The M2M Value Chain: Getting to Market
Robin Duke-Woolley, CEO Beecham Research Ltd.
The "value chain" has been a basic business concept for many years. Each link in the chain "adds value" in a somewhat linear progression from raw materials to finished products or services. It is a useful concept for identifying key elements in the route to market for new product ideas, and for highlighting where new profits can be made.
Figure 1 below shows a typical value chain for an m2m application. It illustrates immediately one of the main difficulties in getting a new m2m offering to market: it is pretty long and may therefore require many different market players to work together. Under these circumstances, someone needs to take charge of the whole chain in order to ensure its success in the market. Who should this be?
Figure 1 also shows two different options for who takes charge. In the first, the network operator (NO) sets up and maintains the m2m network and supplies the m2m service. The NO aggregates all elements of the value chain and operates the m2m service, including marketing and sales. The end user selects the NO for the m2m service....
In the second value chain option, the VASP typically combines all elements of the chain including hardware, software, communication and a specialized service offering for the end user. The user buys the necessary hardware and orders the service from the VASP for a defined time period. The VASP derives advantage from his specific market knowledge to negotiate attractive pricing from all suppliers in the value chain. Usually he is flexible enough to adapt to changing requirements and improving his services. Since the VASP has direct customer contact and aggregates many individual customers, he may generate economies of scale. This may give the VASP the power to negotiate optimal terms from his hardware and services suppliers. These are just two examples of who can take charge. There are equally situations where it is more appropriate for the System Integrator, or indeed the Hardware Supplier, to take charge of the value chain.
So, who should take charge for different situations?
A structured way of looking at this is to categorize m2m applications themselves into the three different types shown in Figure 2: Aftermarket, Regulatory, and Line Fit/OEM.
The After-Market category of applications involves retrofitting connectivity to products already installed and working in the field, as for example, connecting vending machines and monitoring environmental conditions...
Compared with this, Regulatory applications are created by the introduction of new regulations, usually associated with particular applications...
Line Fit/OEM-based applications, on the other hand, are often driven by product manufacturers, acting either in concert with partners or on their own, to create new services opportunities related to their products...
Read the complete article here
Please find more information about Beecham Research here
RSS feeds
