of dedicated IoT-related Connectivity Support Platform. A few still rely on legacy platforms, but this is increasingly rare. The Connectivity Support Platform is not, however, the only software implementation necessary to maximise the opportunity from the IoT. Increasingly another aspect of platforms is application development, with the implementation of an Application Enablement Platform (AEP). Success for SPs in IoT depends on deploying a connectivity platform and would benefit from use of one or more AEPs. For instance, one of the leading SPs, Telefonica, possesses internally developed as well off-theshelf platforms for both connectivity and application enablement. Professional services Helping enterprise customers along the journey to IoT requires some hand-holding, supporting those companies in the business process transformation as well as the nuts and bolts technology. Here SPs are a very mixed bag. A number of SPs provide IT services/systems integration capability. Orange for example leverages its global Orange Business Services (OBS) organization to enhance its IoT value proposition, especially to multinational enterprise customers. For others today the extent of professional services is really just a bit on supporting application developers. There is an opportunity here for SPs, should they wish to invest. Vertical expertise The question of vertical versus horizontal approach is one that splits the SP community. Some have chosen to adopt a deliberate horizontal approach, providing connectivity and other underlying functional capabilities. Others SPs have identified that generating substantial revenue depends on being active in providing the service itself. There are a number of examples of operators strongly pursuing verticals, including AT&T and Vodafone in automotive, Telefonica in retail and Orange in healthcare. Typically this is not an either/or choice. Data analytics and management The value of IoT is often seen as being in the data, hence why there is such interest in data analytics. As yet few SPs have done anything meaningful in data analytics and management. We are however seeing early efforts related to tap into the potential opportunity, particularly in areas such as security related analytics (i.e. AT&T) and via partnerships that seek to enhance applications and services being offered (i.e. with companies like IBM, GE and Cisco). 10 Conclusions & recommendations IoT is a sizeable and rapidly growing market for Service Providers around the world. However, they must adapt to the new reality of supporting IoT, adapting their technological and commercial

30 30 capabilities. Machina Research makes the following recommendations for different types of SPs in addressing IoT, based on the three-way segmentation identified in Section 2: Learners Get involved. The advice for SPs that have not been active in IoT until now is relatively simple: act. Massive investment is not necessary, but some focus is. Set up a dedicated team focused on IoT. While Machina Research would always advise SPs to make use of existing technical resources and commercial capabilities (such as sales teams) there is no avoiding the fact that success in IoT depends on SPs pulling together a dedicated set of expertise within an IoT team. Invest in a set of dedicated resources, particularly an IoT connectivity platform. In recent years there has been a tendency to conflate the act of implementing a third party connectivity platform with having an IoT strategy. However, implementing such a platform is necessary for simplifying the process of deploying cellular-enabled IoT. Builders Develop an IoT strategy that plays to your strengths. There is no one-size-fits-all strategy for SPs in IoT. The correct approach will depend on the SP itself. The key for Builders is to identify the optimum strategy to pursue in IoT, which will be determined by the SP s market position, e.g. the sophistication of its markets, public policy support of IoT, its network assets, its existing customer base, presence of multinational corporations, and its appetite for risk. Resolve the horizontal vs vertical conundrum. As SPs move through the Builder phase they must decide their approach to vertical sectors. They must work out how their product mix breaks down between wholesale, connectivity-only, partner-led products and own products. Build partnerships. SPs cannot do everything in IoT. They need to find partners in a host of different areas, including application providers, device manufacturers, systems integrators and software platform providers. Get involved in SP alliances. There are strong opportunities associated with allying with other SPs as part of one of the global alliances. Explore the application enablement platform (AEP) opportunity. AEPs offer an extra tool for simplifying application development as well as the opportunity to bring in ready-made applications. Players As global leaders in IoT, Players need to help define the sector. They will need to take lead positions in terms of horizontal alliances, driving the take-up of LPWA networks, adopting capabilities such as esim, exploring the benefits of a multi-platform approach, looking at the opportunities presented by NFV/SDN, and generally defining the way in which SPs deal with IoT. Build value propositions in vertical sectors. The key to driving real value in IoT is in vertical application expertise. Major SPs in the IoT space will need to build, borrow or buy capabilities in vertical sectors. In most applications building vertical expertise will not be viable, so partnering becomes critical.

31 31 Resolve the commercial opportunities associated with multi-operator alliances. As well as the vertical partnering, major operators need to build horizontal partnerships in the form of alliances. Technical capabilities have been deployed already today, but there is an absence of commercial arrangements in many cases. Explore new areas where SPs can and should be opening up opportunities. There are a number of areas in IoT where SPs could be playing a significant role. Players should be exploring opportunities associated with data analytics, billing/monetization, professional services and security. As they embrace these additional opportunities, SPs will move towards the role of the Next-Generation IoT Service Provider. 11 Further Reading Machina Research recommends the following further reading: Successful monetization of the Internet of Things will bring a $1.3 trillion reward (November, 2015) 2G and 3G switch-off: a navigation guide for IoT (November, 2015) Systems integration capability is a valuable asset for CSPs in IoT (September, 2015) CSPs have mixed attitudes to Low Power Wide Area network deployments (September, 2015) Machine-to-Machine (M2M) Communication Service Provider Benchmarking 2015 (September, 2015) 12 About Machina Research Machina Research is the world s leading provider of market intelligence and strategic insight on the rapidly emerging Machine-to-Machine (M2M), Internet of Things and Big Data opportunities. We provide market intelligence and strategic insight to help our clients maximise opportunities from these rapidly emerging markets. If your company is a mobile network operator, device vendor, infrastructure vendor, service provider or potential end user in the M2M, IoT, or Big Data space, we can help. We work in two ways: Our Advisory Service consists of a set of Research Streams covering all aspects of M2M and IoT. Subscriptions to these multi-client services comprise Reports, Research Notes, Forecasts, Strategy Briefings and Analyst Enquiry.

32 32 Our Custom Research and Consulting team is available to meet your specific research requirements. This might include business case analysis, go-to-market strategies, sales support or marketing/white papers The Advisory Service Machina Research s Advisory Service provides comprehensive support for any organisation interested in the Internet of Things (IoT) or Machine-to-Machine (M2M) market opportunity. The Advisory Service consists of thirteen Research Streams (as illustrated in the graphic below), each focused on a different aspect of IoT or M2M. They each provide a mixture of quantitative and qualitative research targeted at that specific sector and supported by leading industry analysts. Advisory Service Research Streams [Source: Machina Research, 2014] For more detail on each of the Research Streams, please see the Machina Research Advisory Service Guide to Research Streams document Reports and other published content Our research content consists of a number of broad categories of deliverable: Strategy Reports Extensive and in-depth reports focusing on specific key major themes in M2M and IoT. Research Notes Shorter reports examining key issues and developments in the world of M2M and IoT. Application Spotlights Regularly updated profiles of each M2M application. Each Application Spotlight comprises Definitions, Drivers & Barriers, Market Analysis, Forecast and Conclusions & Recommendations sections. Forecasts Many of our Research Streams include extensive market forecasts. These are available through our online Forecast tool.