The Mobile Evolution the Challenges and Opportunities of Mobile

The Mobile Evolution The challenges and opportunities of mobile

Volume 2 kpmg.com/mobile

KPMG INTERNATIONAL © 2013 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated. Foreword

It’s been a valuable and informative Collaboration is key journey: over the course of 12 months, While each of the articles touched on KPMG’s article series Mobile Evolution critical issues for the mobile evolution, has explored some of the challenges and we also recognize that these issues and opportunities that define this vast and opportunities do not exist in a vacuum. transformative market. Indeed, they are intricately intertwined and We’ve addressed some of the difficult each has an impact and influence on the issues such as security, regulation and other. With this in mind, we have grouped standards, and examined some of the articles into two digestible compendiums. opportunities that mobile is creating for the This edition, The Mobile Evolution: Volume 2, Sanjaya Krishna healthcare, automotive, financial services brings together the second half of the series Principal and US Digital and media sectors. We’ve also tackled and provides an overview of some of the key Risk Consulting Leader some of the key themes emerging in the themes emerging in 2013. KPMG in the US sector such as partnerships, the Internet of We hope that the articles and insights Things and the future of mobile networks. provide valuable guidance to business And, throughout the series, we’ve sign- leaders as they develop a clearer posted opportunities for technology, media understanding of the mobile marketplace. and telecommunications organizations currently working to enable the mobile On behalf of KPMG’s network of mobile evolution. professionals, we would like to express our gratitude to all of those who participated A journey started in this series. In particular, we would like As we noted in the Foreword of The to thank Maciej Kranz, Vice President Mobile Evolution: Volume 1, the most and General Manager of the Connected Graeme Ross important lesson to come from the Industries Group at Cisco Systems, and Global Chair, Media & series is that success in the mobile Dan McDuffie, CEO of Wyless, for their Telecommunications marketplace takes much more than financial valuable contributions to our feature investment. It requires a strong (and articles on the Internet of Things. realistic) understanding of the landscape We encourage you to read the full series and environment, a comprehensive and online or to download Mobile Evolution: achievable vision for the future, willingness Volume 1 and 2 at kpmg.com/mobile. and capability to learn from the mistakes Alternatively, simply scan the QR code and successes of others, the open- below. If you would like to discuss any of mindedness to work with competitors and the articles in this series – or other mobile appropriate resourcing to turn change into challenges facing your organization – please opportunity. contact your local KPMG member firm. We also recognized that this would not be Gary Matuszak easy for business leaders. They will need to Global and US Chair, balance pace against prudence to ensure To read the full series online please Technology, Media & that their mobile strategies support the visit www.kpmg.com/mobile or Telecommunications long-term goals of the enterprise and that scan the QR code below: investments are aligned to the needs of the business. In many cases, we suggested, the adoption of mobile will demand significant transformation as enterprises evolve their business models and enhance their operations in order to take full advantage of the benefits that mobile offers.

The Internet of Things: how Machine to Machine (M2M) communication is changing A brave new world 04 14 the mobile environment

The Internet of Things: the evolving market for Turning mobile Machine to Machine strategy into reality 06 18 (M2M) managed services

Turning mobile security Auto-Mobile: cars to be the risk into revenue 08 22 hottest new mobile device

Partnerships and The future of mobile networks 10 24 collaboration are key

As this series clearly demonstrates, mobile For new market entrants, mobile has emerged as technology is evolving at unprecedented speed a potential ‘golden ticket’ that reduces the cost (and often with disruptive implications). But it of entry, levels the competitive playing field, and is also clear that the wide-spread adoption of allows innovative ideas to become billion dollar mobile holds significant opportunity for all types businesses. of organizations. Looking back over the last six months of The Mobile For traditional enterprises, mobile offers a clear Evolution series, three main trends seem to have path to new revenue opportunities and business emerged that are already having an immediate model transformation that – in many cases – will impact on organizations both inside and outside of create unprecedented competitive advantage. the mobile sector.

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As Tudor Aw, KPMG in the UK, points out in his resources to ensuring that they are leading rather than opening article on page 4, it is no longer an option for lagging the mobile charge.” organizations to sit on the sidelines or take a cautious Yet even those that have developed their mobile strategies approach to mobile; today’s businesses must get ahead are struggling, particularly with implementing their plans of the mobile curve to survive. in a constantly-shifting environment. According to Egidio However, he notes, businesses will likely struggle to Zarrella, KPMG in China, mobile transformation can be an manage a change agenda that – on the whole – is no longer exceedingly complex and challenging project to undertake. being led by enterprises but by consumers and end-users. But, as he outlines in his article on page 6, with the right “If businesses hope to survive this market transformation,” approach and preparation it is certainly manageable. he says, “they will need to devote serious and senior

The emergence of new business models and opportunities

Around the world and across almost every business sharing agreements – often with competitors – to reduce sector, the adoption of mobile is creating new operational costs and improve focus on customer service, opportunities for organizations. as noted by Bart Bastiaans and Lars van Zomeren, KPMG in the Netherlands on page 10. For example, as Alfred Koch, KPMG in Germany suggests in his article on page 8, both mobile network But the impact on business models has not been limited operators (MNOs) and technology firms could be to telecommunications and technology organizations. tapping into new revenue streams and turning risk into Indeed, many industry sectors are now struggling opportunity by developing smart mobile security solutions to adapt to new consumer trends forced on them by which can either be placed over the network or sold on to the rise of mobile and – as Paul Wissmann, KPMG in other organizations and clients. the US, suggests on page 12 – nowhere has this had MNOs in particular are finding new opportunities to a more disruptive effect on business models than in improve their bottom line by entering into network the media sector.

The rise of machines and the Internet of Things

While mobile may be having a distinct impact on the Dan McDuffie, CEO of Wyless, agreed. “The M2M way people interact with their environments, it will be market is very fragmented,” he noted. “Those the ability to connect and interact with machines that organizations investing in M2M are really struggling may hold the biggest promise for the mobile sector and with bringing some simplicity to the technology.” businesses in general. One industry sector that is getting it right – and seeing In a pair of feature articles on pages 14 and 18, Sanjaya significant growth as a result – is the automotive sector. Krishna, KPMG in the US talked to executives at Cisco As Mathieu Meyer, KPMG in Germany points out in his and Wyless about M2M and the ‘Internet of Things’ and article on page 22, cars are quickly becoming more and how these trends are creating new opportunities for more like mobile devices thanks to smart partnerships organizations in almost every industry sector. between operators, tech firms and auto OEMs. Other industry sectors could learn a thing or two from their But, as Maciej Kranz of Cisco noted, some hurdles still experiences. remain. “This is one of those areas where the entire industry needs to come together to solve some of the big challenges,” he argues on page 14.

