For years, we’ve heard equipment vendors refer vaguely to vertical markets as an untapped growth opportunity. We’ve heard that smart grid networks behave similarly to mobile networks. We’ve seen connected cars at trade shows and heard that they’ll soon be able to drive us to work in the morning. Lately, I’ve even heard that crates of bananas will be able to communicate with ship captains and port operators in order to better schedule their arrival into port at the perfect stage of ripeness. Seriously… I heard that. What I hadn’t heard until I attended Ericsson’s OSS/BSS analyst conference held in Boston earlier this week is that the key to tapping vertical markets is much more about the professional and managed services a vendor can bring to an engagement than the telecom products it might eventually sell as part of the deal.
As part of its presentations at the event, Ericsson put forth one of the most credible vertical markets stories that I’ve heard to date. This is partly because the vendor went into detail regarding how its approach to verticals is services-led. It is not approaching companies such as Volvo or Maersk trying to hawk tiny base stations or CDN solutions. Instead, it leads most vertical market opportunities with a consulting engagement that tries to vet the business objectives of the potential customer, then develops a customized solution – which usually includes an ecosystem of partners. Finally, it runs the engagement as a large-scale systems integration project. Of course, if the consultants do their jobs, some equipment sale does become part of the deal. However, that’s not the point. The point, to hear Ericsson tell it, is to position itself as the prime integrator/business partner, making it far more valuable than any tiny base station could ever be.
Consider the Maersk example that it shared at the conference. At a high level, the global shipping giant wanted a solution to make its fleet more efficient from a logistics perspective. Predictably, this involved the ability to track containers, communicate via high-speed broadband connections at sea, and so on. So, in designing a solution for Maersk, it brought in AT&T as well as a host of other partners to design and integrate a solution. The Volvo example was much more straightforward. However, beyond the need to build tiny radios into vehicles, the main thrust of Ericsson’s involvement was a large-scale systems integration project to link the vehicle connectivity back to the IT departments, oftentimes at the local dealership level.
Moving forward, the possibilities become more interesting for the intersection of telecom and verticals. Consider the example of potentially coordinating communications between the shipping industry and the manufacturers it serves; software loads customized for local markets (think vehicles, consumer electronics, etc.) could be downloaded and installed over the air while the goods are en route on a mobile broadband connected vessel. Admittedly, this is only one of many potential intersections between equipment vendors, communications service providers and vertical market players. However, the clear takeaway is that equipment vendors have the potential to sit at the heart of any such deals, with professional and/or managed services being the catalyst that brings all the pieces together.
Neat, right? And, hardly about equipment at all.