Who Will Be the Winners in the IoT Revolution?

Every new technology revolution creates new technology company powerhouses and relegates others to the ashes of history.  The PC revolution gave us the likes of Microsoft and Intel, the Internet revolution created companies like Cisco, Google, and Amazon, and lately the mobile revolution has created market giants like Apple, Samsung and Facebook.  

We are in the early days of another transformative technology revolution – The Internet of Things.  Connected everything to everything in a smart, data-rich world will fundamentally transform businesses, generate enormous economic wealth and create immeasurable social value.  There is immense opportunity for suppliers to help businesses to achieve these tantalizing new benefits.  But, who will be the winning suppliers in the IoT revolution?   

Despite the Internet (connectivity) and Things (devices) being the key terms in the title of the next technology revolution, this is not where the money will be made.  It is estimated that there could be up to 50 billion connected devices in the next five years.  But, these will be largely low cost, low power devices with long replacement cycles.  We have all seen what happens in the device and hardware business – a steep declining price curve.  For example, the cost of semiconductors on a per-transistor has plummeted 50 percent in the last 3 years.  Effectively, lots of volume but a low margin business. 

Service providers are salivating at the thought of connecting the estimated 50 billion inanimate objects to the Internet.  However, the vast majority of these devices will require very low bandwidth as opposed to the demands of chatty and data hungry mobile users.  Equally, most of these connections will be over unlicensed networks, like Wi-Fi, rather the lucrative cellular networks.  Chasing value from connectivity effectively becomes a game of “trading mobile dollars for IoT pennies.” 

While there might not be huge value from chasing catchy IoT term itself, there are good opportunities to generate good money from supplying the IoT revolution.  Success will result in the creation of the next tech giants of this new era.  There are three key areas for value creation: 

1. Platform.  Successful IoT implementations require a comprehensive business and technical architecture – the IoT Platform – to provide the building blocks of the underlying infrastructure.  This platform is comprised of 3 broad areas: 1) Technical – cloud storage and compute, security, etc.; 2) Data Management – capture, management, analytics, etc.; and 3) Management – policy, device, API and application framework. These platforms are horizontal plays that can be leveraged across multiple industry verticals, allowing suppliers to reap the benefits of economies of scope and scale.
2. Solutions.  Implementing effective IoT systems is complicated and often requires considerable customization.  Providers who can provide end-to-end solutions (hardware, software, data insights, implementation and services) will be clear winners.  Successful solutions will have an industry vertical wrapper to make them relevant to the customer’s particular needs.  These solution providers will create new business models to deliver “IoT as-a-service” and outcomes-based financial models.  For example, IoT-enabled machinery as a service, or payments based on energy savings will be new models that will reduce the risk to businesses and ensure successful IoT implementations.  Providers who can successfully deliver solutions, vertical expertise and new business models will create deep and enduring relationships with their customers.
3. Business Integration.  IoT is only as good as its successful implementation and adoption by the business.  As we saw in the Internet revolution, there is a big need for outside providers to help companies to make this transition and to realize the promised benefits of the new technology.  Key business integration needs include: 1) Business Consulting –identifying opportunities, creating the business case, re-engineering the business and change management; 2) Systems Integration – integrating IoT systems with existing systems, data and processes; 3) Management – program management, ongoing operations and outsourcing of key operation

Helping to deliver the IoT revolution presents huge opportunities for business and technology suppliers.  The winners will be those companies that bring distinctive technologies, innovation, new business models and deep industry knowledge to the three key areas of IoT value creation.

Is Big Data the Eyeballs of the Dot-Com Era?

Remember the halcyon days of the Dot-Com era?  A frothy stock market, venture capital money flowing like water and famous sock puppets characterized the exuberance of the day.  One company (Boo.com) spent $188 million in just six months to create an online fashion store.  And 16 start-ups spent over $2 million each for a 30 second advertising slot during Superbowl XXXIV to crow of their existence.  But, all of the money didn’t matter – the mantra was all about capturing “eyeballs.”