So what is the key take-away for those within the industry and between industry operating – or seeking to enter – the sectors will need to grow, and collaboration mobile marketplace? According to across the ecosystem will need to flourish. Sanjaya Krishna’s concluding article on What will remain to be seen, he suggests, page 24, it is that – for mobile to have a truly is which players will take advantage of the transformative effect – stronger partnerships opportunities being created by mobile and will need to be formed, cooperation both which will fall behind.

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By Tudor Aw Head of Technology KPMG in the UK

There should be little doubt that mobile is a game changer. It is a rare business that is not in some way impacted by the opportunities and risks presented by mobile – whether that be new channels to market, creative ways of interacting with customers and engaging employees, or opportunities to drive cost efficiencies for businesses. Indeed, it is hard not to be dazzled by massive potential represented by mobile and, over the past five years, we have been inundated by news stories advocating the virtues of mobile. If all the hype can be believed, it seems clear that mobile is already taking over the world and dominating the lives of both consumers and the enterprise.

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© 2013 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated. The statistics are certainly compelling: challenges and complex technology roll- mobile subscriptions have increased by outs. And almost everyone agrees that KPMG @KPMG 45 percent over the past four years and – security and privacy concerns are slowing Security and privacy concerns are by the end of 2011 – almost 85 percent the pace of adoption and need to be quickly slowing the pace of #mobile adoption of the world’s 7 billion people had access addressed. and need to be quickly addressed to a mobile device1; by the end of 2010, As a result, we have seen some of the most smartphone shipments had overshadowed innovative advances made – not by the PC shipments, making mobiles the de traditional global powerhouses and industry facto computing platform of choice2; stalwarts – but by relatively new start-ups and between 2008 and 2011, revenues such as Square, Shazam and Twitter. for mobile apps and advertising grew by 3 153 percent (CAGR) to reach GBP12 billion. A changing balance of power Will benefits materialize? What is plainly clear is that the pace of change and the opportunities created by Tudor Aw While all this may be true, when you look mobile are unstoppable. For businesses, the Head of Technology back at all the hype that surrounded the simple reality is this: it is no longer an option KPMG in the UK launch of 3G for example, it would be easy to sit on the sidelines or take a cautious to argue that – in many ways – the progress approach to mCommerce, businesses have The bottom line is that those that we have experienced in mobile to date to strive to get ahead of the mobile curve enterprises that are either not does not match up to the innovation that to survive. The ‘consumerization of IT’ will was promised. willing or not able to change their mean that the next wave of mobile business And as 4G/LTE begins to take hold, many models is being driven by users – whether business models to meet this are left wondering if today’s projections will in a consumer or enterprise context. And new mobile paradigm will almost indeed materialize, particularly given the the dramatic rise in BYOD (bring your own certainly miss out. wild predictions now circulating: boosters device) – employees using their own devices paint a picture of populations using their on office infrastructure – is testament to this phones for virtually everything, anywhere shift. Change is therefore no longer being and at any time; from experiencing led by enterprises but by consumers and augmented reality shopping and conducting end-users, and they are dictating the mobile mobile video conference calls through to business agenda. mobile payments and real-time mobile The bottom line is that those enterprises business intelligence tools. that are either not willing or not able to Dialing up reality change their business models to meet this new mobile paradigm will almost certainly Certainly, there are pockets of innovation miss out. Moreover, business leaders must that mark the path to this ‘brave new recognize that the pace of technological world’. But the reality is that many of these innovation and mobile adoption is only developments are still not mainstream just starting to pick up speed and is set (some have yet to be perfected and to accelerate massively in the next few commercialized), leading many to believe years. If they hope to survive the market that we are still some way off from mobile transformation – businesses will need to becoming the truly disruptive technology devote serious and senior resources to that observers predict. ensure that they are leading rather than Depending on whom you ask, this belief lagging the mobile charge. can be attributed to a range of factors. There should be no doubt that mobile is Many businesses are reluctant to invest in finally about to take off into the ‘brave new a channel that they believe will cannibalize world’. The real question is whether today’s their existing business models. Others point businesses are prepared to survive the ride. to variable network quality, inter-operability

To read the full series online please visit www.kpmg.com/mobile or scan the QR code below:

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By Egidio Zarrella Partner, Clients and Innovation KPMG in China

Developing a mobile enterprise strategy is one thing; implementing it successfully is another thing entirely. Indeed, while many enterprises are clearly awakening to the massive benefits that mobile enablement offers, many seem to be struggling with exactly how to move from strategy to reality.

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© 2013 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated. Not just a technology problem whether the organization is either capable or prepared to execute the strategy. Few In part, this is because most organizations KPMG @KPMG have undertaken a thorough assessment are burdened by the technology status Developing a #mobile enterprise of what processes and operational models quo: complex legacy systems, disparate strategy is one thing; implementing must be changed, terminated or created software platforms, fixed assets and it successfully is another thing to achieve their objectives; fewer still have costly infrastructure all conspire to slow entirely. While many enterprises are a strong understanding of their internal mobile adoption and create complexity. clearly awakening to the massive capabilities and capacity for change. But while many people – both inside and benefits that mobile enablement outside of the IT department – believe that In their quarterly evaluation of enterprise offers, many seem to be struggling mobile enablement is, first and foremost, mobility services providers, Forrester with exactly how to move from a technology problem, the reality is much notes that companies are increasingly strategy to reality. more complex. starting to recognize that they need help with their enterprise mobility strategy and For one, process and culture change are key. are therefore turning to mobility service As I travel around Asia talking to executives providers to help design, develop and about their mobile strategy, I am frequently support their mobile applications.5 Mobile struck by the fact that few – if any – have fully Egidio Zarrella operators have much to gain too: Exact anticipated the need for cultural and process Partner, Ventures (an analyst firm focused on change as a prerequisite to mobile success. technology market intelligence) predicts Clients and Innovation So while the choice of technology and that enterprise mobility services may grow KPMG in China selection of software is certainly an into a USD100 billion for US and Western While the choice of technology and important decision in the mobile evolution European operators alone.6 roadmap, in my opinion, executives would be selection of software is certainly much better served by focusing their efforts Taking the first steps an important decision in the mobile on creating the right culture and catalyzing I’ll be the first to admit that mobile evolution roadmap, in my opinion, internal change rather than getting bogged transformation can be an exceedingly down in vendor and platform selection complex and challenging project executives would be much better decisions. to undertake. But – with the right served by focusing their efforts In fact, in today’s marketplace, the reality approach and preparation – it is certainly on creating the right culture and is that many of these ‘pure technology’ manageable. When we work with our catalyzing internal change rather integration challenges can rather easily be clients to develop mobile strategies, we solved by the vendors themselves, many always try to simplify the process down to than getting bogged down in vendor of whom have been working diligently three key questions: Where are you now, and platform selection decisions. to transform themselves into mobile where do you want to go and how do you integrators: SAP, Oracle, Microsoft and want to get there? others are all rebranding themselves as Knowing where you are now requires a deep mobile enterprise enablers. understanding and assessment of not only And with projections that a new ‘Mobile an organization’s technology assets and Backend-as-a-service’ market may be environment, but also the processes and worth some USD7.7 billion by 2017,4 it is culture that underpin it. Identifying where you not surprising that legions of smaller and want to go demands executives and business newer vendors have developed somewhat leaders have a strong vision for the future and compelling integration or ‘middleware’ clear insight into how mobile will enable the solutions aimed at capturing this market. organization to achieve that vision. The trick is to then develop a roadmap that Preparing for the journey effectively overlays the required cultural, So if technology is not the problem, what is? process and technology changes against the For many organizations, it is a matter of skill capabilities and capacity of the organization set and resources. In my experience, mobile in order to create a step-by-step plan of strategies are – more often than not – action for transformation. developed with little real understanding of Then all that remains is to get started. To read the full series online please visit www.kpmg.com/mobile or scan the QR code below:

