January 24

Luigi Capobianco

Why Are Hardware Manufacturers and Distributors Choosing Not to Resell Connectivity?

why hardware distributors are walking away from reselling connectivity

Hardware manufacturers and gateway resellers are at a critical juncture. They recognize that there are significant recurring revenues available in adding reselling connectivity to their offering, and yet many are opting out, choosing to stick to hardware, and leave connectivity to IoT resellers, and out of their own equation. 

What’s holding hardware resellers back? 

Reselling connectivity involves its own core competencies

Just because a reseller is an expert in hardware, that doesn’t mean that they are going to be an expert in connectivity. As a result, resellers are aware that there is a significant learning curve involved in adding connectivity expertise to their capabilities, and for many this curve is too steep. Businesses recognize that in a complex market, reselling connectivity needs to be done in a very controlled manner, and they just don’t have the competencies to make that happen.

Customers come to hardware vendors with a specific purpose in mind, and work with their providers to create a unique offering – bringing a particular vision to mind, from drawing board to reality. The sky’s the limit in terms of creativity. 

In contrast, reselling connectivity usually involves working with a mobile operator, or creating partnerships with multiple operators, and usually then staying within the boundaries of 3-5 specific offerings. The reseller makes their revenues by taking those offerings to market, and adding their markup. 

If a customer needs to build a gateway for devices that will consume 15GB of data each month in Cambodia, and this offering isn’t within the limits of the 3-5 options resellers have, that’s game over. Resellers often can’t create a pooled plan, they can’t switch between prepaid and postpaid to meet a customer need, and they can’t offer different consumption requirements for different devices, as they just don’t have the freedom to make that happen. 

As a result, unless a customer comes with a very standard use case, where every device consumes the same amount of data with a lot of predictability, such as a smart gas meter which the reseller knows will consume maximum 1MB each month in a specific location, there are too many variables to effectively offer connectivity. 

Flexibility is everything when you’re reselling IoT connectivity

It’s clear that reselling connectivity from traditional MNOs doesn’t fit the need for technology and gateway resellers, unless they are ready to set a large commitment to enter wholesale agreements. As we said, clients are coming to hardware and gateway resellers with a specific use case in mind. If you then want to offer connectivity to complete the package, the connectivity needs to meet the use case. 

When it comes to IoT, that could be devices which travel from A – B without losing visibility, tracking and monitoring solutions which need to beat 90-day roaming restrictions, ‘set-and-forget’ devices which sit in the field for up to 5 years, or critical manufacturing or medical equipment where “always on” is far more than a nice to have. 

If hardware resellers start offering connectivity, but that connectivity can’t meet the use case, it would be better if they had never offered it at all. 

This reality puts today’s resellers in a tough spot, caught between the commercial complexity and the technological complexity of diving into connectivity as a value-add, but aware of the potential revenues they are losing, especially when so many businesses are looking for a holistic and all-in-one solution. 

Expand the limits of your expertise with a new way to resell connectivity 

Instead of tying themselves to specific connectivity offerings from individual MNOs, today’s hardware resellers need to take more control over the connectivity that they offer. Instead of creating multiple partnerships with MNOs, and playing by their rules, they need to start making the rules, by onboarding a connectivity management platform of their own, with minimal investment and a pay-as-you-grow approach. By partnering with a solution provider like floLIVE for connectivity, hardware resellers can attain global connectivity for their enterprise customers, alongside the flexibility to meet any specific use case in design. 

No more rigid connectivity offerings that force a square product into round connectivity, and no more watching from the sidelines while connectivity revenues go into a competitor’s pocket. 

Instead, tailor-make an application-specific and reliable solution alongside your customers that meets their needs for hardware and connectivity, no matter what that looks like. Create 1,000 offerings for 1,000 use cases, and hurdle the commercial and the technological complexity in one leap. 

Intrigued? Read all about the old vs the new way of reselling connectivity

January 24

Luigi Capobianco

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