The world’s biggest telecommunications show is occurring right now in Barcelona, with telecom vendors, carriers and other gear makers showing off devices, boxes and new industry standards. But amid the latest phones and technological breakthroughs there is a burgeoning class of services that show some operators and gear sellers understand how the connected world will play out and how they hope to derive value from it.
There are several trends working against the telecommunications industry depending on where in the stack you sit. Overall, there are a growing number of players developing low-cost equipment to undercut the big vendors. On the operator side, the rise of IP communications has threatened to undercut their revenue from specialized voice and texting services. Meanwhile operators are struggling to rebuild their networks to handle the challenges of providing a lot of data to truly mobile consumers who are using a variety of different devices. That’s a real shift in mindset and equipment for them.
So, gear makers are finding their margins under attack, and operators are dealing with the same pressures as well as trying to invest in a new type of flexible and scalable network architecture that will cost less to operate and buy. Services may be the best way to solve these problems for both gear makers and for operators, and two news items from MWC show that AT&T and Ericsson are willing to try.
Ericsson: From data center to data deluge, it will take care of it
Ericsson in the last few weeks has launched an array of products, including a data center on Sunday, that show how far beyond “gear” it plans to move. As my colleague Kevin Fitchard detailed, Ericsson certainly has the technical know-how to build gear to handle the needs of the next generation network, but gear isn’t enough these days.
Enter Ericsson’s new products tied to Wi-Fi offload, IP communicaitons and a new antenna concept for microwave backhaul. But wrapped around all of this were services. As Daryl Schoolar, a principal analyst at Ovum said:
The ‘boxes’ (picocell with integrated Wi-Fi, high-capacity gateway and golfball shaped casing) were delivered simply as a part of the story – rather than as the whole story. The bulk of CEO Hans Vestberg’s time was taken up announcing services and solutions that go far beyond hardware – a partnership in mobile commerce with Western Union, data centres and results of an Akamai trial in Indonesia.
AT&T’s global network for connected machines
Likewise a machine-to-machine partnership between AT&T and Jasper Wireless from 2009 is now bearing fruit. AT&T said it had released a global SIM card that will provide connectivity for connected machines across the globe. As nice as this might be for smartphones, this is aimed at tracking inventory, vehicles and other items that might log thousands of miles in their lifetime.
So instead of a multinational corporation tracking dozens of contracts with operators , they can call AT&T and manage their portfolio of tracked items. Aside from the SIM hardware, AT&T is providing software and consulting around the business, which should help it keep its lead in the M2M space and potentially grow it worldwide. Again, the hardware here is less important than the expertise and partnerships AT&T already has in place to make such a service easy for enterprise customers to use.
Now, instead of a low-revenue (high margin) data subscription for tracking a car, AT&T sells a business service that enables a company to track its entire global vehicle fleet. At that point the enterprise isn’t looking at the per-vehicle cost of a connection; it’s thinking in terms of the overall value that such tracking can bring to its organization. And that value can move AT&T out of the commodity playing field.
The transitions from providing hardware or even individual connectivity, to enabling a business with a seamless technology package aren’t always easy. There has to be real value delivered as opposed to just fancy packaging, and the folks paying for those services have to have a reason to avoid doing the packaging and services level integration themselves. But like any homeowner who hires a cleaning service as opposed to doing it themselves, a well-done service can provide value.