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By Alfred Koch Director KPMG in Germany

There is no doubt that security is one of the greatest challenges – and barriers – facing the mobile marketplace today. But mobile security also represents a massive opportunity, particularly for telecom operators and technology providers.

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© 2013 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated. The reality is that – as consumers and services such as personal fraud watch enterprises become increasingly reliant on and management, consumer app KPMG @KPMG mobile technology – the demand for mobile risk management and personal trust #Telcos and tech firms will need to security solutions has spiked. Consumers are management. rethink their value proposition and worried that all of their personal data that now • Developing consumer identity redefine their relationships with their resides on their smartphones – contacts, bank management services: Operators and customers to truly capitalize on this account numbers, emails and so on – will carriers can combine location information new market. fall prey to identity thieves and crooks. The with detailed customer information to risk for corporations is higher still as mobile become third party consumer identify Alfred Koch devices become integrated into the office providers (IdP). environment and start to be used to access Director sensitive company information, customer • Providing device and application KPMG in Germany records and valuable intellectual property. management services: This would Mobile security business models combine the benefits of consolidated As a result, ‘trust’ has become the byword telecom and mobile management billing are only just emerging and the field of the mobile era. Consumers need to trust with single-sourced support service and that their data and information is being kept will undoubtedly open up a host of simplified vendor management. securely when using mobile devices and new opportunities for telecom and services, while corporations need to trust • Offering mobile security services: The technology companies in the future. that their service providers, technology shift away from fixed infrastructure opens environments and employees are adhering to a valuable opportunity for carriers and their security protocols. operators to help organizations manage their security environment. To read the full series online please Creating opportunity from visit www.kpmg.com/mobile or challenge Unique technology solutions scan the QR code below: Herein lies the opportunity for telecom to help secure the mobile operators and technology providers. Working marketplace in partnership with Forrester Research, KPMG Mobile is a veritable hothouse for technology International examined the current mobile innovation. What’s more, it’s still a fairly level security market and looked at some of the key playing field which means that small and indicators for future success in this area. nimble boutique firms with an interesting We found that there are significant technology alternative to offer can compete opportunities for telecom and technology head-to-head with more established players. organizations to achieve growth from mobile While the mobile security field is still security. Indeed, there are already a number somewhat nascent (it has, after all, of telecom and technology companies making only been 6 years since the commercial technologies look to provide virtual strong businesses out of mobile security introduction of the first smartphone), segregation, deployment flexibility, solutions and creating new and sustainable the report found that there are a number and seamless user experiences to help revenue streams. of innovative security technologies and effectively segregate corporate content In the resulting report, Mobile Security: from services rapidly emerging on the stage, from personal data on mobile devices. risk to revenue, some of KPMG’s telecom creating new opportunities for small tech • Creating hardware-assisted security and technology leaders from around the players and traditional stalwarts alike. assurance technologies: Hardware-based world took a look at these new opportunities • Developing location-based security security innovations, such as general and offer some of their own perspectives services: Adding real-time location purpose secure co-processors, and those based on their experiences in the market. information to security services offers that support encryption and biometrics, security leaders greater context which, Telecom operators leverage their can add trust and verifiability in the mobile in turn, contributes to the robustness of transaction value chain. position decision making. Given the trend towards more commoditized • Deliv ering enterprise-integration-as- Too good an opportunity to waste data volume businesses, it seems inevitable a-service: There is a growing need for True; mobile security business models that – regardless of how much volume mobile technology service providers that are are only just emerging and the field will creates – telecom operators and carriers will able to integrate mobile applications into undoubtedly open up a host of new need to differentiate themselves and renew enterprise back-end services through opportunities for telecom and technology their businesses to survive in longer-term. a standard set of APIs (application companies in the future. programming interface), SDK (software We believe that those operators and carriers But given the speed of the technology’s development kit) or app-wrapping service. that can build and deploy smart security adoption and the increased sensitivity of services built on top of their data traffic • Offering secure content services: This the traffic, we believe that industry leaders will not only deliver a superior and secure includes the ability to offer separately would be wise to start considering how they experience to their customers; they will hardened, separately certified, and might transform their organizations to serve also generate new and sustainable growth vertically focused content services for this new and growing market. opportunities and revenue streams. Some of critical and confidential business content. these opportunities include: • Deploying device and application • Deliv ering personal ‘trust’ services to virtualization technologies: Virtualization consumers: Includes targeted security

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By Bart Bastiaans and Lars van Zomeren KPMG in the Netherlands

These are not easy times for mobile network operators. Margins have been squeezed by increased competition (particularly from ‘free’ internet-based options), revenues from voice and SMS are on the decrease and capital costs seem set to explode in many countries as operators and regulators move towards 4G LTE.