The business theory of the day was that if you could get people to your website (the eyeballs) then somehow the money would come gushing in.  You were a heretic if you questioned how that would happen.  Eyeballs were a very monetizable item, so the more of them the better.  Of course, we know what happened.  The Dot-Com era came to a crashing end when the market finally realized that these companies really needed to have a viable business model, rather than waiting for the eyeball prophecy to be fulfilled.

I can’t help wondering if the exuberance, and some might say blind faith, in big Data is similar to some of the fallacies of the Dot-Com era?  Much of the Big Data mantra is all about creating and collecting as much data as possible because it has to be valuable.  The more of it you have, the more value you can create. 

Don’t get me wrong.  There is huge business and social value to be derived from Big Data.  There are numerous examples in medicine, education, business and government where data analytics has added huge value to the services and customer experience.  There countless opportunities to use data analytics to drive ever new sources of value.  The thing that I am challenging is the belief that by collecting huge amounts of data that it can be directly monetized – or turned into money.

Mobile users, public Wi-Fi, smart city deployments and user-centric applications are generating huge amounts of data.  Typically, huge streams of personal data like location, preferences, application usage, and device type are being generated by these uses.  The operators of these services believe that they are now sitting on a goldmine.  Their dream is to turn this valuable personal data into mounds of cash by selling it to advertisers and others who want to better reach and target end users.  There seems to be great excitement and expectations about how much this data is worth.  Many business cases now seem to use data monetization as a kind of “Factor X” to justify otherwise questionable business cases.

Like the eyeballs of the Dot-Com era, data monetization is all about advertising.  Advertising is a well-known business with well-established governing business principles.  At its simplest, advertising is a function of the ability to target a customer times the number of advertising impressions, or potential customers, that you can reach.  For example, a golf club manufacturer is willing to pay more to advertise to an avid golf player than the general public.  This is why big data is so valuable.  Personal information like location, device and app usage can be used to provide a much better target customer than general mass advertising.

We looked at the potential value of this data in considerable detail for a prospective large smart city deployment.  We discovered that we could definitely make money by selling the data generated on our smart city network, but it wasn’t that different than traditional advertising models.  Our proposed digital signage solutions generated roughly the same revenue as traditional billboards on the sides of bus shelters.  Similarly, pushing ads to mobile user devices generated marginally more advertising revenue than handing out flyers to pedestrians.  In total, we calculated that we could generate roughly $1.5 million in new annual advertising revenues.  To put this in perspective, that is just 5 percent of the total revenues that could be generated from delivering the total smart city solution.  The data can definitely be monetization, but it is unlikely to generate the mounds of cash that is eagerly expected from many operators.

As with Dot-Com eyeballs, once the hype and the naïve assumptions are wiped away, there is no real magic to big data monetization.  While there is money to be made from data monetization, it is highly unlikely to be a major revenue generator.  And, by no means should the promise of monetizing data be used to prop up weak smart city and Internet of Things business cases. 

Big Data has been described as the “New Oil.”  That may be a very attractive and compelling metaphor in a world where a barrel of oil sells for $100 or more.  But, remember oil can equally drop to $40 to $50 a barrel as we are currently witnessing.

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

Digging for the New Mobile Gold: The Next Generation of Mobile Monetization

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. 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.

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. This mobile paradox - huge growth and customer demand, yet significant business and market challenges - seems to be unique to the mobile industry.  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.

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?

Unfortunately there is no obvious tsunami-size fourth monetization wave cresting on the horizon for mobile operators. Unlike the preceding three waves, there will be no gold rush created by a single killer app, such as voice, messaging, or data. A lot of gold still remains in the mobile business, but it is going to come from multiple sources and require some sophisticated mining techniques. 

Cisco believes that there are four key strategic thrusts, or monetization areas, for operators to create new value from their mobile business.

1. Cost Optimization

While not a revenue-generating opportunity in itself, cost leadership will be a critical component in creating value for service providers. In Cisco’s experience, working with our major service provider customers, we have been able to improve overall service provider OpEx efficiency by at least 10 percent. Key activities to deliver these improvements include: virtualized production architectures; next-generation mobile access; improved business agility; and, new business and operating models.
2. Pricing
Pricing has always been an important tool for mobile operators. While pricing is, in fact, the most powerful of a firm’s profit levers, it is often overlooked by managers. Key considerations in enhancing profitability through pricing include: tiered pricing and usage caps; value-based pricing; shared plans for Internet of Everything (IoE) readiness; plan rationalization and simplification; and, bundling.

