Strategies for an Evolving IoT Market – Hyperscale, Build Value, or Exit?

The IoT connectivity market is at a key point of evolution. TecFutures sees two main strategies emerging. The first is to build a high volume /hyperscale business through organic growth and acquisition, and the second is to focus on value differentiation as a competitive advantage. The third option is to leave the market altogether.

We can analyze these strategies further depending on how a provider is addressing the market. Our analysis summarizes competitive positioning based on a supplier’s market focus and competitive advantage.

There are challenges and opportunities associated with each of these four headline strategies.

Wide market focus / High value proposition:

• High value but limited shelf life as competitors will seek to move in
• Rapid need to build ‘hard to copy’ features, re-invent the solution and create new high value markets
• Options to create niche solutions to leverage
• Option to create lower price version

Narrow market focus / High value proposition:

• Hard to easily compete against / copy
• But not so easy to broaden the market focus (Not so easy to broaden market focus)
• Constant need to invest to maintain niche advantage
• Temptation to offer lower price version / reduce prices to stay in the game

Wide market focus / Cost advantage proposition:

• Hard to add value by specializing to a narrow market focus without significant investment
• The much talked about ‘race to the bottom’ on price means that strategic options are more likely cost reductions, or market exit
• Not all organizations are able to achieve the volume of customers to truly hyperscale and enjoy true cost advantages

Narrow market focus / Cost advantage proposition:

• Limited options to add value without significant investment
• Strategic options are more likely to target wider market on cost
• Market position that is hard to defend in the medium to longer term
• Become a takeover target from larger low cost players
• Inability to achieve economies of scale

Read more in our latest report at www.tecfutures.com/unlocking-value-in-enterprise-iot. It is free to download and explores how to build lasting competitive advantage. To find out more about TecFutures, reach out to Phil Todd and Andrew Parkin-White .

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