Podcasts

28 July 2022

6 IoT Challenges Most Companies Will Face

IoT Leaders with Nick Earle, CEO of Eseye and Steffen Sorrell, Chief of Research at Kaleido Intelligence.

Ever wondered whether the problems you have with IoT are shared with anyone else? Wonder no more. Steffen Sorrell, Chief of Research at Kaleido Intelligence, has the answers. The research house recently surveyed over 750 companies about the difficulties they have with their Enterprise IoT projects, and the results may surprise you.

Join us as we discuss:

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Transcript

Intro:
You’re listening to IoT Leaders, a podcast from Eseye that shares real IoT stories from the field about digital transformation swings and misses, lessons learned, and innovation strategies that work. In each episode, you’ll hear our conversations with top digitization leaders on how IoT is changing the world for the better. Let IoT Leaders be your guide to IoT digital transformation and innovation. Let’s get into the show.

Nick Earle:
Hello, this is Nick Earle, CEO of Eseye. And in this week’s episode, we have a first repeat guest. It’s Steffen, Steffen Sorrell of Kaleido Intelligence. He’s the co-founder and the Head of Research. They’re a UK based analyst company, but with clients all the way around the world, and they’re in a very hot space. They were probably the first analyst company to form specifically to look at the issues of IoT connectivity, and actually even within that, specifically to look at the issues of roaming. And that was our first podcast when we talked about that. But the reason that Steffen’s agreed to appear again is, in the episode you’re about to hear, they’ve now done, in conjunction with a series of sponsors of which Eseye was one, what we believe is the world’s largest IoT survey for over 750 companies who responded, talking about what they found difficult in their IoT projects, and at some level of detail.

Nick Earle:
And the results are pretty surprising. You’ll hear them as we go through it. And they’re surprising in the sense of… I mean, we know it’s difficult, but we actually for the first time got some very granular information on what the difficulties are. And without doing a spoiler, the biggest issue of all is one that, certainly from an Eseye point of view, we always said was the biggest issue, in fact it was the primary reason for founding our company, but an awful lot of people have said, “No, no, no, that’s not an issue. That’s not an issue.” And now what you’ll hear is 84% of respondents said, this issue is the biggest thing that they found.

Nick Earle:
So we felt pretty good about that, but there’s a lot more detail here. Steffen has all the data, and we’ve got an analysis of the survey on our webpage, together with the approaches for dealing with these issues. And Kaleido, of course, are the people with all of the data and all of the survey, which if you really wanted to, I think it goes to about 90 pages, it’s very, very extensive and it’s truly global as a survey.

Nick Earle:
So without further ado, let me hand you over to my chat with Steffen Sorrell, who is the co-founder and the Chief of Research Officer of Kaleido Intelligence. Here we go.

Nick Earle:
Hello, Steffen, and welcome to the IoT Leaders podcast.

Steffen Sorrell:
Hey, Nick. How are you doing?

Nick Earle:
I’m doing great, thanks. I think actually, before we start, that you hold the dubious distinction of being the first repeat guest on our podcast. And that’s because we have a different subject to talk about today, which we’re going to get into. That’s this survey that you’ve carried out, and we were one of the sponsors, and so we were pretty pleased, frankly, we were pretty pleased at the results. We thought it gave some actual hard data and proof points of what we’ve been talking about for a while, but I’m sure we’ll come onto that. But just warm things up and ease everybody into this, maybe you can just describe the survey, and the number of people, types of people, methodologies, et cetera, et cetera.

Steffen Sorrell:
Essentially, the survey was born out of the fact that there are a lot of surveys out there for IoT, but there’s very few that are actually focused on the connectivity as the main subject. So that was really the starting point, to understand what are the pain points? What are we missing in the industry? What do enterprises need? So, as you mentioned, we collaborated with yourselves as a sponsor, four other firms, and also in conjunction with IoT Now to engage with 759 respondents in the end, so enterprises from all around the world, through a combination of IoT Now’s reach, through our own reach, as well as a survey panel that we frequently engage with, really to as far as I know produce the largest ever enterprise directed survey focused on cellular IoT connectivity.

Nick Earle:
And I was going to say, when we’ve been talking about it internally, and obviously we’ve done a webinar on this as well, but I believe it was companies above 1,000 employees, have I got that right?

Steffen Sorrell:
70% of respondents had over 1,000 employees, yes.

Nick Earle:
70%, okay. Pretty meaty. And I don’t know of… Obviously being an IoT company, we look at a lot of research and whatever, but I’ve never seen a survey that asks so many people, so many questions. Must have found a lot of patient people, because I suspect this wasn’t a five minute, if you’ve got a minute, can you just answer a few yes/no questions. I mean, it’s pretty meaty, right? And we’re going to get into that.