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© 2013 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated. Not surprisingly, most mobile operators customer service – remains with the are now keenly focused on reducing operator, through to the ‘light MVNO’ KPMG @KPMG both capital and operational costs. And that only takes on the marketing, sales Based on recent events and while some continue to make good and distribution. In the Netherlands, announcements in Europe, it seems progress eking out savings through for example, a number of MVNOs have that the #mobile sector is in the midst traditional organizational cost reductions emerged to challenge the incumbents of breaking into three distinct business and restructuring, others are taking the including Rabo Mobiel, Hema and Aspider. models 1) The Private Access Network opportunity to fundamentally rethink the Model 2) The Shared Access Network way they develop and manage their mobile Outsourcing Model 3) The Mobile Virtual Network networks. Although the sharing option can be regarded Operator Model as an alternative to outsourcing, often it is New models emerging better considered as an intermediate step Based on recent events and in a process of continuous improvement. announcements in Europe, it seems that After the sharing partners have merged their the sector is in the midst of breaking into operations and have reaped efficiency gains three distinct business models: themselves (by streamlining operations Bart Bastiaans and and existing contracts), the option for • The Private Access Network Model. This Lars van Zomeren outsourcing is still open. remains the most common model where KPMG in the Netherlands operators own their network assets An evolution already underway and infrastructure. In markets where While the transformation to new network quality and reach is a significant Already, we are seeing promising signs models will undoubtedly be difficult differentiator for operators, this model that these new models are delivering value for many operators, it is clear offers private networks – particularly and cost savings for mobile operators. For those already established – with a strong some, sharing is also done in other areas that network sharing is already competitive advantage. However, in such as procurement, with Deutsche delivering significant cost savings markets where networks are no longer Telekom and France Telecom-Orange’s as and competitive advantages for seen as a differentiator, private access a good example. Their shared procurement network models most often result in high joint venture (BUYIN), aims to deliver cost operators around the world. capital costs with little added value. benefits by pooling purchasing activity in handsets, mobile communications kits • The Shared Access Network Model. and large parts of their fixed network and In this model, assets are shared between service platforms. competitors to reduce costs and increase efficiency and scale. In some cases, only Short-term pain leads to the passive assets (such as towers but long-term gain not antennas) are shared while in other As with any business model transformation, cases entire active mobile networks the move towards shared assets and are shared and jointly managed – often processes will have significant implications through Joint Ventures. The rise of for operators. Consideration must be given Everything Everywhere in the UK and to the operational impacts (ensuring that NetWorks! in Poland (both operated network quality remains high), commercial as a joint venture between Orange and effects (maintaining focus on customer T-Mobile) shows that this model can needs), organizational change requirements successfully reduce costs while providing (such as the restructuring of business units), a competitive platform on which to as well as regulatory aspects. differentiate. But while the transformation to new models • The Mobile Virtual Network Operator will undoubtedly be difficult for many Model. A number of operators have operators – sacred cows will need to be started to evolve towards a model where closely evaluated and hard decisions will no physical network assets are owned need to be made – it is clear that network but rather leased from other operators/ sharing is already delivering significant cost competitors. Strategies vary from the savings and competitive advantages for To read the full series online please ‘full MVNO’ where everything outside operators around the world. visit www.kpmg.com/mobile or of the network – such as billing and scan the QR code below:

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By Paul Wissmann Head of Media & Telecommunications, KPMG in the US

The proliferation of mobile devices has created a dramatic shift in the world of digital media. Smartphones and tablets are having a dramatic impact on the digital media experience. They’re creating a new world in which content is available on-demand and can be streamed anywhere and anytime.

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© 2013 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated. It’s this immediacy of online content that ecosystem to bring in enough revenue to is the game changer for the media sector justify the cost of their content. KPMG @KPMG and, combined, these forces are changing If online streaming is simply additive, content It’s the immediacy of online and the way people consume television, music, owners will continue to reap the rewards of yet #mobile content that is the game movies and news. another channel to market. There is a potential changer for the #media sector and, KPMG International’s recent Digital Debate dilemma, however: if consumers start to combined, these forces are changing survey of 9,000 consumers in nine countries move increasingly towards streaming through the way people consume television, revealed that 70 percent feel the choice of mobile devices – as evidence suggests that music, movies and news. digital content is broader than that offered they are – content owners could lose some by traditional media. In developing countries, very profitable revenue streams. adoption is even more profound: a recent Meanwhile, for the traditional distributors and Nielsen report found 39 percent of China’s aggregators in the cable and satellite business, mobile subscribers and 43 percent of Brazil’s Paul Wissmann online streaming offers a method for going had viewed mobile video in one 30-day period. around their infrastructure. The big question for Head of Media & The writing is on the wall for established that group is: how do we maintain our position Telecommunications, media companies – both content owners when online availability can shut us out? KPMG in the US and content distributors. Over the next several years, they will have to adapt to this Direct to consumer? The writing is on the wall for increasingly mobile world. The question is, will established media companies – they define that future or will it define them? Content owners should be concerned about any new model that lowers the pricing both content owners and content Lessons learned of their content. They also need to take distributors. Over the next several a serious look at creating new revenue Newspapers experienced this new reality opportunities by developing a direct to years, they will have to adapt to most painfully of all. For years, newspaper consumer approach that gives them a advertising revenues have been cannibalized this increasingly mobile world. The bigger share of consumer spend on their by the internet. As mobile devices took off, question is, will they define that product than the current model does. But the impact became even more acute as how do you do that? future or will it define them? readers accessed their news anywhere, anytime they want. Many newspapers have Hulu (a joint venture of NBCUniversal, tried to stem the tide by instituting pay walls, Fox, and Disney) offers one such example but the revenue from digital subscribers is by streaming on-demand content from like trading dollars for pennies. several major studios and networks. But gaining consensus among a group of highly The record business experienced a similar competitive industry players has proven disruption when Apple’s iTunes* came on difficult. Case in point: CBS continues to be the scene in 2001. Apple* makes about the key Hulu hold-out, only delivering classic 30 cents on the dollar as an aggregator for or cancelled shows through the platform. the music industry – and with 25 billion songs downloaded as of February 2013 that’s The customer will decide a great business. The record companies take on most of the risk of signing and promoting Ultimately, all roads lead to the consumer. artists, while Apple digitizes the content They will drive how content is consumed, and presents it for sale. Apple continues to and the market will have to adapt to that new dominate the music aggregation business, reality. Content companies need to plan for facing off against the likes of Amazon for the future and not assume they have control. downloadable music, and upstart streaming There is both upside and risk in changing services like Spotify and Pandora. to meet consumer demands for content consumption. Consumer preferences may Now playing influence content providers, distributors and aggregators to the point that they have In the equally venerable world of film and to take significant risks in order to stay television we’re seeing a similar scenario competitive. Then the question becomes: do take shape. Content owners and their they want to sit in the same position they are distributors – cable companies and satellite To read the full series online please now, or take advantage of the change and providers – have lived in relatively peaceful visit www.kpmg.com/mobile or get a bigger piece of pie? co-existence, each dependent on the other. scan the QR code below: While online streaming services like Netflix The key is to devise a plan that keeps as have shaken the landscape, content owners much profit in their pockets as possible. have been quite satisfied to license their Cooperation within the ecosystem will be media for online consumption and create a vital to creating a direct-to-consumer model, nice incremental revenue stream, that is as or a new relationship between content long as it is incremental. They like the current owners, distributors and aggregators or – model because there is inherent risk in most likely – some combination of both. change, and they’re dependent on the existing

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By Sanjaya Krishna KPMG in the US and Maciej Kranz Cisco Systems

As the mobile ecosystem moves from connecting people to connecting machines, Sanjaya Krishna, a Principal and Digital Risk Consulting Leader at KPMG in the US, sat down with Maciej Kranz, the Vice President/General Manager of the Connected Industries Group at Cisco Systems – one of the pioneers and leaders of the Internet of Things (IoT) movement – to find out where this market is going and how MNOs and businesses may take advantage of this new and emerging area.