3. Network-Enabled Features

Mobile operators realize that many of the assets and capabilities in their network and operations allow them not only to improve the quality of the user experience, but also to sell relevant information and services to other interested parties. Key opportunities to monetize network-enabled features include: quality of service (QoS); policy; APIs; data analytics; and, security. 

4. New Solutions and Services
As the world becomes truly mobile, service providers have a unique opportunity to use their core technology and business assets to create new solutions and services to enhance their users’ experience and utility, reshape businesses and business models, and create new sources of value beyond their core access business. Potential new solutions and services that mobile operators could successfully deliver include: mobile cloud; Internet of Everything and machine-to-machine (M2M); connected vehicles; enterprise and small and medium business (SMB) solutions; OTT collaboration; and, location and data analytics solutions.

While mobile operators can derive new and incremental business value by focusing on all four of these strategic monetization opportunities, Cisco believes that the truly untapped gold lies at the heart of the mobile operators - their network. This new gold exists in the information and capabilities deep in the core network elements and infrastructure.  The key to mining this new gold and creating new and lasting business value involves building, and successfully delivering, the monetization layers that lie above the network. The features/services and solution layers extract the inherent technical value from mobile networks and translate these into market-ready products and services that can be sold through different channels to the ultimate end user.

Further details on these new mobile monetization opportunities can be found in our white paper:  Digging for the New Mobile Gold: The Next Generation of Mobile Monetization

Understanding the Changing Mobile User: Gain Insights from Cisco’s Mobile Consumer Research

Video highlighting the results and interests of our mobile consumer research.

View here

A World of Wi-Fi Opportunities

An article that I recently published in Mobilize Magazine

A World of Wi-Fi Opportunities

New research reveals substantial business opportunity within Wi-Fi services.

Cisco recently conducted an online survey of 620 U.S. mobile users to better understand their needs and behaviors, current and future use of public hotspots, and unmet demands. The results were clear:

·    Consumers increasingly rely on and prefer Wi-Fi for connecting their devices to the Internet.  In fact, the Cisco research reveals that the average smartphone user employs Wi-Fi 44 percent of the time. This is a significant increase from just one year ago, when one-third of the total smartphone data usage was through a Wi-Fi connection, rather than a mobile network.

·    A remarkable 70 percent of mobile users are now using public Wi-Fi hotspots. According to the survey, close to six out of ten public Wi-Fi users now connect to a hotspot at least weekly, and one-third connect more than once a week. Users spend an average of 44 minutes connected to these hotspots. 

What does this mean for consumer-focused companies, service providers, and other businesses? Opportunity. And lots of it.

 “Many innovative companies are discovering new ways to make money by unlocking the inherent business value of Wi-Fi,” says Stuart Taylor, Director of the Service Provider Transformation Group at Cisco. “They can create localized and personalized mobile services, for example, which improve the customer experience and provide a vast amount of business intelligence.”                        

Taylor highlights three business models that are ripe with opportunity: 

1.   Enhanced Retail Experience. Imagine a service that would enhance your in-store retail shopping experience on your own Wi-Fi-enabled mobile device at a large retailer. The service could include such things as product information, an in-store location finder, integrated shopping lists, coupons for special offers, and automated checkout.  

2.   Enhanced Airport Experience. Imagine a service that would enhance your experience when you are in an airport. The service could include such things as airport information, mobile check-in, maps and directions, coupons for special offers at shops and food outlets, and flight and gate alerts. 

3.   Enhanced Public Venue Experience. Imagine a service that would enhance your experience on your own Wi-Fi-enabled mobile device while you were in a large public venue, such as a shopping mall, amusement park, sports stadium, or resort. The service could include such things as venue information, maps and directions, coupons for special offers at shops and food outlets, and information on upcoming events.  

