Auto Vertical Illustrates Key Few Mobile Opportunities

Consumers express strong support for automobile communications features, Accenture found when it surveyed 7,000 drivers in seven countries.

When asked about future technologies, 83 percent of respondents would like to have in-vehicle technologies that can automatically contact a vehicle recovery organization when their vehicle breaks down, and 75 percent want a system that automatically calls the nearest emergency center if a crash were to occur. Auto M2M

Why is that important? It illustrates the potentially-important role that machine-to-machine communications could play as a significant revenue driver for mobile service providers.

Virtually every executive, at every communications service provider organization, is at some level constantly thinking about significant-sized new lines of business that can offset declining voice, texting, video or other revenues.

But the opportunities a small rural telco or competitive local exchange carrier or ISP might consider are vastly different from the types of opportunities a major global telco can consider. Revenue scale and asset base are key constraints.

An organization that earns $100 million year can look at an incremental $50 million a year opportunity and it is a big deal.
An organization earning a billion a year can look at an initiative that generates $500 million, and that is a big deal. A major global telco cannot bother with incremental revenue at those sorts of levels.

In fact, there actually are a relatively small number of initiatives that a large global telco actually can consider, when looking to affect its top-line revenue in a significant way.

“Needle-moving” new lines of business generally have to represent fairly-large areas of activity with substantial revenue.

Put another way, “C” title executives at global telco organizations cannot, and arguably should not, be bothering with any proposed growth initiatives that are incapable of providing $1 billion a year in new revenue.

Not $1 billion of potential revenue for all providers in the market; $1 billion for each actor. An opportunity “has to be big to be interesting,” notes Amobee CEO Trevor Healey.  Tier-one opportunities

As you might guess, thinking naturally runs to ways to leverage the existing networks business in some way. You would be hard pressed to find any proposed new initiatives of any size that do not build on the customer base, assets and network services capabilities telcos and mobile service providers already possess.

hat does not, by the way, mean that the new businesses necessarily will be run by “telco people” who do not have the background. In all likelihood, the new initiatives will succeed only when professionals with skill sets and perspective in the proposed new businesses are running them, and when telco executives do not handicap those professionals.

Consider the range of initiatives you often hear about. Broadly speaking these are financial services (mobile payments is part of this), machine-to-machine services, mobile advertising or specialized services provided to some business verticals, such as health care or security, for example.

That's about it. In the near term, most of the revenue will come fairly directly from “things service providers already do.”  One thinks of efforts to create new services for some industry verticals or ways to generate more revenue from business partners. Cloud computing probably falls within this basket of initiatives, building on what telcos already do.  

Other initiatives, such as mobile banking and payments, will take a while to reach the serious level of revenue contribution. Mobile advertising likely is that sort of investment as well.

That is not to say that all sorts of experiments get conducted, all the time, at various other levels within a service provider organization. But it typically is true that unless any of those experiments can suggest why they can generate $1 billion of incremental revenue every year, they won't become part of the strategic discussion.

The Accenture study reinforces the fact that consumers are currently focused on IVI safety-driven technologies.

However, it also shows that in the future, they would like their cars to be equipped with more communication- and information-related capabilities – creating the ‘connected vehicle’.

For example, the survey shows that nine out of 12 technologies consumers would most like to have in their vehicles are safety-related.

Specifically, 83 percent would like anti-lock breaking systems, while 74 percent and 72 percent, respectively, would favor having night vision and reversing sensors.  

The survey also shows that in the future, 63 percent of the respondents would like to use car-to-car communications, and 59 percent would be interested in having Smartphone controls on their steering wheel.  

Moreover, 58 percent of consumers would like to be able to read and dictate e-mails while in their vehicle, and 57 percent would be interested in having a windshield that acts as a visual monitor, showing the driver’s vehicle speed, for example, as well as what is happening on the road ahead.

To be sure, such auto vertical apps are but one vertical that could benefit from machine-to-machine communications. Health applications, utility operations and other sensor applications also frequently are mentioned as lead M2M opportunities.
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