Gain valuable insights into the IoT connectivity landscape! Matt Hatton of Transforma Insights joins Ryan Chacon on the IoT For All Podcast to share findings, trends, and key themes from the 2023 Communications Service Provider IoT Peer Benchmarking Report. They discuss the IoT connectivity landscape as a whole, where satellite connectivity fits in, the consolidation of network operators, vertical vs horizontal IoT solutions, and what we'll see happen in the IoT connectivity landscape going forward.

About Matt

Matt is a well-respected commentator and technology industry expert with 25 years experience at the cutting edge of technology research and consulting. He is a thought-leader in Telecommunications, Digital Transformation, and the Internet of Things. He is widely quoted in trade publications and a frequent speaker at conferences. His podcast, The Wireless Noodle, is a weekly guide to the impact of disruptive technologies on business. In 2020, Matt co-wrote a book "The Internet of Things Myth".

Matt is currently Founding Partner at Transforma Insights, the leading advisors on IoT, AI, and Digital Transformation. Previously, he was Founder and CEO of Machina Research, which was acquired by Gartner in 2016. Prior to founding Machina Research, Matt was a technology industry analyst, working at firms including Analysys Mason and Yankee Group. Matt holds an MSc in Telecoms from University College London.

Interested in connecting with Matt? Reach out on LinkedIn!

About Transforma Insights

Transforma Insights is a leading research firm focused on the world of IoT, AI, and Digital Transformation. Led by seasoned technology industry analysts, they provide advice, recommendations, and decision support tools for organizations seeking to understand how new technologies will change the markets in which they operate.

Key Questions and Topics from this Episode:

(00:45) Introduction to Matt and Transforma Insights

(02:31) The IoT Connectivity Landscape

(05:52) Where satellite connectivity fits in

(07:30) IoT Peer Benchmarking Report 2023

(13:46) Findings, trends, and key themes from the report

(25:04) Consolidation of network operators

(27:23) Vertical vs horizontal IoT solutions

(32:24) The IoT Connectivity Landscape going forward

(35:09) Learn more and follow up

Transcript:

- [Ryan] Hello, everyone, and welcome to another episode of the IoT For All Podcast. I'm Ryan Chacon, and on today's episode, we're going to be talking about the connectivity landscape in IoT, as well as best practices and carrier strategies in IoT. And joining me today will be Matt Hatton, one of the founding partners of Transforma Insights. They are a leading research firm focused on the world of IoT, AI, and digital transformation. Matt has been here before, he's a fantastic guest, and I think we'll get a lot of value out of listening again to today. Before we get into this episode, give this video a thumbs up, subscribe to our channel if you haven't done so already, and hit that bell icon so you get the latest episodes as soon as they are out. Other than that, let's get onto the episode. Welcome, Matt, to the IoT For All Podcast. Thanks for being here again.

- [Matt] Thanks Ryan, my pleasure, always.

- [Ryan] Yeah, it's great to have you back. A lot of exciting stuff I know we wanna cover today, but just for audience's sake who may not be familiar or know you very well, it'd be great if you could just give a quick overview, background kind of experience about yourself, quick introduction about not just yourself, but also Transforma Insights.

- [Matt] Yeah, happy to do that. I've been a technology industry analyst for I think now 25 and a bit years, so.

- [Ryan] Nice.

- [Matt] That's a terrifying thing when I think about it. Yeah, I've been a technology industry watcher for quite a long time, kicking off really looking at the telecom space, so I'm a telecoms guy, my masters was telecoms. I did actually work a little bit for a mobile operator as well, so not just being an analyst, but that's been the vast majority of what I've done. The last dozen or so years have been focused on IoT, and that's ostensibly what my current company does. So Transforma Insights is an industry analyst firm focused on IoT, and actually in fact, the wider digital transformation landscape. So we look at a set of other technologies that sit adjacent to IoT as well, things like AI and blockchain, and look at how those technologies also have a role to play for enterprises in digitally transforming, shall we say. But I think predominantly, probably 80, 90% of what we do is focused on IoT and that's my sweet spot and always has been.

- [Ryan] Fantastic, yeah, we're big fans of what you all do. I know we've been in contact, you've been on the podcast before, but the work you all put out is fantastic and a huge value for the industry, so I'm glad to have you back on. I know we wanted to talk about kinda the annual communications service provider IT peer benchmark that you just put out. But before we do that, I wanted to ask if, just at a high level, I wanted to talk about the connectivity landscapes since that will kind of connect to that part of the conversation, but if you were to talk to somebody in, you know, maybe newish to the industry and just kind of trying to get caught up with what the current IoT connectivity landscape looks like, how would you kind of explain it to them or talk them through it?

