Telenor's - Ericsson

the transformation «« connecting machines «« THEME
The experience
of an early starter
Connecting machines is a fundamentally different business than
traditional telecom. As a consequence, Telenor must fundamentally change
to adapt to it. This is not a technical issue at all, but that does’nt make it any
easier. You need a complete a value chain, all the way from production to sales.
NORWEGIAN INCUMBENT Telenor is a pioneer
in taking machine-to-machine (m2m) services
to the global market on a global
scale. Telenor started to work in this area ten
years ago, and now offer a wide range of managed
m2m services, from tracking vehicles and shipments
in transit to reading electricity meters. To
date, Telenor has installed close to two million
m2m sim cards, with the number doubling each
year since 2004.
Per Simonsen, ceo Telenor Connexion, and
Hans Christian Haugli, ceo Telenor Objects,
explain why building a business in machine
connectivity is so different from what operators
are used to doing.
m2m has been talked about for quite some time.
What have been the main obstacles to this business
taking off?
SIMONSEN: I don’t think it is primarily technical
problems. It is more about moving from selling
products to selling services. This has a huge impact
on business processes and business models,
and requires quite a substantial shift on the customer
side. It is more about the time it takes to
change business models and processes than the
time it takes to implement new technology. When
TEXT Benny Ritzén
we talk about customers, we mean our enterprise
customers, not the end consumers. And with
business models, we refer to our customers’ business
models.
What are the prerequisites for turning m2m into
good business for operators?
SIMONSEN: m2m is fundamentally different from
the traditional telecom offering and as a consequence,
operators must fundamentally change to
adapt to it. First of all, it is a global opportunity,
because connectivity is implemented in units for
global deployments. And secondly, it is applied
in life-saving applications, like e-calls and alarms,
so it is part of critical products. This means that
m2m systems must be top quality. For instance,
monitoring the heart condition of a person is
completely different from providing communication
between two people. And you need to have
a business process that is designed to deliver on
that need.
It is not about just adding an m2m product to
your existing product portfolio. You need a complete
a value chain, all the way from production
to sales, designed to meet the needs of the end
customer. And you shouldn’t underestimate that
challenge.
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EBR #3 2010 29