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© 2013 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated. The taxonomy of IoE, IoT and M2M KPMG @KPMG Internet of Everything (IoE) is the intelligent connection of people, processes, data and things to “Machine to machine communication the internet, in a way that creates new opportunities and efficiencies. will have a bigger impact on business than the original launch of the Internet of Things (IoT) is a sub-set of IoE. It is the latest of many technology trends that together internet.” Maciej Kranz, Cisco create IoE. IoT is focused on creating value through the flood of networked sensors, devices and things that are rapidly being connected to the internet. The term Machine to Machine (M2M) has been in use for more than a decade, and is well-known in the Telecoms sector. M2M communication had initially been a one-to-one connection, linking one machine to another. But today’s explosion of mobile connectivity means that data can now be Maciej Kranz more easily transmitted, via a system of IP networks, to a much wider range of devices. Vice President/ General Manager of the Sanjaya Krishna (SK): What is the promise of On the one hand, oil rigs and vending Connected Industries IoT/M2M communications? machines are far less fickle about Group at Cisco Systems service provision than humans, meaning Maciej Kranz (MK): M2M communications – that – once a deal is struck – machine Today, we believe that only or the broader category of ‘the Internet of clients are often much more ‘sticky’ than 0.2 percent of all devices that Things’ – is changing the way many industries consumers. But M2M also offers MNOs go to market and operate. Pretty much could be connected actually are, new opportunities to deliver higher value to everything these days is being connected. At their clients through the provision of more leaving 98.8 percent of devices yet Cisco, we have helped organizations connect sophisticated solutions that, for example, to be connected. So this leaves a trains to system controls; car manufacturers combine customer analytics with inventory connect their products to networks; oil and huge gap between what could be and maintenance schedules to ensure the gas companies connect oil rigs to command right products are available at the right time. accomplished and what is already centers, and healthcare devices to diagnostic underway, and of course, that data centers. SK: And how is Cisco helping to enable the movement towards wider connectivity? presents enormous opportunities. I truly believe that this type of connection will have a much more profound impact on MK: We believe that we have two how businesses operate than the original important roles here. The first is to provide internet did more than two decades ago. an effective infrastructure platform But today, we believe that only 0.2 percent that enables the creation of stacks that of all devices that could be connected combine connectivity, computer storage, actually are, leaving 98.8 percent of devices data aggregation and even data policies. yet to be connected. So this leaves a huge And – since there is nobody in the industry gap between what could be accomplished capable of creating these complete stacks and what is already underway, and on their own – we work closely with all key of course, that presents enormous players in the industry in this regard. opportunities. We are also working at providing interfaces SK: What is the opportunity for mobile at the device level, at the network layer network operators in all of this? and at the platform layer so that we can integrate with other partners, whether they MK: M2M will fundamentally change how are specialized industry-specific partners mobile network operators (MNOs) and or horizontal partners. Our strategy here service providers operate. We are already is essentially to build lines of business seeing some MNOs move towards offering relevance and architectural differentiation by managed services within individual verticals providing directly relevant solutions with our in order to offer a more end-to-end solution partners based on horizontal platforms. to their clients. But the emerging market has also created new opportunities for SK: What is slowing adoption of M2M specialist vendors – such as Wyless (a technologies today? leading provider of global M2M wireless To read the full series online please MK: I firmly believe that this is one of those connectivity solutions and managed visit www.kpmg.com/mobile or areas where the entire industry needs to services) and Axida (an award-winning scan the QR code below: come together to solve some of the big home delivery software specialist in the UK) challenges such as the setting of standards, – who are bringing new value propositions the development of business models, to the market by offering these kinds of the management of some of the social service creation capabilities. implications and even the creation of new To really capture this market, we think that capabilities and new job functions. MNOs will need to invest in some vertical expertise in order to develop solutions that align to the needs of each vertical industry that they plan to service.

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© 2013 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated. Much of the current activity underway of this will soon become apparent as more MK: Basic connectivity applications in many industries is focused on vertical organizations start to explore the M2M/IoT (connecting vending machines, for example) integration through proprietary end-to-end space. can be handled using current networking systems. Ultimately, we believe that the architectures and paradigms. But when you SK: And what impact will all of this have winners will be defined by how well they start implementing more data intensive on the traditional CIO or CTO role at those embrace the openness that will be required applications, such as data aggregation companies adopting M2M technologies? to achieve success in this area. from sensors in oil-rigs or video analytics, MK: I think this is a really exciting time for the traditional network paradigm needs to That being said, there is certainly a the technology functions. As more and evolve in order to meet the demand. movement underway to bring greater more operations are connected to the collaboration to the ecosystem. This year, Simply put, we believe that you can’t always network and automated, the role of the CIO for example, Cisco will host the inaugural take the data to the analytics. More often or CTO will certainly start to transform. I Internet of Things World Forum, which will than not, you will need to take the analytics think that the CIO or CTO of the future will unite leaders and innovators together to to the data in order to process and react to need to have an equal mix of operational create a framework for collaborative industry the data in real-time. and technological capabilities in order to innovation and market adoption that, in turn, ensure the technology they are purchasing SK: So, like cloud and social media, M2M should help accelerate the impact of the and integrating meets the needs of the seems set to be yet another fundamentally Internet of Things on the global economy, business. transformational technology. society and the environment. Ensuring data security, in particular, will MK: It will be truly amazing. We recently did SK: Are clients seeing a lot of value come become a key function of the technology some research that found that the Internet from their IoT strategies? function which – whether led by the CIO, of Everything’s ‘value at stake’ – that is, the MK: It really all depends on how well CTO or CISO (Chief Information Security amount of private sector activity up for grabs, considered the use case is for connecting Officer) – will require not only a holistic view either through shifts or value creation – is everything in that sector. For example, if of the network but also a more consistent predicted to be USD14.4 trillion over the next you are running a car assembly line and security architecture. 10 years. Clearly, M2M is about to radically truly understand the role that systems transform today’s business operations SK: Obviously, data security and privacy play in creating tangible benefits, you can into dynamic, intelligent, data driven and are already top of mind for technology likely reduce costs by around 20 percent innovative business processes. companies and MNOs, but M2M brings and increase uptime – a key measure of other security challenges as well, right? Sticking to the vehicle example, just think manufacturers – by up to 75 percent. about the fact that around 10 to 15 percent MK: Absolutely. Take the movement The key will be in developing a business of a North American’s commute time is towards a more connected car. In five years case that provides obvious benefits to spent in traffic, or that – at any time – or so, cars will start communicating to each providers and consumers. Smart meters somewhere between 7 to 12 percent of other which will reduce accidents, enhance in parking, for example, are a clear benefit traffic in North American cities is made up traffic flow and may eventually eliminate to cities since parking is an important of people looking for parking, or that 10 rush-hour gridlock. In this scenario, source of public revenue. For citizens and to 17 percent of fuel is wasted in cities by however, likely the bigger concern for customers, smart meters in parking means drivers sitting at red lights when there is security officials is preventing hackers from that when you go out, your vehicle can no cross traffic. And then just think of all of hijacking the car controls or feeding the find the closest parting spot, guide your the productivity, environmental and quality computer fake data to cause an accident. car to it and even pay for it without any of life benefits that IoT could offer in that intervention from the driver. A clear win-win Another example is the Stuxnet virus. It situation. It’s going to be big business. for everyone. was a wakeup call for the industry and The views are those of authors and do showed that security would really need to But other industry sectors are still working not necessarily represent the views and be front and center for M2M to really enjoy to articulate the benefit to customers opinions of KPMG International. widespread adoption. and end-users. I think that everyone can intuitively understand that connecting SK: The rapid growth in M2M means a lot medical diagnostic devices to a central of data moving around the internet. Can monitoring system is a smart strategy, our current infrastructure handle this rapid but so far there are few business models increase in usage? that clearly demonstrate what the actual return is on that investment. Clearly, much

