Becoming a service company

Macario Namie - Vice president of marketing - Jasper Wireless

Macario Namie is the vice president of marketing at Jasper Wireless.

Macario Namie of Jasper Wireless explains how to transform from a hardware company to a service company to capitalize on the Internet of Things opportunities.

Interview conducted by Vinod Baya

PwC: Macario, can you please tell us what Jasper Wireless does?

MN: Certainly. We’re a software company that provides cloud-based software to enable both mobile operators and enterprises to build and scale connected device initiatives.

For the mobile operators, we are effectively the infrastructure on which they run their M2M [machine-to-machine] business. This infrastructure includes the entire stack of core network BSS/OSS [business support system and operational support system] technologies, which are distinct from what the mobile operators use to run their handset business. The dynamics of the M2M or connected device market are vastly different from the mobile handset market, hence the need for the capabilities we provide.

For the enterprises, we enable them to capitalize on embedded wireless connectivity in their devices to power whatever business case is strategic for them, whether it is cost savings or new revenue streams or new consumer experiences.

Today, we are the infrastructure for the connected device business of 12 mobile operator groups. Across these operators, we support the connected devices for more than 2,000 enterprises in industries ranging from consumer electronics (such as Amazon Kindle, Garmin, and TomTom navigation devices), to the automotive sector (such as Ford, Nissan, General Motors, and others), as well as commercial industries and others.

PwC: How are customers using your product?

“A big part of what we do is creating an operational standard, so these enterprises can run their connected device initiatives consistently across operators.”

MN: A big part of what we do is creating an operational standard, so these enterprises can run their connected device initiatives consistently across operators. Even though we work with multiple operators, we enable enterprises to have one standard way of operating, reporting, provisioning, configuring, controlling their devices worldwide, and delivering the user experiences that they wish their devices to have.

We’ve abstracted much of the network intelligence, capability, and complexity as configurations, so enterprises can configure things to take advantage of the carrier network and network assets to suit their particular use case and business model. For example, we support Amazon’s Kindle, and Amazon uses our APIs [application programming interfaces] to achieve a singular view of the health of its device—from details that are very specific to the Kindle device all the way down to the operator level.

PwC: How do your solutions relate to the Internet of Things?

“Market forces have reduced the cost of embedding and using network connectivity.”

MN: For us, the Internet of Things is related to M2M communications. In an enterprise, M2M communications usually results in the exchange of data between a remote device and a back-end IT infrastructure. The transfer of data can be a one-way or a two-way transfer. In the past, the high cost of deploying M2M technology made it the exclusive domain of large organizations that had a business model for and could afford to build and maintain their own dedicated data networks. Today, the widespread availability of cellular technology has made wireless M2M technology available to all enterprises around the world. Market forces have reduced the cost of embedding and using network connectivity.

Also, when Amazon Kindle came out, it was a game-changer. Its rise opened operators and enterprises to new business models for using mobile networks—models where a singular device, shipped in millions and that wasn’t a phone, could use the mobile network without having a subscriber relationship with the operator. Today, two years of connectivity is included with the sale of every connected Garmin device. And, Garmin has a whole host of value-added services, such as Google searches, movie searches, real-time traffic, local gas prices, and so on that the company delivers along with it.

PwC: Most Internet of Things use cases are vertical specific. How do you serve so many verticals?

MN: We sit in an interesting place in the enterprise stack. Think of a stack of three layers. The bottom layer is the network—the mobile network in our case. It is a very horizontal layer and common across all use cases. Our solution is part of the network layer. Anybody who uses the mobile network has to touch what we do. There is no way around it.

Becoming a service company 

The next layer up is the hardware or the device itself. The module connecting to the network is inside the device. Now you start to get a little bit more diversity, because of the hardware specifications. For example, a connected module that must last 10 years and be subject to high temperatures or a lot of dirt inside an automobile will have very different specifications from a module that might be put into an e-reader, which has a life span of maybe two to three years.

