IoT MVNOs represent a vital part of the IoT supplier ecosystem. However, in a market that is maturing and evolving they need to be very aware of how growth opportunities are opening and closing.
The MVNO Market Landscape
Historically, the IoT connectivity market was dominated by specialist providers, mainly MVNOs. However, over time, traditional MNOs recognized the potential and began offering IoT connectivity services. Now, there's a return to specialization, with some MNOs shifting focus away from IoT connectivity, and others carving out separate IoT businesses as IoT becomes ‘mainstream’.
TecFutures estimates that MVNOs now account for around 50% of enterprise IoT connections in an evolving but still high growth market.
Of course, MVNOs come in multiple flavors.
At the higher end, we see full MVNOs with competitive differentiators of having a core network and a range of innovative service solutions.
Behind them are less differentiated MVNOs still owning network infrastructure.
Those without infrastructure may compete on value added services, be service resellers, or simply provide SIM capabilities.
Furthermore, MVNOs have differing focus when it comes to market development. We can classify these as follows:
Application-Specific MVNOs: These MVNOs focus on IoT applications such as asset tracking or smart metering, providing specialized services optimized for these use cases.
Geographic-Specific MVNOs: Operating within specific regions or countries, these MVNOs offer IoT connectivity tailored to local market requirements and regulations.
Global Connectivity MVNOs: Offering IoT connectivity across multiple regions and countries - these MVNOs enable seamless international deployments with unified management platforms.
There are then other forms of MVNO specialization.
LPWAN MVNOs: Specializing in low-power IoT devices, they utilize technologies like LoRaWAN or Sigfox for cost-effective solutions in smart agriculture or smart cities.
Satellite (and hybrid satellite / cellular) MVNOs: Leveraging satellite communications, these MVNOs provide reliable IoT connectivity in remote areas, suitable for maritime or emergency response applications.
Platform-Integrated MVNOs: Offering integrated IoT platforms alongside connectivity services, they provide end-to-end solutions for device management and data analytics.
Customized Solutions MVNOs: Tailoring IoT connectivity solutions to individual customer or industry needs, they work closely with clients to develop tailored solutions addressing specific enterprise challenges and goals.
The question is how each of these groups will fare in a highly competitive market characterized by falling prices and increasing consolidation. The related question is what strategies are available to MVNOs, and what actions are needed now to secure future growth.
Routes to Growth
Our research tells us that an MVNO cannot be all things to a potential customer, particularly when running up against larger MNOs.
The market is evolving, and two main strategic choices are emerging. The first is to build a volume business and the second is to focus on differentiation as a competitive advantage. Doing neither of these is also an option though with huge risks to survival.
Build Volume / Hyperscale
Hyper-scaling is a clear competitive trend in enterprise IoT. For example, Vodafone IoT manages over 170m connections currently with clear sector differentiation. If a supplier is to compete solely on cost, then they need to ensure that the incremental revenue is greater than the marginal cost of a connection.
Focus on Niche Markets
Target specific industries, verticals or use cases where there's high demand for IoT connectivity but limited competition. By specializing in niche markets such as agriculture, healthcare, or smart cities, MVNOs can tailor their offerings to meet the unique requirements of these industries and build a strong presence.
Understanding the Growth Drivers
Why does TecFutures see those particular growth strategies as important? They are based on our understanding of what is fueling enterprise IoT growth and in particular how this applies to MVNOs. TecFutures has identified five major market drivers that are serving as a springboard for IoT:
Market Evolution Beyond Early Adopters
As IoT matures beyond early adopters, rapid growth will be driven by mainstream uptake in industries such as manufacturing, healthcare, agriculture, transportation, and smart cities.
A maturing market also highlights the demand for optimized solutions across multiple technologies and device lifecycles.
Connectivity Evolution and Simplification
The evolving landscape of IoT connectivity is simplifying market entry and fostering innovation among new entrants. We are seeing scalable global connectivity solutions that can accommodate varying IoT deployment sizes, from small-scale projects to large-scale enterprise deployments.
Advancements in technologies such as 5G, LPWAN, and Edge computing are also driving the growth of IoT MVNOs, enabling faster and more reliable connectivity.
Added Value Services Becoming Easier
IoT MVNOs are able to offer specialized services including dedicated IoT platforms, device management, security, compliance, and data analytics to meet the unique requirements of IoT deployments.
Partnerships with device manufacturers, solution providers, and other ecosystem players help create end-to-end IoT solutions.
Cost
IoT MVNOs can offer cost-effective connectivity solutions tailored specifically for IoT devices, with flexible pricing models and efficient network management. MVNOs may well have more price agility than other ecosystem players with the ability to move into competitive white space with well-priced solutions.
