Companies need to abandon command-and-control thinking and embrace new, fluid business ecosystems.

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Alliances and Value-Creation Are Inseparable
In business, the companies that survive and prosper in the era of “smart things” will be those that embrace the disruption and respond to it with genuinely new thinking about alliances and value-creation in a world of nearly “perfect information.”

SIGNALSmart™ M2M Technology Segmentation and Suppliers

Portrayal is circa June 2004. Company position reflects dominant focus, not sole focus. Map is illustrative; not all participants are included. (Click the image for a larger on-screen version.) Source: Harbor Research, Inc.

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Why the emphasis on alliances? Because there will be no Microsoft of the M2M / Pervasive Internet era. Even today, digital information is the DNA of contemporary civilization. That status will only deepen over time. The success of the open-source software movement is a symptom of that fact, not the cause of it. Unless we want to live under a global cyber-dictatorship, no single entity can “own” and purvey the core information-mechanisms of human affairs. And no single entity, no matter how large or powerful, can offer by itself complete pervasive solutions of enduring value.

Strategic alliances have driven the unprecedented growth in the technology sector. Yet there has been scant major alliance activity around the epoch-defining M2M opportunity. Some people say it’s too soon to see the new alliances of the Pervasive Internet era. We disagree. The time is now. But we see an onging stand-off in which potential market-makers postpone forging alliances while they wait for the validation of new business models or to see how it all “shakes out.” What they’re missing is that the validation and the shake-out will not occur in the absence of those alliances.

That said, the alliance-landscape is not entirely empty. A few examples of major activity include:

• Nokia. A diversified electronics manufacturer re-invented itself as the global mobile phone leader and is now embracing M2M and working with a number of smaller partners.


• Cingular Interactive. Cingular’s alliances are still in the early stages, but the company has made a good start at establishing VAR-like relationships.


• The ZigBee™ Alliance. ZigBee™ is a Wi-Fi cousin created for devices rather than human beings. It is better suited to most device networking than Bluetooth (partly because of very low power consumption), and represents an important missing piece of the pervasive computing puzzle. It’s too early to tell what ZigBee™ will bring, but the Alliance has grown significantly in the last year, and it brings suppliers and adopters together to take real-world action on specifications, standards, and deployment.

Both the Opportunity and the Alliances Required Are New Animals
As heartening as these initiatives are, it’s still awfully quiet out there. Many large companies still cling to the old command-and-control thinking rather than embracing fluid “alliance webs” that are as decentralized and distributed as next-generation computing itself. The challenges appear to be twofold:

• The sheer complexity of end-to-end “real-time enterprise” solutions is massive and daunting.


• The degree of cultural change and cooperation required has slowed the movement towards new business eco-systems.

Sensing the unprecedented opportunity, some suppliers in the pervasive arena have tried to get around the stand-off by creating some, but not all, of the alliances and partnerships required for complete solutions.

• Most of the larger players with the clout to drive significant and complex customer fulfillment networks have not formulated and articulated clear strategies for moving ahead. The likes of H-P, IBM, Oracle, Cisco, etc. have undertaken little visible engagement of the M2M / Pervasive Internet opportunity, though they’re aware of it and pay lip-service to it.


• Suppliers in specific segments of the M2M value chain are trying to expand in this space with outmoded business modes—models that are often impediments to adopters. This is largely a failure to look past the human-centric activities of the past and see the device-centric opportunities of the future—a failure, in other words, to appreciate the nature of the disruption. For example, most telco carriers and enterprise software players have yet to propose realistic models and pricing schemes for device-generated data-traffic and enterprise integration of that data.


• Many smaller players with significant experience in the space have begun to seek out select alliances, but usually with limited impact for the adopter (often focusing on “local” device connectivity and integration problems but not on a complete wide-area solution).


• Most participants have not established a basic framework for planning and developing the alliances and partnerships required. And they need one, because the M2M / Pervasive Internet opportunity calls into question traditional business models in almost every segment of the value chain. Harbor Research has developed a framework called SIGNALSmart™ that can help (see diagram above and further discussion below).

Cooperation is a minimum requirement for success. Well-constructed alliances can provide the opportunity to cross-breed capabilities, particularly across disparate markets and geographies. Suppliers need to evaluate their roles in the various applications and venues they hope to serve. Then they need to decide on an approach that provides the best solution. And all the while, they need to be thinking about the alliances suggested by those roles and approaches.

In the last year or so, we’ve talked to many companies about these issues. Here’s a summary of the most important requirements we’ve identified.

Robust Framework for Pervasive M2M Solutions - Harbor SIGNALSmart™
This will require a complete and rigorous understanding of all value chain elements. At Harbor Research, we have developed a framework called SIGNALSmart™, which is an acronym representing the components of the M2M technology path.

