How Service Providers Can Become Leaders in the Internet of Everything

Over 50 billion “things” or devices are projected to be connected to the Internet through wired and wireless networks, generating zettabytes of data, all powered by cloud computing.  This Internet of Everything (IoE) will fundamentally transform businesses, generate enormous economic wealth and create immeasurable social value.    

We are discovering that successful IoE implementations require a solid technical and business platform into which different vertical solutions can be easily plugged to efficiently and effectively achieve the promised business, economic and social benefits.  The cornerstone of this IoE platform includes a robust connectivity and technology infrastructure, operational and management services, to accommodate a range of vertical and horizontal solutions.  Details of this IoE platform are outlined in Buildingthe Platform for the Internet of Everything.

The ideal IoE platform leverages common requirements across all vertical solutions to create a scalable, “build once – deploy many”, technical and business architecture. But, who is going to build and deliverable this scalable platform? 

I believe that service providers are well positioned to lead the development and implementation of the IoE platform.  Not only do they have years of experience building and running networks, operations and customer services, but many SPs now offer extensive cloud  and systems integration services.  Not to mention, their strong brands, vertical sales and solutions and a history of complex technical implementations. 

Service providers need to consider their strategic options for developing and operating the IoE platform.  Although it varies by provider, the strategic options build from an inherent, more technical, strength for SPs at the bottom of the platform, to less core capabilities in the services and management layers at the top.  A SP’s strategic options are:

1.    Core – Network Connection – extension of the core networking business.

2.    Closely Aligned – Network Access, Technology Platform – leveraging capabilities in deploying and operating network access and cloud services.

3.    Stretch – Vertical and Horizontal Solutions, Shared Operations Platform – likely partnering/acquiring to create IoE solutions; extending internal NOC and customer care operations as a service.

4.    New Areas – Professional Services, Program Management – while some SPs have some SI capabilities most will need to partner or organically grow consulting and services capabilities.

5.    Monetization – extension and growth of existing capabilities in advertising and data analytics to create vertical-specific monetization opportunities.

Our detailed analysis of the revenue potential for providing an IoE platform for Smart Cities (SmartCities Are a $7.5 Billion Annual Opportunity for Technology Providers) provides a good example of the value that can be created by providing the technical and operational requirements for successful IoE deployments.  Roughly one-half of the platform revenues come from the core or closely aligned areas – areas not very distant from a service provider’s current business.

We are starting to see SPs around the world chasing the significant IoE platform opportunity.  However, they are typically focused on their core business of providing network connectivity.  The big opportunity exists to move up the IoE platform stack to build and deliver new sources of value.  Service providers should start by expanding beyond connectivity to the closely aligned areas of network access and technology platform.  From there explore stretch and new areas by building off existing capabilities, seeking partners or considering select acquisitions.  In parallel, investigate areas where you can create new monetization opportunities in select verticals leveraging existing and new business capabilities.

Building and delivering a scalable IoE platform that can be deployed across multiple vertical solutions provides a compelling business case for SPs to capture a significant portion of the $20 trillion that IDC estimates will be spent over the next three years to realize the promise of the Internet of Everything. 

Service providers are well placed to take a leadership role as the providers of the IoE platform.  But, they better act fast.  Technology vendors, services companies, start-ups and niche players are all circling the waters to see how they can grab a piece of this tantalizing $20 trillion business.

Read the blog on Cisco.com

Building the Platform for the Internet of Everything

We are embarking on a new technological journey that will fundamentally change forever the economy, society and the way that we live.  Wired magazine described a new era where “the most mundane items in our lives can talk wirelessly among themselves, performing tasks on command, giving us data we’ve never had before.”  The Internet of Everything (IoE) is a world where up to 50 billion things (or devices) will be connected to the Internet by 2020; or, the equivalent of 6 devices for every person on the planet.

