Internet of Things (IoT)
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The Internet of Things for service providers: the path to new revenue streams


Derek Howard.jpgBy Derek Howard (@DerekBHoward)
WW IoT and Service Provider Marketing Manager, HPE


It’s time to start talking about the Internet of Things (IoT) in the present tense.

I have a unique vantage point as I cover marketing for both service providers and IoT at Hewlett Packard Enterprise.  I see a great opportunity for service providers today to position themselves to innovate and generate new revenue streams in the emerging IoT landscape. Many risk being marginalized if they don’t take a proactive posture now, since along with the new business models comes substantial market disruption.

Leveraging industry verticals and co-innovating

“We connect everything” is losing its power as a market differentiator—infinite connectivity is now presumed by billions of users across thousands of device and connectivity types. In fact, we’re seeing that the average revenue per user (ARPU) is plummeting for connectivity-only services; only by seizing new market opportunities will providers dependably grow their revenue streams.

They can do this by positioning themselves as co-innovators as IoT takes hold and more industry verticals exploit it. This involves transforming existing business models to allow for innovation partnerships where the communications service provider (CSP) is positioned as a co-creator of services as well as the information backbone of the project.

3 IoT Dimensions for CSPs.jpg3 IoT Dimensions for CSPs

It’s true that some industries will adopt IoT faster than others, especially where the use case pays strong dividends in increased efficiency or creates new revenue streams. Condition monitoring (and more specifically predictive maintenance) and location-based services have strong value across many industries. For some, IoT will be a necessity—take the European Union utilities and insurance industries, for example, which have already begun seizing on clear and immediate business benefits and responding to proactive regulatory changes.

IoT is the logical culmination of many years’ worth of technological development. With the path we’ve taken from machine-to-machine (M2M) to IoT, it’s important to think of these stages not as discrete mileposts, but as points on a continuum where one technology evolves into the next. That evolution will continue indefinitely as physical processes and analog data become digitized and machine learning becomes reality.

How to form an IoT strategy

CSPs can take several different roles as they connect to the industry verticals that can propel them into IoT. These roles are based on the prevailing paths to IoT development:

  • CSP-led: Ad-hoc solutions owned and developed by the CSP—non-Telco industry partner
  • Non-Telco-led: Highly productized solutions are developed by a non-Telco company
  • CSP/non-Telco partnership: A highly desirable approach where both players build and manage the end-to-end service, sharing investment and gain

There are many strategic, regulatory, and business-model considerations involved in adopting IoT. For example, service providers might do well to use analytics as a differentiator—creating new revenue opportunities by leveraging the Big Data that comes from the connectivity they already offer. Naturally, each service provider will tailor its responses to this new technological paradigm according to many variables.

But one thing is clear: IoT represents one of the best ways forward for service providers who are currently weathering a tumultuous marketplace and looking for innovation.

Download our white paper , “The Internet of Things: Opportunities and considerations for service providers” for much more detail on building an IoT strategy.


Empowering the Digital Enterprise to be more efficient and innovative through data-driven insights from the Internet of Things (IoT)
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