Steffen Sorrell:
Yeah, that’s right. So we had two distinct paths within the survey. So we were interested in perceptions and views across the different landscapes. So first of all we were looking at whether respondents were current or previous cellular IoT adopters, so having direct knowledge of their projects and experiences, and also those who had not had, so far, a cellular IoT deployment. So we really wanted to understand and contrast their opinions through there. And we also directed respondents according to the various verticals they’re from. So this is going to be a good one to see if I trip up here. So we had transport and logistics, manufacturing and industrial, energy utilities, healthcare, and smart cities verticals. So those are the key…

Nick Earle:
That’s without having a little Post-it at the side of your screen.

Steffen Sorrell:
I wish I did at that point. No, I got there in end.

Nick Earle:
When you say something like that, you say, “There were five things,” and then you start saying them and you think, “Oh my God, I’ve only got four in my head” So a big comprehensive survey, and it’s tens of pages, the output, but we’re not going to go through that. But I think there is about six key takeaways, at least from an Eseye perspective, that we thought were interesting. And we should really set a bit of context here. We’ve been talking for years about, IoT is difficult, way more difficult than it should be. Loads of data. We talked about on this podcast, you and me have before. There’s going to be 50 billion things connected by 2020, there were 11 billion. It wasn’t a small miss. It’s just darts. We didn’t just miss the dartboard, I think we hit another wall, in terms of that prediction, or we threw the dart backwards. You know, the number of… Gartner have said 80% of all projects fail. It’s pretty doom and gloom.

Nick Earle:
And what we liked about this survey is, you actually managed, by finding so many people who were either, as you say, experienced, or have not yet started or in the early stages of experimentation, shall we say, you actually got below some of the headline takeaways to find out, so when you say it was difficult, what was difficult? For listeners… So it’s percentage of people who identified these factors, we’re going to go through six, as being the things that really are difficult. And they could identify more than one, couldn’t they? So all the percentages, all six, don’t add up exactly to 100, because someone can say, “I found A, B, and C difficult,” “I found B, D, and F difficult.” And so there’s different percentages. But some of the numbers, are having said, that pretty surprising, as are maybe the things that they found difficult.

Nick Earle:
And that’s a prompt for the first one. Let’s quickly rattle through the six biggest takeaways. Having said that there’s industry vertical cuts, there’s 100 plus takeaways, but the six biggest ones, maybe we can just quickly rattle through these and then talk about how, as an industry, we think we can make progress in all these areas.

Steffen Sorrell:
Yeah. So the major one here to begin with is hardware. So 84% of the unique respondent base stated that hardware design is a very complex and difficult challenge for them for deploying IoT. And this is something you and I discussed the last time we were on this podcast. It’s not an off-the-shelf market. You need certain customizations. You need testing to ensure that your device works on network A, network B, and so on. And also you have a situation where a lot of enterprises are not coming from the world of 3GPP, so the cellular standard. They’re used to Wi-Fi or other communications technologies. So they have to grapple with all of these different issues.

Nick Earle:
They don’t suddenly want to become a cellular or, there’s public networks, there’s now private LTE. People can buy their own spectrum. I mean, this is an area that is… It’s called hardware for a reason, and it’s getting harder. What about 5G, network slicing, QoS?

Steffen Sorrell:
A lack of knowledge in the market, to give you an example, I was in a call the other day… You just mentioned private networks. And the guy on the call mentioned, the customer wasn’t even aware that you needed a SIM card to set up the private LTE network.

Nick Earle:
A little bit of journey. It’s not surprising that, A, people don’t want that expertise, B, they don’t want to do it in the first place, but C, we thought as an industry we’d left it all behind. I mean, it was all about software, right? I mean, software eats hardware. Marc Andreessen. And so suddenly here, 84% of respondents said the number one issue was hardware design. And yet very, very few IoT companies, and as far as I know, no MNO, no mobile network operators, have hardware expertise in their portfolio. What’s wrong with this picture. What’s wrong with this picture?

Nick Earle:
We quite like that one, I have to admit. Eseye, we like that one, because when we saw it, we said, “Finally. Finally, somebody understands.” Why did you buy… When we’re raising money. Why did you have a hardware business? Why did you buy a hardware design company? It’s important. Oh, no, it’s all about SaaS, it’s all about the software in the future. And then suddenly, now here’s the data that said, this is the number one issue. So this is the one that, was the first survey we’d ever seen, so I wanted to thank you for that.