Businesses are beginning to completely re-design their processes, operations and business models to benefit from this new era.  We are already starting to see the emergence of smart cities, connected utilities, connected railways, connected factories, connected cars, and even connected mines, to name but a few.  All industries are looking to IoE as a breakthrough technology to help them optimize their business, enter new markets and enhance their relationship with their customers.  This is why industry analysts, like IDC, estimate that businesses will spend up to $20 trillion over the next three years to realize the promise of the Internet of Everything. 

But, The Internet of Things is More Than Just “Things”.  As I described in this recent article, the Internet of Things is really a short-hand for the four technology pillars (mobility, cloud, big data and things), wrapped in security, that are forging a revolutionary new, and revolutionary, connected world.  Successful IoE implementations don’t happen in isolation or independently.  We are discovering that successful implementations require a technical and business platform into which different solutions can be easily plugged to efficiently and effectively achieve the promised business benefits.  The cornerstones of this IoE platform include a robust connectivity and technology infrastructure, operational and management services and a range of vertical and horizontal solutions. 

In our experience, all IoE implementations require all of these technical and business elements to be successful.  Our vision is that effective IoE deployments will build an IoE platform that can be extended across the business, or even entire industries, to deliver a range of unique, value-added IoE solutions.

Starting from the bottom, the layers comprise:

 

1.    Network Connection – connecting all of the solutions, data and applications through fiber backhaul or licensed cellular.

2.    Network Access – a managed Wi-Fi, or other unlicensed wireless network, to connect all of the sensors and applications.

3.    Technology Platform – a platform to allow new devices and solutions to readily and securely “plug and play” into the overall architecture, and to connect to cloud storage and compute services.

4.    Vertical and Horizontal Solutions – the combination of devices and applications that deliver the unique solutions for different vertical and horizontal industry segments/.

5.    Platform Monetization – in some verticals, like smart cities and B2C, opportunities exist to leverage the platform and network to create new sources of revenue.

6.    Shared Operating Platform – a shared platform to consolidate the management, customer care and service issues across all of the solutions.

7.    Professional Services – services to support areas such as systems integration, planning and design.

8.    Program Leadership – services to program manage the entire implementation, operations and partner ecosystem. 

Successfully deploying and capturing the tremendous potential benefits of IoE is not just about cool things and applications.  A comprehensive technical, operations and management IoE platform is required to turn vision and promise into reality. 

Read the blog on Cisco.com

The Internet of Things is More Than Just “Things”

It has been 15 years ago since Kevin Ashton popularized the term the Internet of Things.  How could we have known then what that would come to mean and the huge impact that it would have on our lives?  Cisco projects that 50 Billion things (or devices) will be connected to the Internet by 2020; or, the equivalent of 6 devices for every person on the planet. This exponential growth of connected devices is fundamentally impacting both society and the economy—changing our lives forever.

However, with all of our focus and media attention on the Internet of Things, we are really missing the fundamental technology revolutions that are re-shaping our world.  Radical advances in processing, storage, wireless technologies and new ways of delivering technology are reshaping our world - all at a much faster speed and drastically reduced price. 

In my view, the Internet of Things is really a short-hand for the four technology pillars that are shaping a revolutionary new, connected world.

1.    Wireless – High speed, licensed and unlicensed, networks mean that people and devices no longer need to be tethered by a wire.  We can now collect and transmit information from things that are moving (e.g., automobiles, trains); things that are remote (e.g., oil wells, agriculture), or things that are too costly to wire up (e.g., city parking spots). 

2.    Big Data – The billions of applications, sensors and devices connected to the Internet will create zettabytes of data (10²¹ bytes, or 1 billion terabytes).  But, while the volume of data is just astounding, what is truly revolutionary is the ability to put that data to work.  Advanced data analytics is now capable of managing vast amounts of disparate data to reveal amazing relationships and insights, and drastically improve our predictive capabilities.  As a result, machines will be able to intelligently interact with machines, with limited, or no human intervention.