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By Sanjaya Krishna KPMG in the US and Dan McDuffie CEO of Wyless

As we continue to explore the ongoing evolution of M2M on the technology, media and telecoms sectors, Sanjaya Krishna, KPMG in the US’s Digital Risk Consulting Leader, spoke to Dan McDuffie, CEO of Wyless – a leading provider of global M2M wireless connectivity solutions and managed services – to find out how the M2M managed services sector is evolving. This article complements our previous piece on The Internet of Things (IoT)/M2M where we spoke with Cisco Systems about their view of the fast-moving M2M space.

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© 2013 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated. Sanjaya Krishna (SK): Tell me a bit about particularly when they stretch across Wyless’ approach to M2M managed services multiple mobile operators and geographies. KPMG @KPMG and the role your company plays in the M2M What we do is provide an agnostic service Organizations investing in #M2M value chain. layer that brings together all of the solutions are struggling with bringing some they need to make that project a success. Dan McDuffie (DM): We see ourselves as simplicity to the technology. offering a smarter approach to the challenges Wyless started primarily as a managed Dan McDuffie, Wyless of M2M. We understand that every connectivity business that effectively helped application has its own unique requirements organizations connect to multiple mobile and that customers need access to a wide operators. But today we’ve really morphed range of highly-specialized services backed into more end-to-end solutions that go far up by dedicated support. beyond the connectivity layer to include life- cycle management, engineering services, Dan McDuffie We built our company on the realization that customer software development, support CEO of Wyless for the vast majority of customers, these and billing and so on. needs cannot be met by the traditional I think the key to succeeding in mobile network operators (MNOs). No SK: Can you give me an example of this end- these verticals, however, is data single large operator is capable of providing to-end view of M2M managed services? sufficiently flexible services or the high levels security and privacy. Whether it’s DM: Say that you are a big OEM of technical expertise and support required to manufacturer of alarm panels that wants over alarm data and connections, successfully deploy and manage innovative to embed cellular connectivity into your medical devices, point of sale M2M applications. product. But since you are traditionally a devices and ATMs, devices that That’s why, over a decade ago, we developed manufacturer, you probably aren’t prepared a multi-carrier global wireless data network, to do all the stuff that comes with that – require PCI compliance and, in the along with advanced management software such as activations, coverage analysis and medical field, HIPAA compliance; and a comprehensive suite of M2M services. trouble shooting for installations. More these are all verticals that demand We underpinned this with dedicated to the point, it would mean moving from customer support teams and technical a capital expenditure-based product to an an end-to-end view of security, experts. And now, we offer a seamless end- operating expenditure model which is quite privacy and policy management. to-end solution that currently powers some a different thing. of the world’s most advanced, scalable and So we’ve really created a set of solutions reliable M2M applications. and tools to deliver those services through SK: People often mistake Wyless for being an M2M managed service model. Maybe it’s a Mobile Virtual Network Operator (MVNO). just that they need help handling the support, What makes Wyless different? or maybe it’s the full breadth from activations through to billing and customer service. DM: That’s true. The simple explanation Of course, that’s on top of the ‘bread and is that most MVNOs sprung up as virtual butter’ services that other managed services network operators on the voice side of the providers deliver – assessing the data profile, business, so they had no real infrastructure; the geography and the security requirements much like a marketing company with a billing and then managing multiple MNOs to deliver element connected to a mobile operator. a robust and secure connectivity service. Think Simple, Virgin or Boost Mobile. SK: What has the reaction been from the The fact is that Wyless runs a physical MNOs? network – we look more like a wireless ISP in that we have our own radius core, DM: Fantastic. We have already partnered our own firewalls and routers – and we with 15 MNOs including some of the connect to the mobile operators through world’s largest, and we expect to have more physical infrastructure. It’s all about having than 20 MNO partners by the end of this a managed network. So while we most year. What that means for our customers is certainly buy data from mobile operators that we have a wider geographic coverage and then resell that as a managed service and can help deliver services into markets to our customers – ASPs, large enterprises where they do not have an existing To read the full series online please and OEMs in the M2M space – we are really relationship or network. visit www.kpmg.com/mobile or more of a managed network than an MVNO. scan the QR code below: But it’s worth noting that there has been SK: What do you see as challenges in the quite a shift in the position of the MNOs M2M market? where now they are really starting to recognize the value of their partnership DM: What we’ve seen over the past ecosystem and – particularly over the past 10 years or so is that the M2M market 12 months or so – have been exploring is very fragmented. Those organizations new ways to reduce the complexity of their investing in M2M are really struggling with business. bringing some simplicity to the technology,