Nick Earle:
So that’s a big issue. I mean, nothing happens without the hardware. The hardware delivers the experience and, people recognize at least now that this is a big problem. So that’s interesting, finding number one. What was the next one after hardware?

Steffen Sorrell:
So the second one was related to the perceived complexity of the connectivity ecosystem. So 56% of unique respondents saying that the need to… So thinking about on an international stage, the need to engage with many different connectivity service providers is a key challenge. And you can have a scenario where, if you’re deploying in country A, that’s all fine, you just work with one network provider, but if that network provider doesn’t have service capabilities in another country that you want to ship and use your devices in, then you’re going to have to go with a different partner. And then, for instance, you’ve got two different instances of connectivity management platforms, you’ve got two different instances of invoicing and integrations for analytics and so on. Different levels of service provision for support and things like that. So when you amplify that to X number of countries, then you’ve got a serious problem on your hands, because everything related to that means additional cost and time for your business.

Nick Earle:
And it’s very hard to measure that cost. And this speaks, I think, to when people listening to us are thinking “how did we end up here?” I mean, we’ve been doing cellular for 40 years. But the point is that, if it’s mobile phone, these things aren’t issues. I mean, take that first two. They’re not issues. Somebody designed the phone, you didn’t design your own phone. Secondly, your phone is global. You can go around, you can roam, but point is that you only have one phone, not 10,000 or 100,000 phones. And secondly, you typically go to a country and come back.

Nick Earle:
And I know we’ll get onto roaming, but it also speaks to the fragmented nature of the industry, doesn’t it? Because with 800 plus mobile network operators, none of them… Even the best of the best of the best struggles to get above 80% true global connectivity, and that’s the biggest of them all. Then you are basically having to build the car yourself out of the parts, which is an unsustainable value proposition. You have to be the aggregator as the user. And that’s what as you say, the survey saying 56% of responders said, “I have to glue all this together and manage multiple portals, APIs, pricing, contract.” These things sound crazy to people looking at it from the outside saying, “How did we end up here?” But in fact, it’s here. This is where we are.

Steffen Sorrell:
When you consider IoT, doing a napkin calculation, the margins per device, they’re not high, unless you’re in very specific industry verticals. So any additional cost that you have to roll out your deployment is damaging the overall business case, to be honest.

Nick Earle:
And it’s surprising to management. I mean, obviously we sell 100% global connectivity, but we also have an ROI tool that we work with customers to try and identify prospects, to try and identify the hidden costs of, what does it actually cost to manage two platforms? And basically the cost is the extra people you have to have, to take data out of all these systems and squash it together so that when you go to management, you present a unified view of the data. You may end up having six, seven people, certainly in a larger corporation, all going into different platforms, and all looking at pricing and contracts. So again, proprietary silos, not a global solution. That’s 56%. We’re going down the percentages. So what was the third most common reason for people struggling?

Steffen Sorrell:
Okay, so this was an interesting one, again related to the current perceived state of the connectivity ecosystem. So 51% of the respondents feel that connectivity performance, quality of service when deploying across international markets, is not good enough. So that’s really an issue of what respondents are thinking about the current state of both roaming as well as localization, because roaming or the way that it’s set up today is really on a best effort basis, and it’s also… The technical nature of it means that you have higher latency than you do on a domestic connection. So sometimes you might want to localize to improve that performance, to reduce the latency, or you want to engage with a provider who’s going to be able have some local infrastructure for the routing of data. But that’s not really common today.

Steffen Sorrell:
And of course not that many providers enable a relatively simple way to localize the connection. Of course, here, I’m talking about things like eUICC or eSIM as one option. While a lot of MNOs do support eSIM for their customers, essentially when the customer wants to migrate to a different profile, that means that everything moves from one platform to another. And then you go back to the challenge that we just talked about.

Nick Earle:
It’s like changing the SIM in your phone. And what people tell us is that… And I think this is really important, because a lot of people are claiming that eUICC solves everything, but actually arguably eUICC in the form of eSIM and profile switching, I would argue, makes things worse if you don’t solve that problem that you just talked about. Because if eUICC SIMs facilitate a quicker transfer between operators, then actually you’re going to get… I mean, we’ve seen in Marketing collateral, from people who say, ” eUICC, which means you can now transfer across 200 vendors operators.” And you start thinking, “Oh my God, that’s 200 platforms, 200 sets of APIs, 200 pricings, 200 support calls, 200 different companies.” I mean, that’s actually making things worse.