 

3.    Cloud – Not only does the cloud provide an efficient and cost-effective means to process and store all of the data created by the IoT, but it is essentially the “glue” that holds the Internet of Things together.  Cloud computing allows all of the sensors to communicate with the applications, and the control and monitor devices, across multiple networks, anytime and anywhere. 

4.    Devices (Things) – Of course, the devices, or things, in the Internet of Things are important.  Inexpensive devices and sensors that focus on specific tasks (e.g., temperature, carbon monoxide levels, heart rate) can now be made that are also economical on power consumption, or can tap into alternative sources of power.  And, they are all connected – to a network, the cloud and each other.  Through compelling and easy to use applications, we can access and control these devices through powerful, personal devices such as smartphones, tablets and PCs.

None of these technologies can ever truly revolutionize the world without another key technology – a fifth technology pillar:

5.    Security – The recent high profile Internet security breaches and data thefts highlighted in the media reinforce the importance of security and guaranteeing user online privacy.  Security is paramount to the growth and adoption of IoE.  We have to be able to assure users that their connected car and home will not be taken over by hackers.  Or, that the extremely personal data collected from medical devices is safe from prying eyes.  Businesses and cities will need similar assurances that the sensors that they have deployed and the data that they generate are 100 percent secure.

So, next time you see, or hear, the Internet of Things don’t think of it in the literal sense.  Rather, think of it as a short-hand for the Four + One technology pillars that are truly changing the world.  It is the radical innovation and combination of these five critical technologies that are really delivering the promise of the Internet of Things – reshaping businesses, economies and the way that we work, live, play, and learn.

Read the blog on Cisco.com

New Smart City Opportunities for Service Providers

Tremendous new opportunities are being created for technology vendors and service providers as cities around the world look to build out smart cities to reduce municipal costs, tap new sources of revenue, and improve the overall quality of urban life. The previous blog (Smart Cities Are a $7.5 Billion Annual Opportunity for Technology Providers) described all of the essential requirements of the smart city architecture and quantified the great opportunities for technology vendors and partners to help to create and operate these digitally smart cities of the future.  The last question to address is what are the specific opportunities for SPs and where should they play to extract the most value from the deployment of smart cities?

The potential revenue opportunities available to SPs depend upon the strategic fit to their business.  Specifically, we evaluated the opportunities across three strategic fit criteria:

1.    Core Business – How closely is the solution or service aligned with the SP’s core business (e.g., using existing assets, leveraging current business operations and expertise, in regional footprint)

2.    Stretch – To what extent would new investments or operations be required to deliver the solution or service (e.g., Capex for new assets, creation of new business operations, acquisition of new expertise, out of region play)

3.    Deal Dependent – To what extent would the nature of the deal and the governance structure influence the potential revenues available? (e.g., vendor or lead, city investment or PPP)

Assessing the smart city revenue opportunities across these criteria reveals a number of strategic options for how SPs can think about approaching the smart city opportunity:

·         Core Business – essential part of the existing SP business – Network Connection

·         Closely Aligned – typically some of these are part of the existing SP business, or not very far removed from existing capabilities – Network Access; Technology Platform

·         New Area – new investments and capabilities would be required, but typically leveraging some existing capabilities – Operational Services; Smart City Solutions

·         Stretch – these are area that are not typically part of the existing SP business and would require considerable investment and new build – Program Management, Orchestration

·         Deal Dependent – these are the new sources of monetization (subscription, advertising, analytics, etc.); the realization of which will be dependent upon the deal structure – Monetization

Returning to our example of a smart city deployment for a city like Seattle in the USA (metropolitan population of 3 million), service providers could potentially generate new revenue across each of the strategic options as shown below.

For a typically medium size city deployment, like Seattle, a typical service provider could potentially generate at least $15M in new annual revenues from core or closely aligned businesses. Or, roughly one-half of the total smart city opportunity.  A global market opportunity of $3 to $4 billion of new annual revenues is readily within the grasp of SPs to help cities to deploy smart city initiatives.   And, that number could increase considerably if a service provider is willing to make investments in creating new capabilities and expertise. 