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© 2013 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated. I think there are three key areas where DM: Obviously, the fleet sector was one long high speed packet access (HSPA), and MNOs are now realizing the value that a of the first adopters of M2M so we – and the like, will be available in the market. managed services provider like Wyless can most of our peers – have seen significant I think the question of SIM card portability offer. First, we’re able to help them cost- activity there over the past decade. Location will also become an issue going forward. effectively capture the middle market which security services is also one of those really Once a customer deploys hundreds, has faster and more reliable ROI than many big verticals that has matured well and thousands or tens of thousands of devices of the larger targets they are chasing in- continues to be quite active. on a mobile operator’s network, their ability house. Second is that we can partner with One sector that Wyless is particularly to change based on coverage or technology MNOs to fill areas that are ‘off-footprint’ focused on is healthcare. On the one becomes quite prohibitive. I’m not sure that since we have networks and relationships hand, we’re seeing a lot of medical service the FCC in the US has really considered how with MNOs in other markets. And I companies come up with tools that use they are going to deal with that question, think the third advantage that the MNOs the professional’s own handset – so BYOD but it will certainly be important in driving recognize is that we have highly leveragable or bring your own device models – and adoption in the US. infrastructure that can help move bespoke that’s a particular challenge when you are projects forward faster and more flexibly. SK: It sounds like the market is only just rolling out M2M. It’s also going to be a starting to open up. Basically, we’re the kind of guys that the huge vertical because the home diagnostic MNOs go to when the Internet of Things market is just taking off, so while there DM: It certainly is. If I just look at the MNO becomes too complicated or too costly for are only about a million remote diagnostic side, I see a lot of money being spent in them to do on their own. devices in the US today, we think we’ll see the M2M divisions and – from an outsider something like 50 to 60 percent growth looking in – it seems like they are putting a SK: We’ve also seen some of the MNOs (CAGR) in the market over the next few lot of resources towards chasing bespoke make significant moves into some of the years. type arrangements. But once these MNOs verticals themselves. How is that impacting start to challenge the ROI behind some your business model? I think the key to succeeding in these of that, they quickly start to think about verticals, however, is data security and DM: There’s no doubt that some of the outsourcing or partnering to deliver the privacy. Whether it’s over alarm data and big MNOs are strengthening their M2M solution faster, more flexibly and more connections, medical devices, point of sale capabilities in certain verticals. Verizon and effectively. That’s where companies like devices and ATMs, devices that require Sprint are very strong in some verticals Wyless really start to excel so that we PCI compliance and, in the medical field, like telematics, AT&T is doing some can take advantage of these enormous HIPAA compliance; these are all verticals interesting things in the security vertical opportunities in the market. that demand an end-to-end view of security, and DeutscheTelekom is doing lots of work privacy and policy management. So, clearly, The views are those of authors and do not in smartgrid technology in Germany for this will be a critical consideration for MNOs necessarily represent the views and opinions instance. and their clients. of KPMG International. But we also recognize that few MNOs are SK: What are some of the big issues about to start creating billing or customer impacting the adoption of M2M today? care solutions for these verticals. So I see Wyless and our peers as the guys that fill in DM: One of the biggest barriers to entry in the gaps between all of these things; we’re the US right now is the fact that 2G, 3G and the ones that carry the tool box and medical 4G all have life-cycles to them – particularly kit and say to the MNOs, “let’s really 2G and 3G – and that means that there may understand what you need to do in order to not be a lot of customer service at times. get your vertical products to market.” So a lot of MNOs and their customers are talking about the move from 2G to 3G but SK: And what are some of the more active really there are no guarantees as to how verticals from your perspective?

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By Mathieu Meyer KPMG in Germany and Gary Silberg KPMG in the US

Ever since the late 1800s, the automotive industry has been one of the leading agents of innovation and economic growth. Small wonder, then, that the sector is now at the forefront of mobile technology.

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© 2013 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated. Vehicles have long past the phase of automakers are also getting into the game. being ‘dumb’ machines. Indeed, today’s Mercedes-Benz’ 2014 S-class will have KPMG @KPMG vehicles may have more in common with partial self-drive capabilities enabled by the It will be the integration of #mobile ® an iPad than they do a Model-T. Vehicles Distronic Plus steering assistance system. technology that will truly unlock now have the ability to communicate with At this early stage, Mercedes-Benz has the next big phase of #automobile each other, and it is this, combined with the included safety measures to control drivers’ development availability of limitless new data, that will usage of the new functionality – shutting bring about the next major advancement in off the system after 15 seconds if the driver this sector. Engine control units have been isn’t applying torque to the wheels – but it computerized; integrated software systems is an important first step towards a self- and sensors have been embedded; while driving future. Mathieu Meyer data on everything from engine performance KPMG in Germany and At KPMG, we believe that fully self- to fuel consumption to tire pressure is Gary Silberg driving cars will be a reality within the monitored. next 10-15 years. In part, this is because KPMG in the US But while all of the computerization that has consumers and governments alike are eager We believe that fully self-driving occurred over the past two decades certainly for new mobility options that could reduce represents a giant step forward in the congestion and pollution, while improving cars will be a reality within evolution of the car, we believe that it will be safety and quality of life. But as younger the next 10-15 years. In part, the integration of mobile technology that will generations enter the driving populace, we this is because consumers and truly unlock the next big phase of automobile expect that pace of change to accelerate; development. just as they expect to be entertained or governments alike are eager for informed on-demand, they’ll have the same new mobility options that could There’s an app for that expectations for mobility. reduce congestion and pollution, Likely the most rapid mobile innovations to In the not-too-distant future, we expect while improving safety and quality be commercialized within the auto sector consumers in some parts of the world will of life. But as younger generations are the use of in-vehicle apps. In Europe, start enjoying a very different commute Mercedes-Benz already offers news, from work than they do today. It will start enter the driving populace, we financial market and parking locator apps by them opening up an application on expect that pace of change to through its onboard COMAND system. And their smartphones and summoning a car – accelerate. just last year, Peugeot launched Connect perhaps one belonging to a car-sharing Apps – initially available for the Peugeot 208 service like ZipCar – to take them home. in France, but with an eye to expanding its Once aboard, it will glide easily into the self- use into other countries and other models drive lane, check live traffic conditions and down the road. calculate the ideal course home. Meanwhile, On the other side of the Atlantic, Ford and the ‘driver’ will be at liberty to sit back and General Motors unveiled their app strategies use the car’s on-board apps to search for a restaurant, finish up some work, and perhaps earlier this year. GM announced that it was To read the full series online please book a pick-up time for the next day’s partnering with AT&T to connect most of its visit www.kpmg.com/mobile or commute. And before they know it, they are Buick, Cadillac, Chevrolet and GMC models scan the QR code below: with integrated 4G LTE modems starting home with their family and the car sets off to in 2015. GM will provide apps directly its next assignment. from a vehicle’s embedded touchscreen infotainment system. Meanwhile, Ford Partnerships for the future is counting on drivers to bring their own One of the greatest challenges slowing smartphones into the car and run apps innovation in the auto sector, however, through its Sync voice command system, relates to a mis-match between innovation developed with Microsoft. cycles and design cycles. Today, it takes 3-5 years to take a vehicle from drawing Both car makers have launched software board to showroom, making it practically development kits to encourage developers to impossible for mass-market OEMs (Original build apps for their respective platforms, but Equipment Manufacturers) to ensure they the differing strategies – embedded at GM, have the latest technology in their cars once unembedded at Ford – reflect an evolution on-board experience, and may develop it they hit the streets. that is still in its infancy. themselves or partner with a technology One solution is to create partnerships with company. Just as easily, Microsoft might Driving Miss Daisy technology companies, something that approach Ford with an idea for its drivers’ While onboard apps add new options for the auto sector has already been doing experience. Simply put, innovation will ® ® entertainment and productivity, the progress for decades. TomTom or Garmin drive continue to come from partnerships that allow ® towards self-driving cars promises to have an navigation systems, and GM’s OnStar each party to do what they each do best. came from collaboration with partners like even more profound impact. Whatever the approach, one thing is certain: Continental, LG, and Motorola. Google has drawn a lot of headlines for cars are becoming more and more like its self-driving car, but the phenomenon The ideas can flow in either direction. devices. And before long, they will be driving is more than just a passing fad. Traditional Volkswagen has a strategy for customers’ us, not the other way around.