Nick Earle:
And to your point about localization, people have to ask the second question, which is, when you transfer, are you roaming or localizing? Because your point about latency is, if the data is being, beautiful technical term, tromboned, if the data’s being… Let’s take Vodafone GDSP, which is a great solution, but everything is… It’s roaming out of the Netherlands. VFNL, Vodafone Netherlands. So we have a lot of customers in Africa, and your data’s being tromboned back to the Netherlands, and then back into the local country. And so from a latency point of view, and one of the questions that we have to ask is now, can you actually localize, i.e. not roam, across multiple operators? Therefore keep the data in country, data sovereignty reasons, latency reasons, and can you actually have a collection of MNOs that you can localize onto, from a single eSIM, so that you don’t make things worse by switching the IMSI and then doing even more roaming? And this comes out from this part of the survey.

Nick Earle:
And most people… I know we can localize onto 16 operators from one SIM, and then roam to a total of 700, but 16 localized connections from one SIM. But most people today at least are using eUICC to enhance roaming. And again, this is coming out and people are saying, “That’s not a global solution.” That’s to some extent making things worse, and therefore they go for different SIMs, so they get back to where they started.

Steffen Sorrell:
Yeah. When we talk to the RSP guys, the remote SIM provisioning guys, the Thales, G+Ds, IDEMIAs, Truphones, and so on, those are the guys who are managing that over the year subscription and switching at the back end for eSIM. Invariably they say, for the majority of customers in today’s present environment, eSIM is just there for insurance purposes. So what that means is, like you say, the actual connectivity provider is using a roaming profile with that extra assurance to the enterprise saying, if there’s some serious trouble, you can switch networks.

Nick Earle:
It’s last resort. You can pull the red handle and something will happen, but we don’t expect to be using it on a day to day operation.

Steffen Sorrell:
Exactly. Because you’re going to be looking… The way that a lot of providers have deployed it, you’re going to be looking at quite a substantial cost to actually migrate those devices onto another platform.

Nick Earle:
Plus, the technical reason for that, again for listeners, is because eSIM is like the tip of the iceberg, which we’ve done a webinar on this recently. It’s a bit of ice above the water, and it looks nice and small and manageable, but when you go below the water line, the billing engines, the SM-SR which does the switch, they’re all resident, all the other bits of functionality, the SM-DP, the IMSI ranges, et cetera, it’s all resident within each operator. So if all you’re doing is passing the connection between operators under the waterline, then actually it doesn’t solve the problem. You’re just basically roaming. And because if things get worse, the incentive is… You’re still primarily with one operator whose financial incentive is to hold onto the connection, not to roam, because it means they’re giving revenue away. So you’ve got to take the stuff from under the waterline and abstract it and make it agnostic, so that you have choice of where you get your data from, which we call BYOC, bring your own contract.

Nick Earle:
But the real question I think is, in order for all of this to work… And we’ll get onto that at the end, is the control of the switching rules and the logic must be in the hand of the users, not in the hands of the people who have the proprietary interest to keep the connection on their own network. And so the question is, who controls the switch? Is another way of looking at it.

Nick Earle:
All right, number three. We need to keep going. So that’s three. Number four. What’s the fourth biggest inhibitor that the survey said?

Steffen Sorrell:
Okay. So another interesting one, related to something you touched upon earlier. So 48% of respondents saying that robust global coverage is lacking. And this is something that you mentioned earlier. So your biggest tier ones, they do have significant coverage, but they still have black spots. They still have areas where they are only able to access, let’s say, one roaming partner. And when you get into a situation like that, you might have your device operating in the field with a poor signal, for example, because it’s not able to attach to a more optimal network, or because it might be outside of the main coverage footprint. Then while they may be able to service it, then you’re also looking at inflated costs for your connectivity. Really what the respondents are looking for is for a provider to say, “We can provide connectivity in country X, but you’re going to have a choice of network providers, and you’re not going to be forced onto networks that you don’t want, which might impact either pricing or performance as well.”

Nick Earle:
It’s really education, talking to people and saying, “What do you mean there isn’t global coverage?” Because especially the people who haven’t started implementation yet… Because they think there is global coverage because again, back to mobile phones, cell phones, there is global coverage. But of course when you look at the stats on the website, the coverage is per head of population, not per GPS coordinate, number one. And that’s because the capex model to fund the towers is massively expensive. So you can’t put towers everywhere. You put towers where the population is. But IoT devices are not necessarily where the population is. So straight away, you’ve got a mismatch.

Nick Earle:
And then because of… Not everybody does roaming agreement with everybody else, so you have a series of walled gardens. And you may have a roaming agreement in a country, but as you say, the data rates might be really, really expensive. So the question is, I can roam you, but your bill goes up. Really, your customers are saying “Why can’t we have interoperability? And why can’t I choose?” And there’s a fundamental structural issue why you can’t do that, because there is no such thing as a mega global MNO that has towers everywhere and a roaming agreement with everybody else, and there never will be. And therefore by definition, there will never be global coverage at that level of the stack. It has to be an MNO type play that is truly agnostic. That’s a pretty big one.

