Opinion: Independence is key to success in the M2M market

By Krzysztof Kwiatkowski, M2M product manager at COMARCH

Revenues from M2M have grown steadily, reaching €91 billion in 2010, but they are expected to grow much faster.

Machina Research’s recent “M2M Global Forecast and Analysis 2010-20” report predicts revenues are expected to amount to €714 billion in 2020, with Europe being the dominant region, generating €200 billion.

However, in order to get a share of this forecasted revenue, operators need the freedom to execute their own vision and strategy, rather than being reliant on what a potential vendor or partner is able to provide.

A key part of this lies in choosing the right M2M platform, including the software stack, that supports operators in their M2M activity. When making this decision there are two important things to consider:

  1. Whether or not to create a separate stack for the M2M business in order to eliminate IT silos and consolidate architectures.
  2. What delivery model to choose once a decision about purchasing an M2M platform has been made.

Supporting M2M with an existing BSS platform creates major problems with configuration, integration and processes.

Most operators, therefore, go for separate organisational units and a dedicated software stack, mainly in terms of BSS.

This is the preferred approach because traditional telecoms business and M2M necessitate different partners and logistic processes, while the various business verticals served by the latter all have their own individual needs.

Another, even more important, reason for building a separate “silo” for M2M relates to costs.

In the US, ARPU from traditional telecom services is about $50, while the costs of network management, customer management and acquisition are at about $20-30.

In comparison, M2M has an ARPU of $3 and costs of about $1.4-1.6 – systems supporting M2M are very cheap to maintain and operate, particularly as these figures include the costs of labour and licenses.

When it comes to deciding about the right delivery model for an M2M platform, there are also two approaches.

One is to choose an outsourced platform through a SaaS model or using a platform alongside other operators via an advanced cooperation programme – usually related to international roaming and accessing M2M applications for particular verticals.

This approach may have low start-up and operational costs and assure a potentially faster launch but as it enables one platform to be used by many different operators, it dilutes the possibility of building a competitive market strategy.

In addition, the ownership of the customer database is shared, which entails obvious risks.

The other approach is a licensed platform model, which may prove to be slightly less efficient in terms of OPEX, but grants the operator full ownership of the platform and their customers.

Although this approach has higher costs, they can be easily eliminated using commercial-off-the-shelf products, managed services and dedicated hosting services.

If you really want to make the most of your M2M business and get ahead of competition, it’s time to declare independence!

 

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