Vodafone Analyst Day - The Pivot Towards Services

A few days ago, PAC participated in Vodafone’s global analyst day in London.

The company’s new CEO Nick Read laid out the company’s stall early in the day, highlighting the key priorities for their enterprise market.

Defending their core connectivity business is absolutely critical - mobile still generates the majority of Vodafone revenues, and fixed networks are also very significant. (For a more specifically UK perspective on telecoms, readers should refer to the UK Telecoms profile that forms part of our SITSI intelligence programme)

Vodafone is very keen to move beyond simple connectivity, to pave the way to its strategic future lines of business, in what some at Vodafone called “the pivot to services”. In this context, Vodafone is really referring to its growing capabilities in analytics, IoT, cloud and security – it is very clear that any broader application development and integration services are not in scope.

At present Vodafone’s primary services focus is very clearly on IoT. This is already an area of strength to Vodafone – it currently has over 70 million IoT connections, and growth has remained strong since then.  Although not explicitly stated by Vodafone, it seems that IoT leadership is the cornerstone on which it plans to build its new “horizontal services”.

This strategy seems coherent to PAC, since Vodafone’s IoT leadership is a real point of differentiation in an otherwise crowded market - all European carriers have a play in the converged IT/telco services space, and the incumbents (BT Global Services, OBS, Deutsche Telekom etc) still have a built-in advantage based on their dominant domestic market shares.

By focusing on IoT first, Vodafone will get maximum advantage from its very credible position in this market, creating a spring-board for new opportunities in the company’s cloud and cyber service lines. While IoT sensor data for real-time applications will likely be processed at the edge to minimise network latency, much of the analytics data generated by Vodafone’s connected IoT sensors will be centralised. The processing, analysing and securing of this data creates is Vodafone’s opportunity to extend its reach from IoT across its fairly comprehensive portfolio of cloud partnerships, which today include Azure, AWS, Alibaba in public cloud as well as VMware, Azure Stack and Virtustream in private clouds.

Vodafone also expects to deliver value from the IoT data they store and process. While data will remain anonymous at the level of the individual, Vodafone expects to be able to analyse the data they process at the level of the total population of users, devices, sensors etc. The company believes that this data and analysis will be a source of considerable value to their customers. 

Vodafone has an ambitious vision of the scope of their cloud offerings, which they see as encompassing much of edge computing. In their view, edge computing is now bifurcating into the “Distributed Edge” – the pervasive location all around us where the millions of future IoT devices will do their computing, and the “Dedicated Edge” – the remote locations separated either by distant geography or poor connectivity, where serious enterprise computing is done standalone for local consumption. Dedicated Edge is the mechanism whereby Vodafone will provide heavy-duty computing to locations that are inaccessible to classical cloud services.

Overall, Vodafone’s proposition seems very credible to PAC, combining its leadership position in IoT with partnerships with most of the leading enterprise cloud services providers. The strategy that encompasses capturing data (through fixed, mobile and IoT), holding that data (through public and private clouds, both in-house and partner), and adding value to that data (through analytics, managed access and security) seems very consistent with the needs of mid-sized and larger enterprise customers. And PAC sees that this strategy has the potential to be the on-ramp to a range of newer services as the market matures from IaaS to serverless/platform to SaaS.

As a Vodafone spokesperson put it to PAC, “Vodafone cloud for cloud sake is not the answer – we see cloud as the key enabler that underpins the services we can offer”. To this analyst, this makes perfect sense, enabling Vodafone to act as the network-enabled cloud integrator that excels in IoT.