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Summary

Vodafone's first major step into the consumer IoT market is the most coherent and well-targeted offering outside of the connected home and automotive segments so far by a European operator. Although lacking innovation in terms of the types of devices and services offered, with its latest consumer IoT strategy, Vodafone has shown a coherent approach to designing and developing new consumer services that leverage its mobile strengths. Moreover, with its plans to open an online marketplace to IoT developers, Vodafone is showing a willingness to relinquish a degree of control, so that it can grow its consumer IoT ecosystem – an approach that will be crucial to its success.

Vodafone develops a coherent range of consumer IoT services

Demonstrating what value a connected device other than the smartphone can bring to consumers will be the key to encouraging uptake of the new types of services IoT makes possible. Although the types of device Vodafone has launched are to a degree underwhelming, and are offered by other providers, the strength of its consumer-device IoT offering is its marketing and coherent approach, with location and trackability a common theme across the devices, which use the operator's mobile network to provide wide-area – rather than just Bluetooth or Wi-Fi – coverage.

Central to Vodafone's strategy, which leverages its mobile legacy rather than its fixed capability, as its peers' smart home focus has done, is a simple, easy-to-grasp slogan that communicates the specific value each of the services can give: "What if you could know everything you love is safe?" Vodafone's initial set of services should also be simple to set up and use. The "V by Vodafone" app enables set up of each product by scanning a QR code on the device packaging to register it and add the monthly fee to their existing Vodafone mobile account, thereby doing away with the need for users to go through any configuration or registration processes.

The services, which use M2M technology and not the operator's recently launched NB-IoT network, have been priced in an easy-to-understand way, albeit on the expensive side, which builds on the tried-and-tested device-cost-plus-monthly subscription consumers are used to with their mobiles. For example, in the UK, consumers will pay £80 ($105.84) for a car-tracking and analytics device, and then £4 ($5.29) a month for usage, and £60 ($79.37) for a bag tracking device, and then £3 ($3.97) per month for usage. Services will be billed on a user's monthly account, which could give Vodafone an advantage over dedicated providers, as consumers will not have to start new billing relationships. While these prices are on the high side, they can be expected to change as Vodafone gauges market reaction. Bundling more than one device under a single "V-SIM" monthly fee could be one way to evolve the pricing strategy. Apart from the UK, the services have so far been launched in in Germany, Italy, and Spain.

It is crucial that telcos demonstrate that they can work with other players in the IoT value chain, and adopt an open and cooperative approach to partnerships. Here, Vodafone is also taking the right approach, by opening up to outside developers, and having worked with device-manufacturers for some of its V by Vodafone services. In 2018, Vodafone also plans to launch an online product marketplace open to IoT developers that will extend the product choice for customers. Vodafone's IoT SIM, V-SIM, will be sold by third-party retailers next year, which will extend their reach beyond Vodafone retail outlets.

To compete effectively with dedicated consumer IoT providers, whether it is for the smart home or IoT devices, telcos need to differentiate in terms of price, quality of experience, and through effective marketing to their sizable existing customer bases. Market reaction to Vodafone's latest consumer-device IoT offering will provide a good indication of how other telcos are likely to perform in this area.

Appendix

Further reading

IoT Service Provider Contract Tracker: 3Q17, TE0019-000055 (October 2017)

IoT Service Provider Strategy Profile: Orange, TE0019-000053 (October 2017)

IoT & LPWA Network Deployment Tracker: 3Q17, TE0019-000054 (September 2017)

"Consumer IoT: Beware the banality of data," TE0005-000983 (August 2017)

Author

Paul Lambert, Senior Analyst, Europe

paul.lambert@informa.com

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