Proving the Business Case for the Internet of Things

Google's MVNO ambitions are IoT related, says Machnation

Steve Rogerson
January 28, 2015
 
The news that Google is looking to become an MVNO on the Sprint and T-Mobile networks in the USA is IoT related, believes Dima Tokar, analyst and CRO at consultancy Machnation.
 
“We see Google’s MVNO plans as part of a strategic push into incorporating connectivity into IoT products,” said Tokar. “Google has ambitious plans for connected products and is looking for a way to provide built-in connectivity.”
 
The approach, he said, was well aligned with Google’s forays into wearables, in-car systems, self-driving cars and the Nest product line. Google can add value to such products by providing built-in always-on cellular connectivity.
 
For example, Google’s Android Auto will be built directly into cars. As an MVNO, car manufacturers could ship a connected car, with built-in Google services without needs to deal with sim provisioning or costly data tariffs. The consumer benefit is clear: phone, Google Maps, streaming music built directly into the vehicle. A similar strategy could be applied to Google’s line of in-home products from Nest. Nest thermostats currently need to be hooked up to Wifi. In the future, they could ship with a sim card and be managed from a Google account as soon as they are unboxed.
 
“We don’t see this move as something that puts Google in direct competition with carriers or MVNOs,” said Tokar. “Google is likely to focus on data connectivity and smarter products. We don’t anticipate they have any reason to get into the low-margin space of a traditional MVNO.Data is king for Google. While the voice connectivity will be a part of the solution, it’s the wholesale data tariffs that are of highest interest to Google.”
 
According to Machnation projections, there will be 24 billion connected IoT devices by 2024 accounting for over US$4 trillion in revenue.
 
“We believe Google will start offering Google-branded IoT services in the home and cars,” added Tokar. “Google’s acquisition of Nest, investment in the wearable market, development of Android-powered in-car systems and self-driving cars combined with a continued interest in linking all aspects of consumers’ lives is behind this IoT MVNO play.”