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. © 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. Contents © 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. Anywhere, anytime: what mobile means to the Executive summary 02 12 media sector 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 © 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. Executive summary 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. 2 | MOBILE EVOLUTION © 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 drive towards mobile-enabled business transformation 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.