- [Matt] Well, the landscape very much depends on what you're trying to do, obviously. I mean, that's a given. One of the difficult things with being an analyst is that the answer to almost every other question, if not every question, is it depends. You know, it depends what you're trying to do. It depends what you're trying to connect. So there's a whole lot of the IoT landscape which is really focused on just short-range connectivity. There's a whole load of consumer devices which connect using Wi-Fi, and Bluetooth, and so on. That's probably 70% of the market. But there's also a big chunk, which is around connecting wide area. So that's, might be smart meters, or it might be connected cars, or it could be fleet management, or various tracking devices or whatever. And so that's another part of the market running on public networks, and there's a huge amount of interesting stuff going on there, and in fact, there's some really interesting stuff that's happening that's kind of bridging the gap between those two. So using cellular technologies, but in a private deployment, so mobile private networks. We published a report September last year, I think, something like that, looking at this MPN private wireless landscape, so using 4G and 5G networks for connecting internally within factories and warehouses and those kinds of things. So that's one of the interesting trends that's happening. There's also a lot of stuff going on with the wide-area networking itself. We've got new, well not exactly new now, but increasingly mature, shall we say, low-power wide-area technology, things like LTM and NB-IoT, and on the unlicensed side of things, LoRaWAN being used a lot more for connecting, well, more sensors, low-power devices, things that run on batteries, that kind of stuff. So there's some interesting stuff going on there. So that's the kind of broad brush view of what the technologies are, what they're doing. Ooh, one other thing to mention, satellite. Now, satellite's always been used a fair amount in IoT. Well, I say a fair amount. It's probably 1% of connections and certainly no more than that, but it's very useful for certain use cases in certain scenarios. But there's been quite a lot of interest from adopters, potential adopters, on the low-Earth orbit satellites, the LEO satellites, which are poised to be launched, and potentially, in fact, some already have been launched, but there's a lot of potential. Deployers have said constellations, and that looks interesting. Do we think it's gonna be a huge part of the market? Not really, because the vast majority of IoT connections are still gonna be in places where there's access to some either private or public network, but it's also interesting, and it's part of the ecosystem, it's part of the connectivity landscape.

- [Ryan] Yeah, I've actually had a lot of conversations recently with nano satellite companies and a lot of 'em seem to be pretty, pretty early on just trying to get satellites out into orbit and, you know, figure out how they're gonna fit in. But I wanted to ask you, since you mentioned satellite, is the combination of using satellite connectivity, pairing that with things like LoRaWAN or other kind of terrestrial connectivity options, how do you see that kind of, or what are your, I guess, thoughts on that and how that could potentially provide value or maybe not as much value as people think for the IoT space?

- [Matt] Oh, I think pretty much everything is gonna be multi-mode. The reliability and availability of satellite is obviously very good if you've got, typically, if you've got line of sight, but in many cases you don't have line of sight, but it's gonna be pretty slow. It's going to have higher latency, so it's gonna take a lot longer for the packets to be delivered, almost certainly. It's almost certainly also gonna be more of a batch drain on the devices. So in most cases, we'd expect any given satellite device, or connected satellite device using those technologies, to, predominantly LoRaWAN and NB-IoT, to be multi-mode. And we've got a plethora of those multi-mode devices available. In fact, increasingly, you won't even be able to tell the difference other than, potentially, in the context of the slightly bigger antenna or something like that, but mostly it's pretty much the same device.

- [Ryan] Right. Okay, yeah, I was just kind of curious to get your thoughts on that. I wanted to jump into kinda what I mentioned when we started this conversation is your annual communications service provider IoT peer benchmarking that you just put out. Can you kinda kick us off by just telling us a little bit about what that is, what it means, and kind of the purpose of doing it?

- [Matt] Yeah, I'm happy to do that. One of the things that we've been doing over the course of, well, the whole of the time at Transforma Insights, is looking at network operators, both of mobile network operators and the MVNOs, the virtual network operators in the IoT landscape, and looking at what their capabilities are, what their strategies are, what their approach is to the market are. And let me take a little step back. There's quite a few changes going on in the space at the moment. So you've got a topic that we've been looking at a fair amount in the last few months is around taxonomy for IoT, a new taxonomy for IoT. So lemme talk a little bit about that first, and then I'll go-

- [Ryan] Yeah, let's do that.