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By Sanjaya Krishna Principal and Digital Risk Consulting Leader KPMG in the US

In this final article of the series, Sanjaya Krishna looks back at the articles and focuses on one of the key themes of the series: partnerships.

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© 2013 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated. If we’ve learned anything from the Mobile The mobile evolution continues Evolution article series, it’s that mobile What is also clear from this series is KPMG @KPMG enablement does not happen in a vacuum. that the real mobile evolution is just Whether it’s making cars ‘smarter’, No single organization has the capability, getting started. Businesses are in the delivering more effective healthcare, capacity or capital to ‘own’ the market relatively early stages of recognizing deploying new and secure #mobile outright; in fact, to succeed at all, stronger the transformative benefits of mobile; banking solutions, improving retail partnerships will need to be formed, vendors are bringing truly innovative sales and customer loyalty, or cooperation both within the industry and solutions to the market; and operators are monetizing mobile for the media between industry sectors will need to grow, realizing the massive opportunities that sector, our authors and industry and collaboration across the ecosystem will mobile brings beyond simple volume and experts consistently noted the need need to flourish. infrastructure plays. for greater collaboration across the value chain. The value of partnership What will remain to be seen is which players Frequent readers of the Mobile Evolution will take advantage of the opportunities series will no doubt have noted a recurring being created by mobile. Some will seek theme of ‘partnerships’ across many of to gain competitive advantage from new Sanjaya Krishna the articles in the series. Our two feature mobile solutions, others will leverage mobile articles on the Internet of Things and to disrupt existing markets and create new Principal and Digital Risk Machine to Machine communications, for business models. Still others will find mobile Consulting Leader example, demonstrated that partnerships holds the key to unexpected operational KPMG in the US between customers, vendors and operators efficiency and workforce productivity gains. Mobile enablement does not are key to developing more effective The willingness to experiment and innovate and efficient mobile solutions. As Maciej have always been keys to future success in happen in a vacuum. No single Kranz of Cisco noted, “this is one of those mobile. But it will be those organizations that organization has the capability, areas where the entire industry needs to are able to create a culture that combines capacity or capital to ‘own’ the come together to solve some of the big innovation and experimentation with an challenges.” And it is largely through these openness to partnerships and collaboration market outright; in fact, to succeed partnerships that challenges like mobile that will more than likely succeed in the at all, stronger partnerships will security are now being overcome. long-run. need to be formed, cooperation both Nowhere was this made more clear than within the industry and between in our sector-specific articles. Whether it’s Take the lessons with you making cars ‘smarter’, delivering more Over the course of 20 articles and industry sectors will need to grow, effective healthcare, deploying new and 12 months, the Mobile Evolution series and collaboration across the secure mobile banking solutions, improving has touched on many of the issues that ecosystem will need to flourish. retail sales and customer loyalty, or matter most to those operating in the monetizing mobile for the media sector, our mobile world and serves as a valuable guide authors and industry experts consistently to executives exploring this evolving space. noted the need for greater collaboration On behalf of KPMG’s network of across the value chain. Technology, Media and Telecommunications The series also demonstrated that growth professionals, I would like to thank all of opportunities in the mobile space will those who gave up their valuable time to require vendors, technology companies contribute to this series; your insights, and operators to work closely together experience and advice have been greatly in the future. Standards will need to be appreciated. set and implemented; joint ventures will To learn more about the issues and topics need to be formed, ecosystems will need raised in this series – or to discuss your to be encouraged and risks will need organization’s unique mobile objectives – to be shared if the market is to grow. I encourage you to contact your local KPMG Internal collaboration will also be key as member firm. organizations seek to transform their organizations through mobile enablement. To read the full series online please visit www.kpmg.com/mobile or scan the QR code below:

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Apple ®, Apple Store®, App Store®, iPad® iPhone®, iTunes® are trademarks of Apple Inc., registered in the US and other countries. ® iPad is a trademark of Apple Inc., registered in the U.S. and other countries. ® TomTom is a trademark of TomTom International B.V. ® Garmin is a trademark of Garmin Ltd. or its subsidiaries, registered in the USA and other countries. ® OnStar is a registered trademark of OnStar, LLC. * Apple is a trademark of Apple Inc., registered in the U.S. and other countries. 1 ITU World Telecommunication/ICT Indicators database 2 IDC Worldwide Quarterly PC Tracker, January 12, 2011 3 Gartner 4 http://www.marketsandmarkets.com/PressReleases/baas.asp 5 The Forrester Wave™: Enterprise Mobility Services, Q1 2013 6 http://www.spidercloud.com/news/press-release/mobile-operator-managed-mobility-services-100-billion-market- opportunity-us-and-w

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Gary Matuszak Graeme Ross Global and US Chair, Technology, Global Chair Media & Telecommunications Media & Telecommunications T: +1 408 367 4757 T: +44 20 73 11 33 72 E: [email protected] E: [email protected]

Americas Asia Pacific We gratefully acknowledge the contribution of the following individuals who authored the articles in this report: Paul Wissmann Peter Mercieca Head of Media & Telecommunications Head of Media & Telecommunications Tudor Aw KPMG in the US KPMG in Australia KPMG in the UK T: +1 213 955 8518 T: +61 2 9455 9155 E: [email protected] E: [email protected] Sanjaya Krishna KPMG in in the US

Sanjaya Krishna Ning Wright Egidio Zarrella Principal and Digital Risk Head of Technology, KPMG in China Consulting Leader Media & Telecommunications KPMG in the US KPMG in China Alfred Koch T: +1 212 954 6451 T: +86 21 22 12 36 02 KPMG in Germany E: [email protected] E: [email protected] Bart Bastiaans and Paul Simonetta Egidio Zarrella Lars van Zomeren Head of Media & Telecommunications Partner, Clients and Innovation KPMG in the Netherlands KPMG in Canada KPMG in China T: +1 416 228 7287 T: +852 2847 5197 Paul Wissmann E: [email protected] E: [email protected] KPMG in the US Maciej Kranz Europe, Middle East & Africa Cisco Systems

Dan McDuffie Joe Gallagher Wyless Head of Technology, Media & Telecommunications Mathieu Meyer T: +44 20 7311 3044 KPMG in Germany E: [email protected] Gary Silberg Tudor Aw KPMG in the US Head of Technology KPMG in the UK T: +44 20 7694 1265 E: [email protected]

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The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. © 2013 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International. Designed by Evalueserve. Publication name: The mobile evolution: The challenges and opportunities of mobile – Volume 2 Publication number: 130828b Publication date: December 2013