While there is a significant upside of new potential revenue, smart cities often have a broader strategic context for service providers.  As described in How SPs Can Profit from Digital Cities, there are additional benefits, beyond the direct revenue benefits, that SPs should also evaluate when assessing their involvement and options in smart cities.  Consideration of Ancillary Benefits (e.g., rights of way for network deployment on city assets; upsell to city, local businesses and consumers; customer retention) and Indirect Benefits (branding; PR/communications; customer experience; regulatory relief; government relations), together with the new sources of revenue, can create a very compelling business case for a SP’s active involvement in smart city opportunities.

Read the blog on Cisco.com

Smart Cities Are a $7.5 Billion Annual Opportunity for Technology Providers

Cities around the globe are beginning to build out new digital services such as smart lighting, traffic, waste management and data analytics to reduce costs, tap new sources of revenue, create new innovation business districts and improve the overall quality of urban life. The previous blog (“How to Make Money from Smart Cities”) identified the great opportunities for the technology vendors and partners to help to create and operate these digitally smart cities of the future. 

The Cisco Smart City Business Architecture identifies a set of essential requirements in a number of different business layers essential for delivering and operating a successful smart city initiative.  In order to measure this opportunity, we developed a detailed economic model based on the business architecture.  We chose Seattle in the USA as a representative city, with roughly 3 million people in the greater metropolitan area, to quantify the potential opportunity available to technology providers.  Our model smart city initiative included covering 30 per cent of the city area with a Wi-Fi network and four key smart city solutions - traffic incident management, smart lighting, smart parking, safety & security.  In addition, we included the technology platforms, operational capabilities, and services in the Smart City Business Architecture. All of the services and solutions were modelled as managed services, generating an annual revenue stream to the provider.

Creating such a smart city solution for a city like Seattle could generate approximately $32 million in new technology and services revenues for technology vendors and partners.   This revenue is distributed across the architecture categories as follows:

Network connection and access comprise over one-third of the potential revenue opportunity.  The smart city solutions equal one-quarter of the total smart city opportunity and operations and leadership a further 19 percent of the potential revenue.

There are roughly 1,900 cities throughout the world with populations of 250,000 or more.  Twenty-six of these cities have in excess of 10 million inhabitants.  Making some very conservative assumptions on potential smart city deployments based on city size, we estimate that just over one-quarter (or 27%) of the world’s cities are viable candidates for smart city solutions over the next 3 to 5 years.  That equates to a global market opportunity of $7.5 billion of new annual revenues for technology vendors to help cities to deploy smart city initiatives to create significant new value for their cities and citizens.

Cities will need vendors and partners to provide solutions and services to make their smart city initiatives a success.  There are significant sources of new revenue available to providers who can deliver compelling solutions and value in each of the layers of the smart cities business architecture.   

 

Read the blog on Cisco.com

How To Make Money From Smart Cities

As cities around the world grow in size, we are beginning to see that strained resources, infrastructure, and services are causing natural limits to urban growth, which in turn limits the economic growth opportunity.  To combat this, cities as diverse as Barcelona, Nice, Kansas City and Songdo in South Korea, are starting to leverage advanced technologies and data analysis to create smart, connected cities.  These cities, and others around the globe, are building out new digital services such as smart lighting, traffic, waste management and data analytics to reduce costs, tap new sources of revenue, create new innovation business districts and improve the overall quality of urban life.

Not only will the creation of smart cities generate huge value for the cities and their inhabitants, but great opportunities will also exist for the vendors and partners who help to create and operate these digitally smart cities of the future.  However, the question is where and how can partners such as infrastructure providers, technology and services companies, and communication providers participate?  And, what types of revenues can they generate from helping to create smart cities?

Based on our extensive experience in creating and supporting smart cities around the world, Cisco has identified a number of essential ingredients required to deliver and run a successful smart city.  The Cisco Smart City Business Architecture categorizes a set of requirements in a number of different business layers, with each layer supporting the layer above and increasing the potential business return as we move up the stack. 

