Gartner Research

Market Trends: CSPs Are Deviating From Connectivity-Centric Offerings to Platform-Based IoT Solutions

Published: 29 July 2016

ID: G00301676

Analyst(s): Katriina Valli, Johanna Stjerna, Eric Goodness

Summary

There is a coalescing approach among communications service providers to sell Internet of Things solutions. CSP business unit leaders must understand how turning connectivity-centric offerings into IoT solutions affects the pricing model, bundles, revenue mix and profitability.

Table Of Contents

Introduction

Market Trend

  • The M2M Market Is Transitioning From Connectivity Toward Higher-Value IoT Solutions
  • Characteristics of IoT Solutions Contracts
    • IoT Solution Areas Vary in Maturity
    • The Size of IoT Deals Vary From Thousands to Millions of U.S. Dollars
  • Pricing Practices in M2M and IoT Solutions
    • CSPs Bundle Nonrecurring and Recurring Fees Into Annuity-Based Contracts
  • The IoT Modifies the CSPs' Profitability and Revenue Mix
    • High Profitability of Connectivity Offering Enables Diversification of Higher-Value IoT Solutions

Contrarian View

  • CSPs Have Never Added Much Value Beyond Connectivity in Any New Technology or Service Market

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