The Cisco research reveals consumers are eager to embrace such services to enhance their experiences in retail locations, airports, hotels and resorts, stadiums, and shopping malls. And while many consumers are concerned about who will have access to their data and how it will be used, most recognize that they will have to relinquish some of their personal information to get a better mobile experience.  

Taylor offers several pieces of advice for businesses seeking to capitalize on the emerging prospects of Wi-Fi services: 

·    Actively pursue new Wi-Fi monetization opportunities. Develop new offers that enhance the customer experience and deliver new sources of revenue.

·    Take advantage of technical and business capabilities. Combine the inherent capabilities of Wi-Fi with personal metadata and customer relationship management (CRM) data to create compelling new localized offers.

·    Develop proactive personal data strategies and communications. Undertake extensive customer research to formulate comprehensive data policies and strategies to allay customers’ concerns.

·    Actively communicate privacy policies. Make customers aware of privacy policies and the value delivered from the localized services.

“If your business isn’t providing Wi-Fi access to customers then it better be the number one item on your agenda,” Taylor suggests. “Customers expect it now almost everyplace they do business, and if they don’t find it they are voting with their feet.”

Discover What Consumers Want from Wi-Fi and Mobile

Consumers have a true love of mobile devices, as evidenced by recent Cisco mobile consumer research.  Significant percentages of respondents reported using everything from laptops, smartphones, and tablets to eReaders and mobile gaming devices. Americans now own an average of three mobile devices each, up from 2.6 devices in the 2012 Cisco mobile consumer study.  Perhaps more significant, our findings show that the number of smartphone users has grown by 21 percent in just one year, now reaching 68 percent of the population, at the expense of basic phones. Most remarkable is that the number of tablet owners has expanded by over 90 percent in just one year, with close to four out of ten consumers possessing one of these new devices.

The insatiable demand for mobile devices and new applications that use large amounts of bandwidth is generating staggering volumes of mobile data. In parallel, the use of Wi-Fi for Internet access is exploding, as more mobile devices are Wi-Fi enabled, the number of public hotspots expands, and user acceptance grows. Most mobile operators now realize that offloading data traffic to Wi-Fi can, and must, play a significant role in helping them avoid clogged networks and unhappy customers. Many service providers are now constructing extensive networks of public Wi-Fi hotspots for use by their mobile or home broadband customers. The networks allow mobile offload and help enhance and differentiate their offerings. In addition, service providers are struggling to understand new business models for making money from Wi-Fi.  However, very little is currently known about how consumers are actually using public Wi-Fi and how they view the overall experience. Nor is there much information about mobile users’ appetite for these new services, their willingness to use them, or their privacy or security concerns surrounding these data-based services.

To learn more, Cisco conducted a survey of 620 U.S. mobile users to understand their needs and behaviors, use of devices, applications and mobile access technologies, and how they have changed since our 2012 mobile consumer study.

Top 10 Research Findings

 

1.    It’s all about the home.

2.    Wi-Fi is the connection of choice for all mobile users.

3.    LTE is a complement to Wi-Fi, not a substitute

4.    Public Wi-Fi is now a big part of the mobile life.

5.    Consumers are communicating and surfing at established hotspots.

6.    Public Wi-Fi needs to be faster, more secure, and in more locations.

7.    Users are generally satisfied with public Wi-Fi, but have concerns with some locations.

8.    Mobile users are interested in localized, personalized, and enhanced experiences when using Wi-Fi.

9.    Consumers are willing to surrender personal data for a better experience.  But they want control.

10.  Small cells provide an opportunity to improve mobile quality and coverage and reduce churn.

The complete results can be found at Discover What Consumers Want from Wi-Fi and Mobile.

Cisco mobile consumer research clearly demonstrates that consumers are using a greater number of mobile devices to do a greater number of things. As demand for mobile devices and network connectivity continues to grow, Wi-Fi, small cells, and traditional macro mobile networks will all be critical to meeting the needs of mobility-enabled consumers. Service providers are in the enviable position of being able to successfully integrate these networks and deliver new sources of value.