Nick Earle:
Typically what we find is, after people have done their first IoT project, then they understand this issue, but going into it, they think, “No, that can’t be the case. I get roaming everywhere.” And the answer is, no you don’t, and your business case is predicated on 100% connectivity. We talked about verticals, 92% of heart monitors being able to connect is not a great percentage. And so that’s a really big issue. All right, that’s four. How about number five?

Steffen Sorrell:
So coming in closely to the previous one, and this is an interesting topic that we discussed in our last podcast together. So 46% of respondents raised concerns over the number of countries that are restricting permanent roaming. So permanent roaming, just for the listeners, is basically your IoT device lands in the country, and it spends longer… There’s no strict definition, but we typically say longer than 90 consecutive days. And often it could be very much longer than that, up to years in a single country, roaming. And national regulatory authorities, as well as MNOs, are starting to look at this and say, “Hang on, how does this affect our networks? How does this affect our business? Should we be doing something about it?” And some of those organizations are saying, “We are no longer allowing permanent roaming at a legislative level,” or in some MNOs’ case, they are not allowing permanent roaming from a commercial perspective. So then you have a big risk, essentially.

Nick Earle:
It’s dynamic, isn’t it, Steffen? It’s not like the rules are laid out into the world and everybody knows. These things can… I mean, in two hours’ time, there could be a change, probably will be a change, somewhere in the world, of either an MNO who’s fallen out with another MNO and says, “I’m not accepting roaming any more until a commercial dispute is closed off,” or a country could say, “I want to protect the local operator, therefore I’m imposing a…” 90 day rule can be generous. Some of them are 30 day rules. And the notification period for getting off, the shortest we’ve seen is four hours, a notice to get off the network within four hours. Which again, if you think about some of the business critical use cases for IoT, it’s just impossible. And you can’t swap the SIM in a device or anything like that.

Nick Earle:
Again, it’s an industry structural issue, isn’t it? It’s not surprising regulators are doing this, because especially if you’re a smaller country, you want to protect your operator. But having said that, the largest country in the world has permanent roaming restrictions. The U.S. have roaming rules, which surprises a lot of people. Places like Brazil, India, China, Turkey, which is a famous one. So there’s large parts of the world where roaming is not allowed by the operators and not allowed by the regulators. So yet another complexity for IoT project manager. We are going to get into, so what’s the answer? But if we can just pile on the issues, because the survey data is really important. 750 plus people who said, this is what I found out. So, the last one. What was the last one? And then we’ll stop.

Steffen Sorrell:
So 42% of respondents raising concerns over security of devices and the environment. And this is not really a surprising statistic. When you look at any IoT survey, security is always a big topic, especially when you’re deploying these devices en masse, you could have real consequences if there’s some kind of confidentiality breach, and perhaps even more likely the loss of connectivity availability. So we talked just now about permanent roaming and how you could potentially lose access to your devices within four hours, as you said. A similar situation could happen in terms of a security breach, and then you could lose access to your devices for God knows how many hours, and what does that mean from a monetary perspective?

Nick Earle:
You could lose access to your job as well. It’s one of the biggest reasons for changes, not just at individual level, but the CXO, and arguably the fragmentation of the industry and component solutions in it all make this last point even more important, because you’re having to deal with multiple companies to implement an IoT project, then you’re having to implement multiple security solutions, and then how on earth… So you’re not only having to coordinate the operators, you’re having to coordinate the security solutions. Let’s stop there, and I know there’s many, many more questions in the survey. And as you said, the survey is… Some of the data has been published with IoT Now, the publication. And just before we get into, so what do we need to do about it, if people want to find out more about the survey how can people actually get access to the full survey? Is it contact Kaleido Intelligence?

Steffen Sorrell:
Yeah. You can contact us via info@kaleidointelligence.com, and we can point you in the right direction.

Nick Earle:
OK. So that’s K-A-L-E-I-D-O.

Steffen Sorrell:
Yep.

Nick Earle:
Okay, great. Let’s just move now to, so what’s going to happen next? Clearly this is a scenario where we’re trying to take individual component parts, massive complexity, and we’ve put the onus on the customer, despite what the industry says, and all the working groups, to try and sort things out. The fact is, the reality is, that the customers are having to glue solutions together themselves to make them work, and they’re not succeeding. And it’s one of the reasons, back to that stat, that we didn’t get to 50 billion devices, we got to 11. Another way of saying it is we’ve not crossed the chasm yet, we’re in the early innovators and the early adopters, and we have to cross the chasm and get into Main Street.