- [Matt] onto the benchmarking. And the idea there is maybe we've been getting this a little bit wrong over the years in terms of thinking about how the services are provided and who provides those. Or maybe not wrong, but things have evolved a little bit. So we tend to think now of there being a set of service domains that are separate from who runs networks and who sells you a device. There's a set of service domains which are around the management of the connectivity, the management of the devices, the provision of security, the contextualization even of the services as they're being offered to the customer. Context is very important. You can't just sell a completely horizontal solution to somebody. What's become increasingly apparent is you need to be able to talk the language of the companies that are deploying this stuff in order for them to get it, to understand, and also to smooth their deployment of these IoT technologies. So that context layer is very important as well. So you've kind of got these service domains that are the key ones in IoT. So when we come to do our annual benchmarking of the capabilities of all of these various players, that's what we've got in mind. We're thinking, how capable are these companies in pulling together both a connectivity offering, and that includes things like how you deal with multi-country deployments. Are you using eSIM or roaming? Have you got some other special kind of mechanism for supporting devices in multiple countries? Also, what are your capabilities and skills in, in things like your connectivity management platform or how you deal with, how your data flows are managed to ensure that you get lowest latency, have local breakout, you have, you know, all of these things to consider. Compliance is another critical one. So we were looking at all of these things in the context of, okay, core connectivity. How do you do your connectivity? How do you provide connectivity? What are the capabilities there? And then also, as a sort of second dimension to it, what kind of capabilities have you got in the other areas that sit adjacent to these, these IoT connectivity capabilities? So things around security and compliance, and as I mentioned, contextualization and devices and the whole load of other areas like that. So that gives us a really interesting framework for thinking about who's doing what and where. And what comes out of the research is, really, it's two things. One is we've just spent the best part of, probably getting on for six months, I guess, from the very start to the very finish, talking to all of the great and good of the network operator community, the providers of this IoT connectivity. And when you do that, you get a feel for what are the key trends, what are the interesting things that are happening in the space? And that's one of the things that we boil down in the report to give the providers a view on what's happening in your landscape. I'm sure they're aware of quite a lot of it, but just our take on what those key themes are. The other thing is, of course, we're able to then compare and contrast the capabilities of all the various operators and then look at who do we think is best. I have to be a little bit careful with that though, because-

- [Ryan] Of course, of course, we're in the same boat. We try not to play favorites, but we try to guide people in the right direction for sure.

- [Matt] Well, we're happy to put a stake in the ground. The problem with doing those kinds of things, and we do do them right, we do put a stake in the ground and say, okay, we rate these companies at the highest, and so on. But it is pretty reductive. You're taking something which is a complex topic, and then you're trying to boil it down to a score out of 10 or a place on a two by two matrix or whatever. And our message is always with this stuff, again, who's the best? Well, it depends. It depends on all sorts of things. Predominantly, where do you want to deploy this stuff? You know, if what you're trying to do is connect a bunch of connected cars in the Asia-Pac region, well, you may wanna go talk to Singtel. If you wanna connect smart meters in Sweden, you wanna go talk to Telia. It may also depend on just things like who your cloud provider is, and therefore, the most seamless data integration. That kind of determining factor may actually be the key thing. So you try to, or what we're trying to do is kind of boil all of that down into, well, who's doing the most interesting stuff? And therefore, who do we think that buyer ought to be looking at to understand, okay, well, what capabilities have they got? What kind of things should we be looking for in our connectivity provider?

- [Ryan] Fantastic. And what are, without kind of divulging too much, what are some of the kind of findings, trends, key themes that you were able to pull from, you know, six months of research and engagement?

- [Matt] Yeah, how long have you got is always the question at that point. But there's a whole lot of stuff. So one would be, I mentioned about this idea of provision of multi-country connectivity, how do you support cellular-based IOT connections? And that's what we're talking about here. When we talk about our communication service provider benchmarking, we're talking about providing cellular connectivity. Some of 'em also do a bit around LoRaWAN and a few other things, but predominantly, this is cellular connectivity. And there's a very interesting dynamic happening with that at the moment where we're kind of in a interregnum between the way things used to work, which was with, you switch a SIM card out, or you rely on roaming, to an environment where there is a well-established, tried and tested set of mechanisms for localizing connectivity onto a local network, be that with eSIM, maybe iSIM, remote subscription management, that kind of thing. Or some more sophisticated mechanisms for handling roaming, a sort of roaming plus-type approach. And we're halfway through that process. We're kind of in the dip at the moment. Whatever we works out, okay, how am I gonna do this? I've got multi-SIMs, I've got eSIMs, I've got this agreement with operators for, often on a reciprocal basis, for supporting my connections in each other's territory. You know, this stuff is kind of playing out at the moment. And that's interesting to watch, but it's still a little bit chaotic at the moment, shall we say?