This white paper is part of a series presenting 2013 Cisco mobile consumer research findings.  Previous blogs and white papers have highlighted What Mobile Consumers Want from Public Wi-Fi, Understanding the Changing Mobile User and Unlocking Wi-Fi Enabled Value-Added Services.  

 

Read the blog on Cisco.com

Unlocking Wi-Fi Enabled Value-Added Services

Competing with the virtual, e-commerce world is becoming increasingly challenging for real-world businesses. Traditional retailers have long envied the massive amounts of valuable data that online retailers have available to help them better understand customer behavior and implement winning marketing tactics. Online retailers know valuable information such as how frequently customers return, how long they spend on their sites, what the customers looked at but didn’t buy, and where they went before and after coming to the site. Businesses as diverse as hotels, banks, stadiums, airports, and large public venues are all looking for ways to get similar detailed data on customer activities in their facilities, so they can improve the customer experience and their bottom lines. The data and insights have not been available to bricks-and-mortar facilities, until now.

That situation is changing through the growing availability of Wi-Fi in business locations. Many retailers, hotels, and other businesses are increasingly offering Wi-Fi as a service that allows their customers to connect mobile devices to the Internet. Hidden in this valuable service is a vast amount of information and insight, which retailers and others can use to deliver tangible value to their bottom lines. Hypersensitive location information, device details, identification of returning customers, and sophisticated path analysis are just some of the customer data captured by Wi-Fi networks. Businesses are now realizing that the data and capabilities offer new ways to improve the customer experience and support a range of market-leading monetization models.

For many businesses, these new location-based experiences and monetization models offer new ways to compete with e-commerce. However, very little is currently known about mobile users’ appetite for these new services, their willingness to use them, or their privacy and security concerns surrounding these data-based services.
To learn more, Cisco conducted a survey of 620 U.S. mobile users to understand their needs and behaviors, use of devices, applications and mobile access technologies, and how they have changed since our 2012 mobile consumer survey.

The study revealed that consumers are very interested in new localized services and solutions that are delivered directly to their mobile devices.  Our findings show that consumers would embrace such services to enhance their experiences in retail locations, airports other large public venues, such as stadiums or shopping malls.  In addition to access to free Wi-Fi, mobile users value the convenience and efficiency of the service, the ability to locate themselves in the venue, and being offered personalized deals or coupons.  However, they are concerned about security on their devices and the use of their personal data.   

We explored these personal data concerns in much more detail.  The good news is that consumers are willing to sacrifice some of their privacy and personal data to derive the value of these personalized services, but they want to be in control.  They want to control what data can be used, when and where, and by whom, and they want to control the experience.  Our research revealed that consumers have a “data sharing threshold”.  Beyond this threshold consumers do not feel that the value of the benefit justifies the value, or intimacy, of the personal data that they are being asked to give-up.

Wi-Fi value-added services allow businesses to compete on more equal terms with the data-driven world of e-commerce, and the financial returns more than justify the investment in Wi-Fi infrastructure. Best of all, as our study shows, consumers want these enhanced mobile experiences and the value that they offer.  Of course, consumers have privacy concerns, but these concerns are not insurmountable and incompatible with the new localized services if the insights from the research are incorporated into the design of these services.

The complete results can be found at Unlocking Wi-Fi Enabled Value-Added Services

This white paper is part of a series presenting 2013 Cisco mobile consumer research findings. Previous blogs and white papers have highlighted What Mobile Consumers Want from Public Wi-Fi and Understanding the Changing Mobile User.  

Read the blog on Cisco.com

Small Cells are Big Things in the Middle East

I recently had the honor to speak at the Small Cells Forum in Dubai. One thing is certain: Wi-Fi and small cells are certainly important throughout the Middle East and Northern Africa.  Operators from throughout the region came together to learn how they could deploy small cells to meet their growing customer demands and improve their own bottom-line in the process. 

I took away six key messages from the conference on the future of mobility in the Middle East:

1.    Small Cells Are the Next Big Thing: Operators from large countries like Saudi Arabia to smaller countries like Qatar all wanted to learn how they could use small cells to help them cope with the huge traffic that they are experiencing on their mobile networks and to  improve mobile coverage, especially indoors and in heavily congested areas. 

