Connectivity isn’t enough – where’s the VALUE?

BLOGGER: YOAV SNIR 

Is mobile communications now all about the connected world? Well, if you attended last week’s Mobile World Congress, you would think so. There were certainly enough connected devices around, with almost every original equipment manufacturer – from phone manufacturers to consumer electronic giants – apparently about to launch a tablet. Everyone else seemed to be offering a connected “something”…[feel free to insert an appropriate noun here: car, home, camera TV, heart monitor, UPS packages, etc ].”  

So there’s a definite buzz. But although both the machine-to-machine (M2M) and consumer electronics markets are still in their infancy, the sheer number of connected devices flooding the market right now are driving the discussion beyond “buzz” and into creating practical models.

That’s because the devices themselves aren’t enough – it’s actually got to be all about the value they’ll deliver.

If device manufacturers, resellers and service providers want to make real money from these connected devices and services, they’ll need to create value for consumers by combining innovative services with supporting business models.

Simple examples of this – like being able to share and manage a single bucket of data across all of your devices, or select your preferred on-demand connectivity in the form of day/month/Mb passes – are already here. In the very near future, we’ll see more and more of these value offerings. But in the meantime, here are a few examples and ideas that caught my attention, and are probably only the tip of the iceberg:

* “Data Snacks” – an interesting example of this is the win-win partnership between Google and Verizon whereby some of Google’s new devices will come with “data snacks” in the form of pre-activated connectivity from Verizon, providing 100Mb per month for 24 months for free. The result? Google gets to differentiate its devices in the market and bring value to its customers, while Verizon enjoys a huge up-sale opportunity and great public relations.

* Implicit connectivity – when you buy an ebook from Amazon, it’s sent to your Kindle but the customer doesn’t get charged for the data transfer by its service provider. So an evolution of this model would be to apply it, for example, to buying a HD movie from Netflix with no need for a data plan, or getting new maps to your car’s GPS and an update to the onboard computer.

* Multiple dimensional usage – we’re used to thinking about usage in terms of minutes/Mb, but usage has many aspects, including the network that’s being used (3G/4G/Wifi/Femto), the type of service (browsing, video streaming, social network etc), the apps being used and the context (personal, for work, with friends etc). So why not, for example, offer a heavy Facebook user a very low Mb plan but which allows unlimited social networking at specified sites (such as LinkedIn, Myspace and Facebook) for a reasonable price? The user will be happy about being “unlimited” while the service provider doesn’t have to worry about high bandwidth consumption. The variations are almost endless and will evolve as new services emerge.

* Splitting the charge – Do you use your personal iPad to check your work email? In that case, why not send that portion of the usage to your employer?  Forced to watch endless minutes of commercials while watching your favorite show via Hulu on your tablet – why should you bear the usage cost?

* Charging for value – SoftBank’s CEO spoke about “charging for value” rather than charging for service/data usage. For example, for home security surveillance, you will pay a fixed-rate ongoing charge, regardless as to whether you are using the network at all or alternatively using HD video every day to “spy” on your nanny. Consumers will pay for such services because they perceive them as valuable and a “must have”.

Since some of these concepts can become very complex, there’ll be a tradeoff between the services’ flexibility and customers’ ability to understand and keep track of their usage. The key to mass adoption and increased revenues will therefore lie with keeping the devices, plans and services simple and easy to use.

Unfortunately, that future hasn’t yet arrived, and for now, with most of the service providers slow to adopt the charging-for-value approach, I still have to pay for each one of my connected devices and get only connectivity in return.  Hopefully by Mobile World Congress 2012, the situation will already be quite different.

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