Nick Earle:
So you’re head of research for Kaleido, and co-founder. What do you think… It seems like this is not an area that needs small, incremental tweaks. There needs to be some pretty fundamental changes here, because it’s not a sustainable situation when you get 80%, 60% of people… It’s not like we’re talking about 8% and 6% having difficulties. These are pretty fundamental stats, which don’t reflect great on the IoT industry and the players. So what’s your take on what’s going to happen, perhaps over the next two, three years, that would hopefully give us a bit of hope, would hopefully make it a lot easier? Because there’s no shortage of demand for IoT and the business benefits of IoT. People are wanting to do it. So what do you think are the big things that are happening in the industry that will help this, knowing it’s not going to be a short term fix?

Steffen Sorrell:
Maybe touching first on the hardware side, I think what we’re seeing is the connectivity is more and more part of the early conversation among enterprises when they’re looking to deploy. So it makes sense that you need to have that hardware expertise ready to help that potential customer from the outset, to help them decide, which radio technology are they going to use? This is another stat, which I can’t remember off the top of my head, but there was quite a substantial proportion of respondents saying they’re confused by the number of different radio access networks.

Nick Earle:
That’s right. And of course they get sunsetted on a regular basis.

Steffen Sorrell:
Exactly. We’re just in the middle of… We’re just really starting to kick into gear in terms of, 2G’s going to go away, 3G’s going to go away. Then what are you going to use instead? Do you have a fallback option? Are these technologies going to be working in the country that you want? For example, with Narrowband IoT or LTE-M, for example. So I know you guys have hardware expertise to help customers in that respect, but I would hope that we would see more of that across the ecosystem. I think we’re already seeing some of these hardware players, to a relatively limited extent, offering a bundled connectivity and hardware solution. So those kind of things are starting to crop up. I would expect that to increase in future.

Nick Earle:
And we think that it’s not just bespoke hardware design. I mean, we’ve done hundreds of bespoke hardware designs, where you build in future protection, as you said, but it’s also the ability to have scalable hardware design, so a firmware applet in the device, which will solve a lot of the issues, because it’s not just the RAT type, the radio access type, it’s the battery life management, which is key for a lot of devices, the way the modem interfaces with the connectivity, the device management capabilities, what’s called Lightweight M2M, these are all the acronyms that people will get to understand when they dive into these projects. But your ability to actually get granular level information of what’s going on in the device to manage the device.

Nick Earle:
I mean, really the SIM, it isn’t a SIM, back to the earlier thing. It’s a small computer, which also has SIM capabilities. In the edge aggregation device space, it’s 80% of the applications are processed at the edge. So it’s a computer designed for specialist tasks, which is different for every use case. So yes, I agree with you. It is very surprising that more people don’t offer hardware type expertise. And I personally think it’s because most companies are private, and the VCs don’t like investing in hardware companies. I honestly think that that’s one of the reasons people have steered clear. In an opposite view, which is why we focused on these big deployments, but I do believe that it’s… Blame Marc Andreessen. We’ve all swallowed the Kool-Aid on that, and now was suddenly realizing, maybe it’s important. But there are very, very few companies that can do this, that also understand IoT. Hardware expertise has to come up.

Nick Earle:
What about, if I can put you on the spot and ask you some predictions on specialists in roaming, Kaleido is well known, arguably the best analyst firm that’s out there in roaming. What’s your view on, is there going to be an outbreak of peace? Is everyone going to do permanent roaming with everybody else, and there’ll never be any things cut off in the future? Or is that wishful thinking?

Steffen Sorrell:
I think we’re at a very important stage of IoT roaming. So in the last few years we’ve seen more and more demand for dedicated IoT agreements among roaming partners, rather than just using the, let’s call them gray roots, where they were just using their consumer agreements to run. I think that was quite apparent during the pandemic. A lot of MNOs suddenly found they still had a lot of roaming going on. Where’s that coming from? No-one’s traveling.

Nick Earle:
One operator said to us, because no-one was traveling, no-one was using their phones abroad, so the water level dropped, and when the water level dropped, suddenly these shapes emerged that were under the water, and they were called IoT permanently in country. They went, “What on earth is that?”

Steffen Sorrell:
Exactly.

Nick Earle:
And then they went, “How profitable are those contracts?” And that’s the point at which they went, “Oh my word, there’s this…” So the pandemic actually exposed the problems with IoT roaming.