Competition and Risk
As IoT adoption becomes more commonplace, enterprises will be looking at ways to gain an additional competitive edge and MVNOs must be able to help those enterprises achieve their IoT related commercial objectives.
In the same vein, enterprises will expect MVNOs to manage risk in a more transparent way as their track record of successful implementations grows.
Avoiding Pitfalls: Risks and Challenges
While IoT MVNOs are have major growth opportunities ahead, they also face challenges on a number of fronts:
Variable Network Coverage, Interoperability and Quality
Ensuring reliable network coverage and quality is crucial for IoT MVNOs. They may face challenges in providing adequate coverage, especially in remote or rural areas, which can impact the performance and reliability of IoT devices as well as scalability of applications.
The IoT ecosystem also presents interoperability challenges. MVNOs may encounter difficulties in ensuring seamless connectivity and integration between different IoT devices and platforms, especially when dealing with heterogeneous networks and technologies.
Rising Security Concerns
IoT devices are often vulnerable to cybersecurity threats, and ensuring the security of data transmitted over IoT networks is a significant challenge for MVNOs. They need to implement robust security measures to protect against data breaches, unauthorized access, and other cyber threats.
Complex Regulatory Compliance
IoT MVNOs need to comply with various regulations and standards related to data privacy, security, and permanent roaming. Navigating the complex regulatory landscape across different regions can be challenging and requires continuous monitoring and compliance efforts.
Customer Education and Support
Many businesses are still in the early stages of IoT adoption and may lack awareness or understanding of IoT technologies and their potential benefits. IoT MVNOs need to educate customers about IoT solutions, address concerns related to security and privacy, and provide ongoing support to ensure successful deployment and usage of IoT devices.
Riding the Wave: What is Required to Action these Strategic Choices?
Thoroughly Understand Enterprise IoT Adoption Drivers
IoT connectivity is integral to enterprise digital transformation initiatives, enabling the collection of data for process automation and operational optimization. However, IoT is a business and not a technology decision. Enterprises are looking to leverage technology for business advantage, provide a better customer experience, increase process efficiencies and reduce costs. MVNOs can create additional value for customers and differentiate themselves from competitors.
Excel in Global Connectivity Solutions
Provide global connectivity solutions that enable seamless IoT deployments across different regions and countries. By offering a single platform for managing IoT devices worldwide, MVNOs can simplify logistics and management for multinational businesses and attract customers looking for international connectivity solutions.
Move Beyond Connectivity Alone
In a highly competitive IoT market, MVNOs need to differentiate themselves. A pure connectivity play alone is no longer a guarantee of success. Suppliers are now offering a range of value-added services to their core offerings which increases customer appeal and increases ‘stickiness’.
MVNOs need to forge strategic partnerships with device manufacturers, solution providers, and other ecosystem players to create integrated IoT solutions. By collaborating with complementary companies, MVNOs can leverage their combined strengths to offer more compelling and innovative solutions to customers.
Pay Attention to Commercial Models
Offer customized pricing plans and flexible contract terms that cater to the specific needs and budget constraints of different customer segments. By providing transparent pricing and flexible contract options, MVNOs can attract a wider range of customers and increase customer satisfaction and loyalty.
Stay Ahead of the Technology Curve
Invest in emerging technologies such as 5G, LPWAN, Edge computing, AI, digital twins and IoT security. By embracing cutting-edge technologies, MVNOs can enhance the performance, reliability, and security of their IoT offerings and position themselves as leaders in the market.
Partner with Your Customers
Invest in customer education and support initiatives to help businesses understand the value proposition of IoT technologies and navigate the complexities of IoT deployments. By providing educational resources, training programs, and responsive customer support, MVNOs can empower customers to make informed decisions and drive adoption of IoT solutions.
How TecFutures Can Help
TecFutures recognizes that growing an IoT business in a highly competitive market comes with its challenges. We help create strategic roadmaps that help to answer the fundamental questions that an MNVO needs to address.
The TecFutures Market Acceleration Framework enables MVNOs build competitive advantage and drive revenue growth in the fast-evolving IoT landscape. As a modular framework for research-based consulting, it is designed to build on three strategic and tactical areas for commercial success.
Market and Product Demand - helping to drive growth and match product propositions to changing market needs
Competitive Response - ensuring effective differentiation and innovative market positioning
Growth and Expansion - developing the strategic building blocks for growth in new and adjacent markets
At TecFutures, we're committed to helping our clients.
Contact Rysio Pakula at rysio@tecfutures,com to learn more about how we can support your journey towards ongoing success in enterprise IoT.
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