 

Starting from the bottom, the layers comprise:

 

1.    Network Connection – connecting all of the solutions, data and applications through fiber backhaul or licensed cellular.

2.    Network Access – a managed Wi-Fi, or other unlicensed wireless network, to connect all of the sensors and applications.

3.    Technology Platform – a platform to allow new devices and solutions to readily and securely “plug and play” into the overall architecture, and to connect to cloud storage and compute services.

4.    Smart City Solutions – the combination of devices and applications that deliver the specific solutions, such as smart lighting, parking and traffic management.

5.    Platform Monetization – opportunities to leverage the platform and network create new sources of revenue in areas such as advertising, data analytics and subscriptions

6.    Shared Operating Platform – a shared platform to consolidate the management, customer care and service issues across all of the solutions.

7.    Professional Services – services to support areas such as systems integration, planning and design.

8.    Program Leadership – services to program manage the entire implementation, operations and partner ecosystem of the smart city initiative.

Cities will need vendors and partners to provide solutions and services in each of the different layers of the business architecture to make their smart city initiatives a success.  Future blogs will explore how much revenue is available in each of the layers of the business architecture and how providers can best capture it.

 View on blog on Cisco.com

What do predictions about 5G mean for the Future of Mobility?

With the recent exponential growth of mobile devices, it is hard not to look ahead for the next big thing that will transform technology as we know it.

One current hot topic is 5G. While most industry experts agree it is a ways off, there are obvious reasons for excitement -- including how it will impact the future of mobility, the Internet of Things, and ultimately the Internet of Everything.

If 5G is all that it’s speculated to be, the mobility landscape will be in for a dramatic change , especially as businesses and organizations embrace all that 5G stands to offer such as ultra-fast network speeds and an increase in capacity.

However, while the industry grapples with understanding “just what is 5G” many experts, such as Peter Jarich, Vice President of Current Analysis Consumer and Infrastructure services, declares that it is “more relevant today than you might think” as 5G will introduce new network architectures. In addition, many of the technologies being developed today will be a part of the longer-term implementation of 5G.

Recently, I participated in a new Future of Mobility podcast with Peter Jarich to discuss what IT and business leaders can do today to prepare for the evolution of the 5^th generation of mobility and speculate on long-term implications. You can listen to the full recording here.

In this post, I’ll share some of those key insights from my discussion with Peter and discuss why 5G will revolutionize how we define mobility.

Let’s start at the beginning. What’s all the hype with 5G?

Since we are in the technology industry, it’s pretty standard to hype emerging solutions and ideas. However, the jump from 4G to 5G will be similar to the evolution of 2G to 3G, in that it will enable a broad range of new capabilities through lower costs and faster speeds.

We see a lot of buzz words surrounding 5G such “infinite capacity” and “virtualization of the network,” but really, it’s not just about how wireless technologies can be applied to what people are doing, but also how we connect everything to the network in a way to best meet our needs.

In terms of mobility, 5G is an enabler of a new world.

Gartner often refers to a Nexus of Forces – the convergence of four major tech trends: social interaction, mobility, cloud, and information – as a means of changing our business landscape. Today, we are seeing this convergence first hand. And it needs a network to support it. For example, the influx of mobile devices and applications are measuring heartbeats and monitoring brake pads on trains. This capability is being combined with an influx of data – available in real-time through the cloud.

From a network technology standpoint, 5G will continue to connect these capabilities.  It’s hard to predict exactly how all these pieces will come together, however 5G will be able to provide relevant networking – both over licensed and unlicensed spectrums – independent of people managing that process. With this in mind, 5G will be essential to bringing together people, process, data and things in an Internet of Everything world.

So, what can I do today to prepare for 5G?

I agree with Peter Jarich when he said, “You don’t need to wait until 5G arrives to figure out what you can do with it.”

If you’re a retailer, what does this mean?  How do you start running your business differently?  How do you start using mobility to engage with the customers that come in to your store like any e-commerce experience?