- [Ryan] Okay, very good. Yeah, keep going.

- [Matt] Second theme being devices, the importance of devices. Now, this might seem pretty obvious, really. An IoT connection needs a device on the end of it. But increasingly, we see there's a need for connectivity and devices to be cross-optimized or provided together in some way, which means that the hardware manufacturers are increasingly getting into the connectivity space. There's a couple of hardware manufacturers, or companies that are ostensibly hardware manufacturers, who have added on or continue to provide connectivity that are profiled in the report. So we include Sierra ONE, INTELLIT, and then you have the likes of QuickTel, who don't feature, but they're building a connectivity offering around their devices as well as we speak. So, they're getting in on the act. But it's also gotta happen from the other direction as well. The companies that historically were providers of SIM cards, shall we say, are also needing to look at the hardware space because, well, there's a few reasons for it. One, you've got that benefit of cross-optimizing all of the various things when you're dealing with constrained networks and you're dealing with the use of protocols which need to work with the low-power technologies, and you've got, you wanna optimize the application logic, all the various different elements of an IoT proposition. You've gotta get that to work seamlessly together. And in order to do that, you wanna make sure that the device works with the connectivity. That's one thing. Another one is the device manufacturers, or the consideration of the device, the hardware piece, is often very early on in the process of building that solution. And so, if you're a network operator and you wanna be considered early on in the process, rather than just an afterthought, it's very useful to be involved in that conversation early on about devices. And then, the final one's eSIM. We're likely to have pretty much every device or large volumes of devices shipping with some form of connectivity already baked in, 'cause they need a bootstrap, an eSIM, they need some bootstrap connectivity baked into the device. That's rather different from what happened before where this was a unconnected terminal. You needed to put in a SIM card. So that kind of dynamic means it kind of focuses the attention on, well, I want my connectivity to be the one that's in that device already. So there's a lot of dynamics like that. Cloud native as well, or the importance of scalability, shall we say, actually. We talked in the last iteration of the report about this concept of hyperscale IoT connectivity providers. So setting yourself up to be able to cope with tens of millions, hundreds of millions of connected devices. Many operators are already at tens or hundreds of millions, but maybe 10X or 100X the number that you're supporting today. Can you do that with on-premises platforms? Can you do that with a set of infrastructure which is geographically specific? Well, it's kind of challenging. So we see some really interesting stuff happening in terms of having cloud-based core networks, cloud-based packet gateways, just having infrastructure in place to scale to almost infinitely. So that's one of the things that we look at a lot when we're considering who we think are gonna be the hot players. And then there's a few other things. One, I mentioned this contextualization idea, and in fact, that's bound up in this idea of a service wrap, the requirement that actually all of this IoT stuff that's being sold is actually really needs to be sold as a managed service with some provision for holding the hand of the customer as they deploy these solutions. They're not experts in the space and connectivity providers are never gonna be infinitely scalable IoT platform companies. There has to be a services element to it as well. And we see that as being very important. And we've seen that happen with, well, one of the interesting things that's cropped up actually, a microcosm of that is, we've seen a lot of focus on customer success managers. And I see this has been quite interesting. This is the term that's come up probably more in the course of the last six months than it ever has before, so this is people internally within the operators who are responsible for making sure that the client is supported in the most appropriate way, which kind of reflects that it changes, the relationships change from being one about just a transaction, I've sold you a bunch of SIM cards, to one that's about an ongoing relationship and one where you need to really be thinking about the context in which that company is deploying stuff and really look after them. So that's a few. So a couple, I could go on. I've got a couple other macro level ones, which are quite interesting as well if you're game.

- [Ryan] Yeah, let's hear it. Yeah, absolutely.