Steffen Sorrell:
We’re starting to see more commercial activity for dedicated IoT inter-operator tariff agreements. The question is, in the case of things like Narrowband IoT or LTE-M, when you charge based on consumption metrics at the wholesale level, the current transfer account procedure framework, the TAP framework, that’s done on a daily basis. Sometimes you might not have accumulated enough data to actually register a record. Effectively, some people could be using their NB-IoT or LTE-M devices for free, effectively. It’s not profitable, it’s not sustainable. So we’re moving to a new framework called billing and charging evolution, which will introduce new types of wholesale agreements. Perhaps for an NB-IoT device you could charge by the number of devices that were active on your network, via a monthly recurring charge. That should help in terms of profitability, but of course the fact that arranging those roaming agreements takes time to migrate from TAP to BCE is another hurdle, or certainly a perceived hurdle that MNOs think they have to overcome. And then of course you have to work out what is sustainable in terms of that charge and actually gaining some traction.

Nick Earle:
How long will those agreements stay in place? I was talking to a utility metering company the other day talking about the meters are in the ground for 15 years. And they said a certain country, a certain operator said, “Don’t worry, we’ve got a permanent roaming agreement in place,” for Narrowband IoT in that country. I said well, we’ve never seen any of these roaming agreements be more than a year, for a start. So the meter’s going to be in there 15 years. As you said, data price is coming down to zero, people are creating new economic models to try and get some money in, because no one’s making any money. You have to ask yourself the question, is roaming fatally flawed? And if so, given that you have all these operators, what is the model?

Nick Earle:
And of course, what our viewers and regular listeners will know is that, it’s the Star Alliance. You distribute connectivity, but you don’t roam, you localize, so that the operator per country, like Star Alliance in the airline industry, is actually very, very happy. And the customer, it’s not that you never roam, it’s just that you don’t roam as much, and the customer’s risk profile is, you’re not going to get kicked off for localization.

Nick Earle:
But again, that is a model that takes a long time. It means it interconnects along a certain way. And most operators haven’t yet done eUICC. So they’re doing what’s called global redirect, you have eUICC and non-eUICC. So the roaming model is certainly, compared to a year ago, there’s a lot more discussion on roaming and what it will mean. And I think the pandemic did drain the swamp, which a lot of people were saying, “I’m not going to do any roaming at the very, very low end, because I can’t make money on it. I want to be a good citizen, but I can’t make money.” That’s not great for the industry. So another thing that we do is even just to say, “Where can you roam? Where is there Narrowband IoT roaming?” I don’t mean by country or by operator. Is it on that street corner outside there? Is there a Narrowband signal?

Nick Earle:
So the idea of network sniffers, we’ve certainly created network sniffers for installers, where you can actually sniff the networks to see what’s the reality versus what it says on the website. Because at the end of the day, it’s the reality that counts. And if it’s a fixed machine, you can’t move it to find the signal. If it’s fixed, it’s fixed. So I think the roaming model is flawed. We see device charge… A lot of creativity in charging models from operators right now to try and get around the fact that no-one’s making money. So a very changeable environment. There’s still people trying to make the model work, but no one’s really made it work.

Steffen Sorrell:
Yeah, exactly. It’s quite a manual process and complex to…

Nick Earle:
It’s a lot of work for other people. Let me ask you one other one. The eSIM, eUICC, so the Holy Grails, don’t worry, cavalry’s coming, but don’t worry, eUICC’s going to solve all of this. The eSIM is going to solve all this. I gave the view that actually right now, could actually make things worse. Do you think eUICC and eSIM will cause shakeout in the industry? In that… I saw some surveys that there’s over 1,000 companies in the IoT space. We’ve seen industry moves, such as we’ve seen people pull out the IoT business, we’ve even seen the biggest IoT player of all, Vodafone, announce its potential spin-out of their IoT business, which is pretty big news.

Nick Earle:
And yet at the same time we see interoperability and eUICC standards are going to solve all the issues. We’ve also got the hyperscalers who of course are truly global. I mean, there’s no such thing as a regional hyperscaler solution that’s truly global. I guess what I’m trying to say is, do you think the landscape will fundamentally change over the next two to three years, without being specific on any one company?

Steffen Sorrell:
I think it will. And we’re already starting to see signs of that. When we look at eSIM from MNO perspective, as I said, there’s quite a few of them who do support eSIM, but as I mentioned, it’s that stunted, shall we say, mechanism where if you want to switch, you’re migrating everything from platform A to platform B, and that creates a headache. We are starting to see some signs that MNOs are willing to be a little more collaborative in that respect. I think they’re starting off with their operator groups in the first instance. Not to mention the fact that more MNOs are now willing to play a role at the wholesale level, where for example, they’re willing to supply their profile to MVNO type players.

