17 November 20091

17 November 2009Joost Fleuren

Profitable & long-term partnerships in M2M

Joost Fleuren MSc MBAStrategy & Business DeveloperMarketing Strategy & Innovation departmentKPN Business Market

M2M Exchange, Brussels, 17 November 2009

Break out session: Telecoms Business Strategy

17 November 20093

Content

1. Overview KPN (Royal Dutch Telecom)

2. How M2M differs from traditional MNO services

3. Where M2M has to evolve to

4. How to make money together in the meanwhile

5. KPN product offering and partnerships

17 November 20094

Summary:- Company owned mobile networks in Netherlands, Germany, Belgium- Worldwide connectivity partners (roaming networks)- EU considered as ‘home market’ for M2M- 36.702 FTE staff (2008)- € 14.6 billion revenues (2008)- € 2.6 billion operating profit (2008)

KPN Group

17 November 20095

Acknowledge the difference

From an MNO (Mobile Network Operator) perspective M2M has a different…

• Marketing & Sales reality

• Technical supply chain reality

• A different ‘money making’ reality

17 November 20096

HardwareMNO

(connectivity)Direct sales

Traditional: laptop data card supply chain

customer

sale

s

Uniform offering, as such recognizable for end-customer

One (co-) branded product

Channel conflicts, but manageable

Distribution

partners sale

s

Product

marketing

Product

marketing

Marketing & sales reality

17 November 20097

Hardware ConnectivityConnectivity

mgmnt platform

Integrator

services

M2M: more actors involved directly to end-customer

customer

ASP

sales sales sales salessales

inefficient marketing and sales efforts

Results in problems with operational & technical reality: longer development time and higher development risks higher Operational and Total Cost of Ownership

higher adoption barrier for the end-customer

Marketing & sales reality

17 November 20098

Hardware ConnectivityConnectivity

mgmnt platform

Integrator

services

Explained: separated offerings prevent efficiency

customer

ASP

accountability accountability accountability accountabilityaccountability

Technical and process integration best served with stable (longer term) partnerships

No formal accountability towards each other = no optimalization of technical design & processes

Competing on services that can be delivered by more than one player in the value chain, but not with the same efficiency

No coherent approach on ‘educating the customer’

Technical supply chain reality

17 November 20099

modulegateway or embedded

hardware

device

mgmnt

platform

Connectivity Connectivity mgmntM2M

integration services

ICT

Integration

M2M

Application

EU

US

Asia

Satellite

Network stability

Usage statistics

provisioning

Large quantities

Time To Mrkt

Data optimization

Battery powered

WiFi

Zigbee

WiMax

Helpdesk tools

Secure trans.

Mission critical

Configuration mgmnt

Usage statistics

power usage

size

power usage

size

Explained: not easy to vertically integrate or partner

Technical supply chain reality

harsh environments

Dual GSM

Quatro GSM

WiFi

# I/O ports

data logging

updates

local funct.

Firmware update

harsh environments

Repair by replace

Updat mgmnt

WiMax

Access control

usage alerts

pre- / postpaid

selfservice

Industry spec.

Time To Mrkt

API’s

Security

Multilingual

B2C helpdesk

Each solution requires a different set of capabilities from the value chain partners.

# produced

17 November 200910

Explained: standardization

Technical supply chain reality

Standardization:- Currently no company (-group) is that dominant that it can push a standardization.- A single standard is never optimal for every application.

For now the choice of

A - specializing and vertical partnerships / integration, B - settling for casual relationships in an not-standardized world.

17 November 200911

MNO’s have influence but get a small slice of the pie……especially compared to regular Voice and Data offering.

Money making reality

* Beecham research, “M2M and the

Internet of things”, October 2008

17 November 200912

The answer?

17 November 200913

From this…

Hardware

Connectivity

Connectivity

mgmnt platform

Integrator

services

ASP

Hardware

Connectivity

Connectivity

mgmnt platform

Integrator

services

ASP

Hardware

Connectivity

Connectivity

mgmnt platform

Integrator

services

ASP

Hardware

Connectivity

Connectivity

mgmnt platform

Integrator

services

ASP

customer

customer

customer

customercustomer

17 November 200914

…to this.

Hardware ConnectivityConnectivity

mgmnt platform

Integrator

servicesASP

Hardware ConnectivityConnectivity

mgmnt platform

Integrator

servicesASP

Hardware ConnectivityConnectivity

mgmnt platform

Integrator

servicesASP

Hardware ConnectivityConnectivity

mgmnt platform

Integrator

servicesASP

Customers

Application type 1

Customers

Application type 2

Customers

Application type 3

Customers

Application type 4

M2M solution

M2M solution

M2M solution

M2M solution

marketing

consultiveselling

development

deploymentTogether as

partners:

17 November 200915

Make money in the meanwhile……start with partnering for M2M solutions & integrator services

Required for enduring and profitable solution partnerships:

Know what specific value you add in the chain – be complementary. For example: brand, local sales force, connectivity, core mobile network.

Do make a choice what fits you to focus on. For example: connectivity and VAS based upon that

Be focused on who to target the solution at. For example: OEM, complementary VAS resellers as integrators

EU / Global scope to have critical mass in one solution.

17 November 200916

Practice what you preach…

17 November 200917

KPN SIM

KPN SIM Control Centre

Geographically Redundant Data Centers

Private Circuits

KPN Company and partner Networks(GPRS, EDGE, UMTS, SMS, Voice)

GSM Encrypted

VPN/ Public Data Traffic

KPN SIM

KPN SIM Control Centre

Geographically Redundant Data Centers

Private Circuits

KPN Company and partner Networks(GPRS, EDGE, UMTS, SMS, Voice)

GSM Encrypted

VPN/ Public Data Traffic

KPN SIM

KPN SIM Control Centre

Geographically Redundant Data Centers

Private Circuits

KPN Company and partner Networks(GPRS, EDGE, UMTS, SMS, Voice)

GSM Encrypted

VPN/ Public Data Traffic

KPN’s track record in M2M

Hardware ConnectivityConnectivity

mgmnt platform

Integrator

servicesASP

- 2007

2008

2009

M2M Development partners

2010 initiatives in development

M2M Connectivity partners

KPN SIM

KPN SIM Control Centre

Geographically Redundant Data Centers

Private Circuits

KPN Company and partner Networks(GPRS, EDGE, UMTS, SMS, Voice)

GSM Encrypted

VPN/ Public Data Traffic

KPN SIM

KPN SIM Control Centre

Geographically Redundant Data Centers

Private Circuits

KPN Company and partner Networks(GPRS, EDGE, UMTS, SMS, Voice)

GSM Encrypted

VPN/ Public Data Traffic

KPN SIM

KPN SIM Control Centre

Geographically Redundant Data Centers

Private Circuits

KPN Company and partner Networks(GPRS, EDGE, UMTS, SMS, Voice)

GSM Encrypted

VPN/ Public Data Traffic

To partner with us to provide EU wide connectivity, outside our NL, D, B sales footprint.

Continue to offer best in class connectivity platform.

To ensure that requests for M2M services are being met with the best partners available.

Be the preferred partner for ASP’s who want to become and stay most efficient by offering integrated global communication

Core capability

17 November 200918

KPN’s partnership approach – please contact us

M2M Connectivity partners

- for connectivity resellers, EU wide.

M2M Development partners

- for solution developers / M2M Integrators, EU wide.- benefitting from our state-of-the art SIM Management platform and EU &

WorldWide connectivity offering

- for solution providers / ASP, EU wide.- benefitting from our state-of-the art SIM Management platform

and EU & WorldWide connectivity offering