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Connectivity Remains the Focus of M2M Telecom Service Providers in Europe
Published on:
The machine to machine (M2M) market is so diverse that the key to success is to not only capture new customers but also develop relevant services to create sustainable revenue streams. Currently, telecommunication companies are still focusing on capturing M2M connectivity and additional related services revenues. Telcos' ecosystem strategy also involves third-party relationships to maximise routes to market and achieve relevant customer touch points.
"Breadth of geographic footprint is not the sole determinant of business profitability in mobile communication services, nor is it the critical success factor in the M2M market," says Frost & Sullivan Senior Industry Analyst, Yiru Zhong. "Companies adopt similar ecosystem strategies to create a relevant and diverse portfolio, which along with the ecosystem quality determines the relative success of telcos in M2M."
While the ecosystem strategy of telcos includes looking for and managing third-party relationships, most large telcos agree that buying an ecosystem partner could diminish the benefits of a small, nimble specialist. Conversely, smaller telcos and other M2M stakeholders perceive acquisitions as a valid path to obtaining market share or market expertise.
"Another factor of M2M success is the telcos' scope of ambition," adds Ms Zhong. "The strategy of global players is the same as those telcos with a more limited geographic scope. The latter rely on their wholesale/mobile virtual network operator (MVNO) expertise to serve the wholesale market. This allows for a wider and deeper M2M sector that enables different types of M2M service providers to coexist and achieve a sustainable revenue share."
According to Frost & Sullivan, M2M applications will remain cost driven. "While M2M will also allow end users to create new business models, many deployments remain relatively small scale and limited to a small part of an overall business operation," notes Ms Zhong. A telco's strength in ecosystem development and portfolio diversity will determine its success in capturing higher M2M revenue at this stage.
"In the likelihood of connectivity becoming another commodity, higher revenue must come from additional value, such as using analytics to wrap intelligence for end-users, enabling more relevant application development, and utilising computing trends to support different M2M deployment scales," summarises Ms Zhong.
Tags: [m2m] [machine to machine]
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