Nick Earle:
Yeah. It’s part of a broader shift, isn’t it? There’s been a lot of commentary on that recently, is that the MVNO star is in the ascendancy. There’s more and more people saying, there’s a lot of things we have to solve, but it seems like it needs to be an MVNO solution, and therefore there’s more MNOs are being more cooperative through their wholesale agreements to the MVNOS. And that seems to be a trend.

Steffen Sorrell:
When you take China out of the equation, and you look at the rest of the IoT market, we’ve seen higher growth from IoT MVNOs overall, versus MNOs. And there’s a big reason for that, and that’s because as you mentioned, you can have agnostic type model where, in the case of the eSIM, you’re aggregating different profiles across a single platform to help optimize that solutions. And that’s not typically been available through MNO strategies, that has led to some inflexibility for the customers.

Nick Earle:
Which the survey shows.

Steffen Sorrell:
Yes.

Nick Earle:
It’s a fairly minor description of what the survey… I’m conscious of time, Steffen. It’s such a big subject, and this is the second time around we’ve addressed it. So what I’m going to suggest is that we… I’m sure we’re going to revisit it. I’m sure there’ll be a three-peat, as the American says, we’ll do it again because this landscape is changing so fast. I guess the good news is, from your perspective there’s so many questions around this space that you’re actually positioned at the heart of the issues in IoT right now. So from a Kaleido intelligence point of view, you’re a very relevant analyst firm, because you’re at the heart of these issues. So I’m sure that keeps you busy.

Nick Earle:
And I would just say to listeners, from an Eseye point of view, we do have a lot of information on our website, on the survey, a lot more detail than we’ve gone into here, plus how Eseye addresses each of these issues with our model. I would really encourage you to look at that, because we were very encouraged, as I said at the beginning, about these results, because in many cases, we felt they were an endorsement of some of the architectural decisions that we’d taken years ago around the subjects that we’ve talked about.

Nick Earle:
But in the meantime, Steffen, I wanted to thank you again for doing this. I need to get you a badge. We’ll see what happens, but it does certainly feel like, if we were to repeat this again in early 2023, I think that probably the landscape would’ve changed fundamentally again. Because certainly my experience of IoT, whenever you get stats like this, which is pretty rare, but if you get stats that says 84% think this or 56% are struggling with that, this is not a sustainable situation. The industry will change, driven by consumer demand and consumer spending. And so it could be we’re on the verge of a pretty big change in the industry. And it has to be, because the demand for IoT and what it can do for society, et cetera, is huge. So I’m kind of optimistic that, when you get data like this, change is on the way. But I guess we’ve been here before, haven’t we?

Steffen Sorrell:
We shall see. I hope so. I think things are happening. Let’s see whether they are successful or not.

Nick Earle:
Yeah, we will. Okay. So let’s leave it there for our listeners. You’ve been listening to the IoT Leaders podcast with me, your host, Nick Earle, CEO of Eseye, and with my repeat guest, Steffen Sorrell, co-founder and head of research for Kaleido Intelligence, analyst firm, on the big subjects for IoT. And these really are the big subjects, because as we said, the largest survey that at least we’re aware of, and many other people are aware of, that’s ever been done across the largest number of corporations. And they all were very patient and answered the most number of questions, and we’ve only skimmed the surface of the research, so I very much encourage you to either come to our website or Steffen’s and to find out more information. If you’re starting an IoT project, you can do a lot worse than find out what the issues are before you get started. That’s probably the net takeaway here, given 80% of projects fail. Educate yourself on what the issues are before you plunge in, because you can get through these issues, but you have to navigate your path.

Nick Earle:
So Steffen, thanks very much as always for this. I look forward to speaking to you again, where we hopefully talk about how we’ve made progress as an industry on this in a few months’ time.

Steffen Sorrell:
Yeah. Thanks for having me, Nick. Always enjoy these discussions.

Nick Earle:
Yeah. Okay, great. Thank you.

Outro:
Thanks for tuning in to IoT leaders, a podcast brought to you by Eseye. Our team delivers innovative global IoT cellular connectivity solutions that just work, helping our customers deploy differentiated experiences and disrupt their markets. Learn more at eseye.com.

Outro:
You’ve been listening to IoT Leaders, featuring digitization leadership on the front lines of IoT. Our vision for this podcast is to be your guide to IoT and digital disruption, helping you to plot the right route to success. We hope today’s lessons, stories, strategies, and insights have changed your vision of IoT. Let us know how we’re doing by subscribing, rating, reviewing, and recommending us. Thanks for listening. Until next time.

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