The fragmentation of the M2M-market is a stumbling block for expansion. In a time where everybody is looking everywhere for growth, the M2M market players need to be open for cross business collaboration.
By Mads Winblad, Chairman of the Board, NextM2M A/S.
After ten years of development, the machine-to-machine (M2M) market is ripe for an unprecedented growth. The “internet of things” is on our doorstep. A Yankee Group forecast predicts that enterprise cellular M2M connections worldwide will grow from 81.8 million in 2011 to nearly 217.5 million in 2015, and connectivity revenue will double to US$ 6.7 billion.
According to a Frost & Sullivan analysis growth over the next fire years in most sectors of M2M will be between 30 and 35%.
No doubt, the M2M market will be among the highest growth areas in the wireless industry during the next decade.
Fragmentation the problem
However, the fragmentation of the market is a stumbling block for this development. Besides being a prolific growth area, the M2M business is also an extremely complex business with a complicated value chain and a plethora of different players small, large and huge.
Our challenge is to create a profitable market without alienating the customers. They demand end-to-end solutions, which can give them easy access to the M2M technology. In order to do so, the business needs to collaborate and be open for untraditional partnerships even with competitors.
In the mobile telephony market in the 1990s, we saw a similar scenario, where all established ecosystems were shattered. The new carriers were unable to enter with their services because of low quality of the networks due to among other things restrictive competition. The result was subsidized telephones, which were practically given away for free, and a total disruption of the entire market. It is the same trend we see in to-days M2M market but just much faster.
Uncertainty leads to rigid market
To use the terminology of Geoffrey Moore’s classic book “Inside the Tornado” we have crossed the chasm of go/no go and entering the chaotic and dynamic tornado where everything goes haywire.
The big players such as the operators are eager to enter the market, but nobody really knows how it will develop. Just like the text messaging of the early mobile market that outgrew all expectations in no time.
Due to the uncertain market, the big players create alliances and try to obtain ownership to all and everything including the customers. In this way they feel safe, whichever way the market goes. However, customers do not want to be the property of any operator or other business. They want reliable relationships with suppliers that can provide the best possible end-to-end solutions.
Embrace the opportunities
In a market with such speed of innovation as the M2M business we need equally innovative ways of management such as open source. As with the mobile telephony market, it is difficult to fail, when the demand is doubling every year. The problem is, however, to be ready for the end of the tornado. You have to prepare while in the tornado, and open source is ideally suited for such chaotic, turbulent market with constant demand for fast innovation.
To be able to navigate and survive the chaotic tornado, we need solid strategy and increased speed of innovation. This is obtainable with open source principles. We have to apply this attitude and other forms of co-creation in order to add value for the customers. Nobody can handle everything on their own.
At NextM2M we practice these ideas by collaborating with partners and even competitors and semi-competitors, who share our view on open source.
For instance, we have initiated a co-operation with Datatrade, a semi competitor that is using our core competences, an advanced management platform, instead of spending time and efforts on developing their own.
Similarly, we have entered a strategic partnership with Materna on system integration which is within their core competences.
No exclusivity, no ownership of customers but an open minded collaboration on developing the market to the benefit of all not least the customers.
Adding value the key
The goal is to find partners, who share our belief in open source and share the same attitude. Co-creation and collaboration can add more competences and quality to the market thus adding value for the customers. This is to the benefit of the entire industry and all its players.
Of course you have to have a clear and concise value proposition and know what you want. And then collaborate with other likeminded with competences you lack.
The ultimate goal is to offer the customers added value and trouble free, transparent solutions that make it easy, efficient and economical for them to enter the M2M market. And that they can do so in confidence and assurance that they will get the most suitable solutions.
It is a matter of creating a dynamic and reasonable M2M marketplace. Otherwise we will get a mess of a business with lots of waste and mismanagement.
The M2M market comprises many of the same players as in mobile telephony. Let us not make the same mistakes as in the beginning of the mobile market, where many companies got in troubles or had to abandon the market altogether.
The message is clear: Break down the silos and employ open source principles in establishing the collaboration necessary for developing transparent, end-to-end solutions, which the customers can relate to and feel comfortable investing in.
For more on open source leadership, visit www.winblad.net.