The intent of the SIGNALSmart™ framework is to provide a comprehensive view of all the value elements required, presented in plain vocabulary that facililitates discussion among stakeholders. Without such a framework, players will lack a coherent road map and value chain perspective.

Clear Benefits for Each Partner
Probably the most important aspect of alliances is that each side benefits from the relationship in one or more ways, such as developing new skills while accessing new markets. This may seem obvious to some, but we can point to many failed examples of alliances between technology companies that did not carefully analyze the potential benefits. An alliance cannot be merely a Band-Aid or short-term fix. It must have the clear potential to create major new opportunities for the participants. For example, wireless and core network carriers need vertical application partners in order to move forward.

Complements, Not Dominance
There must be good complements in an alliance. Too great an imbalance between players will cause an alliance to fail. In fact, it won’t have been a true alliance in the first place. We have seen few successes between a very strong partner and a very weak partner. Typically, such partnerships collapse, or end in the stronger partner buying out the alliance or acquiring the weaker player altogether.

One requirement of new alliance thinking is that big companies forget their bigness and their dominance in the previous IT era. That’s the meaning of disruption: what worked in the past won’t work anymore. Many smaller players today—for example, Ember, nPhase, Xsilogy, Cimetrics, Wireless Matrix, and M2M Datacorp—possess application knowledge and domain expertise that would make them very valuable to larger players who provide broader-scope services througbout the product life-cyle (GE), or are simply more horizontal in nature (IBM).

Resources Combined At Many Levels
Alliances are really defined by the intermingling of resources at multiple levels. Therefore, simple OEM and distribution agreements do not constitute the type of alliance we’re discussing. True alliances require many levels of attention and sharing—technology, development, sales/marketing resources, manufacturing resources, management talent, etc.—to work well. For example, some small connectivity players, particularly in the wireless sensor network segment, could potentially become quite important to many parts of a product / device OEM organization.

All Motives Fully Disclosed
An alliance requires full, honest disclosure of all motives. Again, this may seem painfully obvious. But we have all witnessed potential alliances where one party adopted a command-and-control posture, believing it had the other party “over a barrel,” and the situation backfired. The alliances we’re discussing are not about “dominant” and “parasitic” relationships in which a larger player absorbs the energy, creativity, and strength of a smaller player. They are about fluid, ever-changing ecosystems.

Flexibility
Finally, alliances must open up and develop new opportunities for all involved, but often the original mission and focus are found to be faulty or difficult to implement. In a true alliance, both partners must maintain a high degree of flexibility, letting the alliance’s mission and focus evolve as required for success.

Most companies investigating the development of alliances need to pursue a rigorous top-down analysis that answers some very basic questions, including:

• What are the strategic purpose and focus of the alliance?


• What are the objectives of the alliance? What strengths will each party bring to the alliance?


• How will the alliance be managed? Who will make critical decisions? Who has responsibility?


• What level of organizational and asset integration is desired?

Beyond these basic questions—about when to create an alliance and what type of alliance makes the most sense—the success of any alliance in technology will depend on how well relative roles and contributions are defined and bounded. In defining each partner’s role, a number of critical questions need to be evaluated and answered.

• What should be the alliance’s specific charter in terms of market or technology focus and development? What flexibility should alliance management have in defining and changing tactics to meet that charter?


• What is the optimal versus achievable level of objectives?


• How will management control be configured? How can that control be guaranteed? How and by whom will key managers be chosen?


• What indicators should be used to evaluate on an ongoing basis the alliance’s performance against its charter and the individual objectives of the contributing parties?


• What specific options should be established for altering, invalidating or abolishing the alliance, and how should the assets (tangible and intangible) be valued and distributed?

There is no simple approach that will guarantee success. Alliances require a great deal of effort to work well. Overall, they require far more flexibility and autonomy than our management-by-objectives culture typically permits. Alliances should be configured to minimize the contention that grows from rigidity. Ultimately, the speed at which the market for many new technology opportunities develops depends on the speed at which companies abandon their parochial views of their relations with other suppliers in the market.

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Who We Are and What We Offer.
Harbor Research Inc. has been providing strategic consulting and research services to leaders in communications, computing, control, and content since 1983. The firm has built relationships with larger multi-line companies including AT&T, ABB, General Electric, Danaher, Eaton, Emerson, Hewlett Packard, Honeywell, Hughes, IBM, Intel, Invensys, Lucent, Motorola, Rockwell, Siemens, and Texas Instruments, as well as focused growth companies such as EMC, Cadence Design, Conexant, Qualcomm, and SAP.