If you are a mobile operator, what does 5G mean for your business? In this new 5G world built on heterogeneous networks, how will your business need to evolve to stay competitive?

Regardless of your industry, the future of mobility – and next generation networks – will require every IT and business leader to redefine, reengineer and recreate business models based on the an infrastructure that is a lot more powerful and more pervasive than it is now.  5G isn’t here yet – but it is never too early to prepare and begin building a strategy.

Listen to the podcast: What do predictions about 5G mean for the Future of Mobility? featuring Cisco’s Stuart Taylor and Peter Jarich, Current Analysis.

How Will Mobile Operators Make Money in the Future?

The mobile market continues to evolve at a blindingly fast pace. It seems as though new faster, sleeker, and more powerful mobile devices are launched every day. And new categories of mobile devices are created almost overnight. The number of applications available to run on these revolutionary new mobile devices is staggering, numbering in the millions. The insatiable demand for mobile devices and new bandwidth-hungry applications is generating enormous amounts of mobile data. The Cisco Visual Networking Index™ (Cisco VNI™) predicts that these trends will cause global mobile data traffic to increase 11-fold from 2013 to 2018, surpassing 15 exabytes per month by 2018.

In spite of this phenomenal growth and insatiable consumer demand, many MNOs are struggling to profit from this mobile gold rush. Mobile operators are watching as their average revenue per customer (ARPU) flattens or declines. Despite increasing customer appetite for mobile data, minutes of use in their cash-cow voice business are falling off sharply, and usage of text messaging is peaking. In fact, Ovum predicts that 2018 will mark the first year of revenue contraction in the history of the global mobile market. Following four years of less than 1 percent growth between 2012 and 2017, revenues will decline by 1 percent in 2018, ending the year $7.8 billion lower than in 2017.

This mobile paradox - huge growth and customer demand, yet significant business and market challenges - seems to be unique to the mobile industry. When other industries, such as the automotive industry, face healthy customer demand, they build out more capacity, sell more cars, and reap greater profits. Mobile operators need to build out more network capacity to keep up with the voracious customer demand, but they are struggling to convert these investments into higher revenues and profitability. Much of this business is being lost to substitute over-the-top (OTT) services and to major shifts in usage behaviors. Mobile consumers would rather pay for these OTT services or be subjected to advertising from the likes of Google, Facebook, YouTube, and the App Store, than pay more to mobile operators.

Not only is it a challenging world for mobile operators to be doing business in, but a number of major disruptors are radically altering the entire mobile ecosystem. The rise of software platforms (from “walled gardens” to “walled ecosystems”), the availability of new fast mobile networks, and the Internet of Everything (growth of network-connected devices) are causing significant disruption and uncertainty across the industry. Equally, the move to cloud delivery models (“everything as a service”), the changing industry structure, and the role of regulators are fundamentally changing the mobile ecosystem.

The history of the mobile industry has involved huge and successful waves of revenue growth.  For a long time the mobile industry made huge sums of money from the mobile killer app - voice. However, high or unlimited minute plans and changing usage have meant the end of that growth wave. Messaging provided operators with perhaps one of the highest-margin and highest-growth products of all time, from any industry. OTT applications such as WhatsApp, Snapchat, and social media saw that revenue wave crest. Lately, MNOs are watching mobile data access rise to well over one-half of their total revenue, fueled by the insatiable consumer need to connect their mobile devices and applications. However, the crest of this third growth wave is visible on the horizon as the industry disruptors begin to shape a new mobile world.

The question for mobile operators everywhere is, what is this fourth, or next, wave of mobile growth? What are the new opportunities for them to monetize their assets and extensive investments in their mobile networks? How can MNOs continue to enjoy the success and profitability in this new mobile world that they have had in the past?
 
Questions to these answers can be found in our white paper:  Digging for the New Mobile Gold: The Next Generation of Mobile Monetization

Read the blog on Cisco.com