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Telcos likely to take their M2M platforms inhouse - report

According to the Heavy Reading report, Managed M2M Platforms: Quick Fix vs. Long-Term Solution, operators will have to grind down their operational process costs to cope with ARPUs of just a few dollars per device. If they can't there's no hope of profitability.

And, says the report author, there's every sign that telcos get it.

"Many telecom operators appear inclined to buy expertise from third parties in order to speed their market entry," says report author, Simon Sherrington. "But there are some significant players not taking this path, and others may be planning to go it alone longer-term."

It's a point that aligns with the views of Jeremy Green, principal analyst, M2M at Ovum, who told me in December 2012 (see below) that there had been a trend away from shared platforms. "Whereas a couple of years ago operators were making a big deal of how, by using the same platform, there was the opportunity for synergies. Now they seem to be making more of the fact that they're using their own platform which gives them unique advantages for differentiation."

One possible extra advantage that platform control and ownership might bring, of course, is better integration with other parts of the telco IT estate and that's critically important from an Opex standpoint, according to Heavy Reading, which points out that if telcos are going to play at serious scale in the M2M market they'll have to automate and continually optimize their business processes to drive out costs. Owning end-to-end control of the platform probably puts them in a better position to achieve this in the long run.

According to report author, Simon Sherrington, "Managed, cloud-based M2M solutions offer telecom operators a swift means of entering the M2M market with services that cater for a wide range of different customers and industry sectors [but] ultimately, many of the biggest telecom operators will want end-to-end control of their M2M platforms and we can expect to see more of them launching their own in-house platforms, despite their existing or imminent relationships with managed service providers."

Cloud-based providers will have to work hard to show they can scale up and drop their costs in the cloud, more effectively than telcos can, in-house.

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