2.    Small Cells Are Not an Add-On: SPs realize that future of mobile networks lies in a heterogeneous network (“HetNet”) world where licensed and unlicensed mobile networks coexist and complement each other.  With their unique strengths, Wi-Fi and licensed small cells are quickly becoming important components of an integrated access portfolio complementing the macro mobile access network.

3.    A New Enterprise-SP Partnership: Enterprises have already invested in Wi-Fi in order to bring mobility to the workplace.  However, they now face the rising challenge of BYOD – employees using their own devices to work and expecting the same service and experience that they enjoy outside of the office.  Several speakers explained how enterprises want to partner with service providers to provide a highly reliable integrated Wi-Fi and cellular service to their employees.  A critical first step is using small cells in enterprises to improve the quality and coverage of mobile voice in the workplace.

4.    Vertical Solutions Are Key: Several speakers provided excellent details and case studies of how SPs need to be creating specific vertical solutions to be successful in selling small cell solutions in the enterprise market.  The key verticals that offer the biggest opportunities and have the most unique needs include: education, hospitality, hospitals and retail.

5.    Wi-Fi Offload Comes to the Rescue: Saudi Arabia has the highest mobile growth in the region and some of the highest mobile usage in the world.  The country expects the number of mobile subscribers to increase 5-fold over the next 3 years and mobile broadband data to triple over the same period.  Amro Mohamed Al Buti, Head of Application and Content Design at Saudi Telecom described a fascinating case study of how they are using small cells to intelligently offload up to 7% of their anticipated mobile traffic, saving them $3.6 Billion by 2020.

6.    It’s All About the Data: Operators and vendors alike recognize the value that is waiting to be released from small cell technologies.  Hidden in the technology is an incredible amount of information and insight that providers can exploit to deliver tangible value to their bottom-line.  Data analytics and location-based services offer real opportunities to monetize small cell deployments.  The challenge to all participants was: “stop letting Google extract the information from your network and create value.”

 As I stared down on Dubai from the Burj Khalifa – the tallest manmade structure in the world (2,722'/830 m) – I reflected on the future of small cells in the Middle East.  However, as I connected to the local Wi-Fi at the “Top of the World” to instantaneously send photos of the stomach churning view to my family back home, I realized that much of that future has already arrived.

 

View on Cisco.com

Wi-Fi Value-Added Services Improve the Retail Bottom-line

Retailing has always been a tough business.  But, the move to online shopping, the challenging economy and changes in shopper’s behavior has placed even more pressure on traditional retail margins.  Retailers are constantly looking for ways to get more people in to their store and to spend more.  Traditional retailers have long envied the massive amounts of valuable data that online retailers have available to help them better understand customer behavior and implement winning marketing tactics.  Online retailers know such valuable information as: how frequently customers return, how long they spend on the site, what they looked at but didn’t buy and where they went before and after coming to the site.  With this information, online retailers are able to rapidly adjust prices, promote certain items, and re-configure the layout of the site in almost real-time in order to increase the probability and value of a sale.  None of these data and insights has been available to bricks-and-mortar retailers - until now.  The increasing availability of Wi-Fi in retail locations is changing all of that.

Shopping malls and retailers are increasingly offering Wi-Fi to their customers as a service to connect their mobile devices to the Internet.  Hidden in this valuable service to the mobile user is an incredible amount of information and insight that retailers can exploit to deliver tangible value to their bottom-line.  In a previous blog, I identified 8 core technical capabilities available in many Wi-Fi networks that allow the collection of massive amounts of useful information that can be turned into key enablers of business value.  Hyper-sensitive location information, device details, identification of returning customers, and sophisticated path analysis are just some of the shopper data that are captured by the Wi-Fi networks.  Best of all, retail venues can now effectively collect valuable information from anyone who enters their store with a Wi-Fi activated mobile device in his pocket.  With over 50 percent of adults carrying Wi-Fi enabled smartphones, and growing, retailers can now capture information on the majority of their shoppers.  However, this does not raise personal privacy issues because only the MAC address of the device is collected and the information is aggregated across all users.