We also continue to work for a broad array of emergent start-ups and pre-IPO technology ventures. We have built relationships with a number of significant M2M / Pervasive Internet players, including Cimetrics, DataSweep, eDevice, Ember, emWare, Questra, Wireless Innovation, and Xsilogy, to name a few.

Harbor is organized around emergent and disruptive opportunities in high technology, with a unique focus on the impact of the Pervasive Internet—the use of the Internet to accomplish global device networking that will revolutionize business by unleashing entirely new modes of system optimization, customer relationships, and service delivery.

We provide studies, workshops, briefings, research retainers, and consulting engagements of uniquely high value to both technology suppliers and adopters. For more information, please contact us.

Harbor’s new online platform for research services offers continually updated intelligence and stunning data-visualization.

Static, printed reports can’t track the complex ecosystems and warp-speed pace of high tech. SmartSphere® projects can.

The brains of the Web. The brawn of server databases. The beauty of a CD-ROM.
For nearly ten years, we’ve been waiting for Web media to get good enough to let us do this. It’s finally here. Harbor SmartSphere® re-invents the whole concept of delivering research value. It’s to business research what the Pervasive Internet will be to business itself: a huge injection of dynamic intelligence and sheer voltage. SmartSphere® is online, interactive, dynamic, and visualized. There’s nothing static, rigid, or dead about it. Eventually, we at Harbor will do everything in SmartSphere® that we used to do on paper, and we’ll do it better. And you can, too. in a custom-configured project of your own, SmartSphere® can be anything you want it to be.

And yes, you can get printed reports. We’ve re-invented those, too. Not fixed, one-size-fits-all printed reports, but custom printed reports that you configure and SmartSphere® creates for you on the fly in PDF format.

See SmartSphere® and find out more right now:

1. Visit our free, live SmartSphere® demonstration. They say pictures are worth a thousand words. So what are they worth if they’re pictures of your whole world, and you can fly around inside the pictures with your mouse?
2. Download a brochure on the SmartSphere® research platform and services (PDF, 970 KB).
3. Download a brochure about our SmartSphere® “living research” projects on the M2M/Pervasive Internet phenomenon (PDF, 240 KB).

A small portion of an interactive Harbor SphereMap™. This one portrays a company’s world. You “fly around” the map by dragging it with your mouse, bringing into focus any area you want to explore. You see a company’s peers, investors, products, and alliance-structure at a glance. Clicking nodes fetches additional information from the database. Shift-clicking nodes creates new maps of other companies—and maps of markets, too.

Projects, projects, projects. Ours, and yours.
SmartSphere® is an online platform that Harbor uses to deliver Web-based services. You don’t buy SmartSphere® the way you buy a program for your computer. You buy access to one or more SmartSphere® projects. We define projects of our own on important high-tech subjects, and clients can subscribe to those projects. Clients can also define their own custom (and completely private) projects.

SmartSphere® projects are laser-focused on their subjects. No waste, no fluff, no irrelevance. A SmartSphere® project delivers continually updated information on whatever the project has been defined to track. Some of that information is created in the good old-fashioned way, by experienced researchers and analysts. And some of it is created with 21^st century tools like automated news feeds and Web-based info services. Every time you log in to a project, there’s new information—freshly tracked events, new company alliances, new company and market comparisons, enhanced company, market, and technology profiles, and insightful Harbor commentary and analysis.

When you visit our SmartSphere® demonstration, you’ll see a limited version of our own “Pervasive Internet Suppliers” project. Bear in mind that the free demo offers limited information and functionality. The full “Pervasive Internet Suppliers” project, for example, was created to replace and improve our own earlier online publication, Pervasive Internet Report.

Custom SmartSphere® projects. Your secret weapon has arrived.
You’ve heard about some of our SmartSphere® projects. Now let’s talk about yours. Does your company have business development, M&A, R&D, or sales and marketing goals? We hope the answer is yes. How would you like “living business intelligence”™ on the companies that interest or worry you? Or on the markets and technologies that are defining your future? A custom SmartSphere® project is the perfect way to do that. “Living business intelligence”™ means research that is laser-focused on your targets, and continually updated for as long as you need it.

Any collection of companies, markets, or technologies can become the backbone of a SmartSphere® project. You define who or what they are. You define what you want to track about them, and how you’d like to rank or score or weight them. You define the types of cross-company or cross-market comparisons you’d like to see.

Take action and take control.
If you’ve read this much about SmartSphere® without clicking something, it’s time to click. Here are those links once again.

1. Visit our free, live SmartSphere® demonstration.
2. Download a brochure on the SmartSphere® research platform and services (PDF, 970 KB).
3. Download a brochure about our SmartSphere® “living research” projects on the M2M/Pervasive Internet phenomenon (PDF, 240 KB).