- [Matt] So, at a very high level, obviously, we look at network operators and we look at MVNOs. So network operators, they run access networks in whichever, in a range of countries. Not all countries. They've all got their own footprint, but you know, they run access networks in some countries. And then you've got the MVNOs that don't do that, but they do have some network elements. They've got a core network, typically, and a bunch of distributed network elements as well. But there's quite a difference in the approach between those players. We've got what I describe with the network operators as something like existential angst. All right, so they're really thinking, a lot of them, what's my role in IoT? What am I doing? I don't mean this in a negative way, but like, rethinking their approach to the space in quite a significant way and quite a few changes. AT&T just announced the other day that it was moving its IoT, it's consolidating its IoT operations and putting it into its emerging businesses line of business. We've got, Vodafone is looking some way at spinning out its IoT operations. Exactly what format it takes, we shall see. But there's certainly something interesting happening there. And then other companies, Deutsche Telecom has rearranged how it addresses IoT a few years ago, and there are a bunch of others. There's some very interesting dynamics happening there where they're trying to work out what they should be doing. Now, from the MVNO side of things, now those guys are bullish, shall we say, at the moment, and there's a lot of dynamism happening in that space at the moment. Partly as a result of this trend which sees a lot of this, the responsibility for IoT move out of the, what we term infrastructure domains, into those service domains that I talked about earlier. You know, you can address most things in IoT through these software service-based domains. And they are increasingly doing a lot of the more innovative stuff. We moved from, last year we covered a dozen companies of which two were MVNOs, and this year we're covering 23, which let me tell you, doubling the size of the report was quite the endeavor, shall we say, but of those 23, nine are MVNOs, so we've added significant numbers of MVNOs because they're doing a lot of the more interesting stuff.

- [Ryan] Sure, sure.

- [Matt] And in fact, we've seen quite a lot of instances where the network operators are almost trying to channel the IoT energy, shall we say. This kind of being more nimble, being more agile and software-oriented, even to the point of Telefonica, as a for instance, they launched an IoT MVNO in their own home territory of Spain. So you've got that kind of, this very interesting approach, and I think we'll see more of that kind of dynamic going on in the next year or two, and maybe even some consolidation. I can well see network operators buying up a few of these IoT MNVOs to try and get a grip on some of that more nimble approach to the market.

- [Ryan] Yeah, I was actually gonna ask you what you thought about kind of consolidation, 'cause there's a lot of companies that I talk to, and we work with a lot of companies pretty closely in the connectivity space, a lot of MVNOs and a lot of companies focus on this, and I just wanted, kind of, I'm trying to understand and get a better grasp on, you know, how big is the opportunity for, to fit how many companies within it, you know. At what point do you start to seek consolidation, whether it's from acquisitions or companies not able to kind of getting a good foothold in the space. But that's a very interesting kind of element to kind of keep an eye on.

- [Matt] Yeah, it is, it's fascinating. Now on the network operator side of things, not at all. I mean, this is one or 2% of their revenue. They're never gonna consolidate based on IoT. Not amongst themselves anyway. But we have seen, we've certainly seen on the MVNO side of things, consolidation's happened over the years a tremendous amount. You look at CORE, for instance. So the heritage of CORE is that they were a rollup of about half a dozen different IoT MVNOs. And Wireless Logic even more, so UK-based Wireless Logic. They've been acquiring companies since day one, more or less. And I think in the last two or three years, they've added seven or eight, probably, operators to their roster and they integrate them. Typically, that's about geographical expansion but also some functionality expansion. So this kind of stuff has always happened, I think. You know, it's not particularly a new dynamic, but I think we will see it continue. I think, to an extent, there's actually an environment which is rather more receptive to those kinds of strategic acquisitions at the moment because private equity money, actually, is maybe a little less interested in IoT connectivity companies than they possibly were two or three years ago. Which means that, well, those kinds of assets are priced more reasonably, shall we say, in terms of the multiples on revenue. And I think that allows for a bit more strategic acquisition, and we'll see quite a bit of that, yeah.

- [Ryan] How do you kind of see the focus of a lot of these companies when it comes to trying to be more of a horizontal play, or focusing kind of on certain verticals and trying to be a bit more kind of niche themselves down a bit to say, you know, we're connectivity focused in this, on this industry, as opposed to being kind of something that can be applied to, or adopted for, variety of different industries. We've kind of seen that with platforms kind of trying to be a very horizontal play, but then realizing, well, maybe we should specialize a bit more based on our solutions that we push around certain verticals that we're seeing foothold, you know, kind of traction in. Are you kinda seeing a similar approach, or have you seen kind of anything kind of connected to that in the report an