Aggregating the information available from the Wi-Fi access points provides unique insights into where people go, their common paths, and most visited places. Mall owners, for example, are using this detailed data to justify higher rents for stores in high-trafficked areas or to measure the impact of signage on customer traffic patterns. Trend analysis and history comparisons of data can show the effectiveness of changes in marketing programs or store layout. Retail chains are using footfall traffic patterns derived from Wi-Fi connection data to help them better locate new stores in highly trafficked sites of target shoppers.  Shopping malls and large box retailers can use the data to improve operations and security. Real-time shopper traffic flow patterns highlight congestion points and areas demanding more shop assistants, cashiers or security guards. 

Retailers are combining the location and user information from the Wi-Fi access points together with customer relationship management (CRM) and customer loyalty data to provide personalized experiences and offers to shoppers at points of purchase in the stores. Equally, retailers are combining location-based services and shopper services to provide additional product information and help customers navigate throughout the store.  While these Wi-Fi Big Data services may raise privacy concerns, shoppers are typically receptive to the idea if they have control over how their information is used and they are getting real value in return for sharing it with the retailer.  Our mobile user research confirms that shoppers are interested in an enhanced in-store shopping experience (52 percent were either somewhat or very interested) because they think that it will make them more efficient and enhance their shopping experience. Mobile users particularly liked the idea of personalized deals and coupons that would be presented when they were looking to buy something, rather than before or after as is now typically done.  

Despite concerns of show-rooming and loss of in-store sales to online purchases, many leading retailers are embracing mobility and including it as an integral part of their strategies. And many are outfitting their stores with public Wi-Fi access as a cornerstone of those strategies.  Wi-Fi value-added services not only allow retailers to compete on more equal terms against the data-driven world of online retailing but the returns more than justify the investment in the Wi-Fi infrastructure.  Retailers are finding that value-added services and insights are driving up customer spend, store dwell time, and allowing them to run more effective marketing campaigns, resulting in a better overall customer shopping experience.

Further details on how service providers can create new and innovative sources of value from Wi-Fi can be found in our recent white paper:  Wi-Fi: New Business Models Create Real Value for Service Providers

Read the blog on Cisco.com

Creating a Wi-Fi Monetization Virtuous Circle

In the decade or so that Wi-Fi has existed, most technologists and mobile industry executives viewed it as the “poor cousin” to licensed mobile communications.  Now mobile operators around the world are asking how they can effectively use Wi-Fi to help them cope with the huge surge in mobile data traffic and to meet customer needs and expectations.  In addition, they are all eager to understand how they can make money from Wi-Fi and to make the business case to justify investments in deploying Wi-Fi networks. 

Based on extensive research and consultative engagements with leading global service providers Cisco has identified a number of new and innovative business models which we characterize as The Wi-Fi Monetization Pyramid – 3 layers of monetization opportunities which support the subsequent layers below (described in detail in our recent white paper W-Fi: New Business Models Create Real Value for Service Providers).

Approaching the fundamental question of Wi-Fi monetization as a pyramid, or series of layers of business opportunities, creates not only significant new business value for a service provider, but also a virtuous circle that leads to ever-increasing sources of new Wi-Fi value. As the Wi-Fi Monetization Virtuous Circle outlined below shows, the reinforcing network and scale effects of Wi-Fi investments not only deliver unique business benefits at each of the levels, but also establish a valuable platform to exploit additional monetization opportunities at the next level.

 

Deploying an initial public, home, and business Wi-Fi network provides a compelling ROI through Baseline business models. However, after this initial network is established there are now New Revenue opportunities that can be built on this platform. And, expanding the network through managed services and roaming agreements at key venues allows service providers to offer additional Value-Added Services to extract new sources of value from the Wi-Fi network. Now we have come full circle: Expansion of the network to new venues and the addition of new services make the network even more valuable to end users, making the ROI for the baseline models even higher.

 

Service providers who are successfully delivering business value from Wi-Fi do not view individual monetization opportunities in isolation.  Rather, they view investments in Wi-Fi as a platform upon which they can deliver a pyramid of new business models, creating a Monetization Virtual Circle of increasing business value.

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