The next layer up is the application itself. Frankly, this layer becomes extraordinarily proprietary as the application defines the end-user experience. A healthcare application that monitors a person’s temperature and blood pressure will be very different from a utility application that monitors a smart meter.

PwC: As you help enterprises embrace M2M connectivity, what are some challenges you see?

MN: The era of the Wild, Wild West is still very much in play here, and it’s really around what business model will work. The technology is the easiest part. You can no longer come in and say, “Well, we can charge $30 a month for the new services.” The few that have tried it have failed; there is subscription fatigue among consumers. OEMs [original equipment manufacturers] must figure out the business model for connectivity itself.

Take, for example, a medical device that is connected. Business model questions include the following: Who pays for the connectivity? How do you get customers to buy it? Do you go direct or use a retail channel? Do you get the insurance companies to pay for it?

Do you try and get the doctors to prescribe it? Do you try and get the employers to offer it as part of the insurance plan? Answers to such questions are essential to define the connected device strategy.

For devices that want to use mobile networks, the cost of the modules is a big hindrance as well, as it goes to the BOM [bill of materials] cost. Today, a 2G module is about $12 to $13 in volume. A 3G module is around $22 to $23. A 4G LTE [Long Term Evolution] module is still upward of $70 to $80. For OEMs, a business case must justify the cost of the module built into the device.

PwC: What are some changes that enterprises should be willing to make to capitalize on the Internet of Things?

MN: I’ll give you an example. Garmin established a very successful business by building great navigation hardware as cost-effectively as it could and putting it in retail distribution channels. When a customer makes a purchase, Garmin at some point down the line gets a check for that sale.

Now if a customer gets a connected Garmin device, suddenly Garmin has a subscriber on its hands. That simple act of embedding connectivity inside this device has transformed— really revolutionized—how Garmin must work with this consumer. Suddenly the company knows who the consumer is and gets data about how the consumer uses the device, the features used and not used, and so on. Garmin is no longer a product company. Now it must deliver real-time services to the consumer.

“The act of transitioning from being a hardware company to a service company is quite profound.”
 

The act of transitioning from being a hardware company to a service company is quite profound. Garmin is now responsible to make sure that service works, that it is activated or deactivated properly and seamlessly, and that the customer gets all the real-time traffic and content expected. If the customer wakes up one day and gets into his car and there’s no real-time traffic report, he picks up the phone and calls Garmin, as the customer is a Garmin subscriber. Garmin is now playing the role of service provider and must have billing systems, revenue stream systems, diagnostic systems, customer care systems, and network control systems that provide real-time visibility into the service and the customer.

Multinational enterprises have an additional challenge. It is one thing to offer a service in one country. But offering the service across 53 or more countries around the world, in a cost-effective manner so it allows this business to be profitable, is also an operational challenge.

PwC: How can enterprises become service providers if they have been steeped in a device culture?

MN: I described the three-layered stack earlier. Most device companies own the middle layer. To become a service provider, [a company must learn to build and own the full stack—from network to device to application. That’s really the name of the game at this point.

A big part of our value is that we enable enterprises to own the stack. We effectively provide a BSS/OSS as a turnkey cloud solution—so enterprises can run their businesses as a service without significant investments. We reduce the complexity by taking advantage of network capability and intelligence.

PwC: What new use cases do you anticipate will become real in the future?

MN: I’ve heard a lot of futuristic ideas. For instance, I’m going to be able to have my stoplight talk to my car, which talks to my refrigerator, which talks to my grocery store and tells me I need more peanut butter. So as I drive up to the grocery store, a robotic arm hands me the peanut butter jar and charges a credit card I have on account.

That may be true far in the future, but I don’t see that in the near term. It’s just the practicalities of getting there—the barrier is so high. What I see is very purpose-built use cases that are meaningful. Over time we’ll see a lot more things connected, but I think we’re going to live in a much more practical world in which specific use cases serve a particular purpose. Experience shows that the ones that have attempted to overreach tend to die very quickly.