Operators see revenue growth as key driver for entering the IoT: Ericsson
According to Ericsson’s new study, service providers still lack of a clear strategy to target the IoT business opportunity
Revenue growth is currently the biggest driver for telecom service operators seeking to enter the internet of things space, but most of these companies lack of a defined strategy to achieve this, according to a new study by Ericsson.
The Swedish vendor said that although revenue growth is confirmed as the key driver for market entry, 70% of interviewees do not have a well-defined strategy in the IoT field. Instead, most of service providers “are testing and taking on different roles within the IoT value chain”, according to the report.
“IoT is one of the most talked-about topics in the tech industry, and yet the landscape remains fragmented due to its immaturity. There are high expectations of the commercial possibilities in this space – with more than 20 billion IoT devices projected by 2023 – and large numbers of companies from every corner of the world are vying for a position to capture that business potential,” Ericsson said.
Ericsson’s new study aims to understand how 20 leading service providers are engaging and positioning themselves in the IoT market. For this study, the vendor interviewed 10 of the world’s 30 fastest-growing mobile broadband service providers.
The study highlighted that interviewees believe in the potential of IoT and describe new cellular IoT technologies, such as Cat-M1 and NB-IoT, as game changers. They also regard IoT as a totally new type of business that will change their organizations and operations.
“Most service providers are pursuing the key roles of network provider and connectivity provider currently, while also actively diversifying into sub-roles for new value-added services,” according to Ericsson. “However, the majority of interviewees have expressed an ambition to move up the value chain and become service creators or service enablers in selected areas.”
Ericsson also highlighted that most of the service providers interviewed believe 5G technology will have a significant impact on IoT, although few have a clear view of specific 5G use cases. Most of them are also relying on standards and open Application Programming Interfaces (APIs) to enable third-party development.
When it comes to end-user segments, the business-to-business market is a prime focus for all that service providers that were interviewed, largely due to the fact that enterprises generate the bulk of total market spend. Fleets and logistics, connected cars, smart cities and industrial automation were found to be the market segments most commonly targeted by the interviewed IoT leaders, Ericsson said. The consumer IoT market addressable by service providers is relatively immature, with limited uptake due to unclear value propositions and competition from over-the-top players, the vendor said.
“Service providers are establishing new business models for revenue sharing and increased use of indirect channels; creating new delivery models for as-a-service and online services; and driving innovation with partners and customers, on top of investing in new technologies,” the report explains.