Vodafone B2B IoT Strategy: Heavy on the Ends, Light in the Middle

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By Dan Shey | 1Q 2018 | IN-4845

Vodafone has been an aggressive operator in the B2B IoT market, mostly driven by its heritage in DSL/fiber infrastructure, unified communications, and mobile networks. In addition, the enterprise emphasis also comes about due to its international mobile network footprint spanning countries with a large business base of customers and significant business activity, including the United Kingdom, Germany, and India. But a review of Vodafone’s IoT strategy based on information provided by its recent analyst event suggests that it is de-emphasizing the middle of the IoT value chain and placing greater emphasis on its own cloud services. This is interesting, but also risky!

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Vodafone B2B IoT Strategy: Heavy on the Ends, Light in the Middle

NEWS


Vodafone has been an aggressive operator in the B2B IoT market, mostly driven by its heritage in DSL/fiber infrastructure, unified communications, and mobile networks. In addition, the enterprise emphasis also comes about due to its international mobile network footprint spanning countries with a large business base of customers and significant business activity, including the United Kingdom, Germany, and India. But a review of Vodafone’s IoT strategy based on information provided by its recent analyst event suggests that it is de-emphasizing the middle of the IoT value chain and placing greater emphasis on its own cloud services. This is interesting, but also risky!

Heavy on the Ends

IMPACT


It is natural for a mobile operator to heavily emphasize devices and connectivity. Mobile networks continue to evolve, so ensuring that devices are available and approved for cellular networks is an important activity. Network evolution also provides operators with a chance to introduce cellular in markets that traditionally have not used wide-area networks for connectivity. Vodafone has been aggressive with NB-IoT, but unfortunately this technology has not met expectations due to network challenges and a lack of confidence from use case POCs. Interestingly, it has not been aggressive in finding opportunities for cellular in the manufacturing space, unlike AT&T, which has a partnership with Rockwell Automation for this endeavor. LPWA technologies, 5G technologies, and private networks provide a solid set of capabilities for tapping the lucrative manufacturing vertical. ABI Research’s analysis shows that the manufacturing vertical is within the top 5 IoT services market today and its rank will increase over time.

Vodafone’s IoT strategy also appears to have shifted to a greater emphasis on offering its own cloud services, which is the other end of an IoT solution. ABI Research, in a recent technology innovation survey, asked 450 business decision makers what is the dominant cloud model used for storing and accessing data today and if this would change in the next 5 years. Unfortunately, only 4% of respondents were investing in the telco cloud today and expected investment was declining in the future. To be fair, survey respondents were only from the United States, so this was not a global market view. However, Vodafone is still competing with cloud heavyweights of AWS, Microsoft, and, to some extent, Google and IBM. In addition, formidable new competitors like Huawei and Alibaba are moving into the space and gaining relevance with IoT applications.

Light in the Middle

RECOMMENDATIONS


Beyond the highly competitive cloud services market, Vodafone appears to be relying less on IoT platform suppliers and more on SIs and VARs for IoT solution enablement in the middle; the middle being all services that extract data from devices into the cloud, device management services, and services for acting on data both in the cloud and on the edge. SIs and VARs are clearly critical to the development and deployment IoT. But IoT platform supplier partnerships, both specialists and multi-service suppliers, should be encouraged and embraced for several reasons. First, IoT platform suppliers are at the forefront of automating the device-to-cloud IoT value chain. This is especially important for industrial markets that consist of a highly fragmented device and protocol market and need middleware services that can automate device onboarding and data extraction. Second, IoT platform suppliers have a penchant for verticalizing, making them good at uncovering new high-growth vertical applications with new opportunities in smart cities, asset tracking, and sensor-based solutions. Third, IoT platform suppliers are building edge services acumen in application deployment, management, and analytics. Note that this third point is heavily influenced by the device ecosystem about which operators need to stay informed.

Vodafone is placing bets on the IoT market, with greater emphasis on the cloud and a preference for large enterprises. The IoT is still dominated by large companies, but it is also highly competitive, particularly in the area of cloud services. By not tapping into the complete IoT supply chain, it is missing out on new market opportunities and awareness of the suppliers driving efficiency and automation into IoT solution enablement. Vodafone or any operator seeking to stay relevant in the IoT need to build the capabilities across the middle, as well as the ends. This is critical today and in the future when 5G will provide telcos and mobile operators with new opportunities and potentially new competitive advantages.

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