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IEEE COMMUNICATIONS MAGAZINE. FEATURE TOPIC INTERNET OF THINGS 1

Business Development in the Internet of Things:a Matter of Vertical Cooperation

Amirhossein Ghanbari, Andres Laya, Jesus Alonso-Zarate and Jan Markendahl

Abstract—Smart and connected devices can improve industrialprocesses and generate new and better services. While thispremise is well understood within the ICT industry, there is achallenge in extending this knowledge to vertical industries. Thepotential of the Internet of Things (IoT) lies in the interactionamong industries working together towards value co-creation.Firms need to look beyond their internal business models andexplore cooperative perspectives to define new business oppor-tunities. In this paper, we look into the relevance of verticalcooperation in the IoT and highlight the need to develop newvalue networks which leverage this cooperation and enable thecreation of new business models. To lead our discussions, weuse the examples of two major building blocks of Smart Cities;Intelligent Transport Systems (ITS) and Health and Wellbeingservices based on connected devices and solutions.

Index Terms—Business Model, Co-creation, Health and Well-being, Internet of Things (IoT), Smart City, Value Network,Vertical Cooperation.

I. INTRODUCTION

THE vision of the Internet of Things (IoT) as a hyper-connected world of interconnected devices can improve

industries and facilitate better services. While technology andstandards for the IoT are on their way of getting mature,there are also challenges and opportunities to be faced fromthe business perspective. The challenges are in the sense thatthere are no predefined processes to follow or well establishedboundaries in the market. And the opportunities are that IoThas the potential to create completely new possibilities inuncontested markets.

The IoT first caught the attention of the ICT industry wherethe potential of connected devices was more clear. Therefore,it has become necessary for the ICT technical community toshow grounded evidence that other industries can benefit fromIoT solutions. It is clear that just technology availability is notenough to drive the creation of added-value solutions, and itis thus necessary to explore and define the business contextand the opportunities where to build valuable propositions.

We argue that, in order to support creation of solutions basedon IoT, the ICT sector needs to have a closer involvement inthe development of services and understand how it can beprofitable for other industries.

We take the stance that IoT corresponds to a set of technolo-gies, principles and systems associated to Internet-connectedobjects. The concept of IoT encompasses data sensing and

A. Laya, A. Ghanbari and J. Markendahl are with the CommunicationSystems Department, KTH Royal Institute of Technology, Sweden.

J. Alonso-Zarate is with the Centre Tecnologic de Telecomunicacions deCatalunya (CTTC), Spain.

acquisition, processing, transmission, storage, analysis, actua-tion, and sharing; all this, with the ultimate purpose of creatingvalue. The stages of value creation in IoT are representedin Figure 1 [1]. The inner loop represents the smart deviceinformation loop and it refers to products with embeddedsensor and computational capabilities used to improve theirown efficiency. Information is sensed and analyzed locally togenerate an action. The outer loop represents the connecteddevice information loop, which allows the device to exchangedata with the outer world. Data can be communicated andaggregated by third parties to create added value. Even thoughthese two loops only represent the ICT perspective of valuecreation in IoT, they already highlight the associated com-plexity, where different resources, players, and expertise arenecessary to create valuable solutions.

The creation of viable IoT solutions needs a coordinatedinteraction among industries. This leads to value co-creationamong involved entities, which blurs the differentiation be-tween providers and consumers. This is different from tra-ditional mobile broadband business, where communicationproviders usually interact directly with end users. In the IoTcontext other industry verticals are directly involved in thevalue creation process, and in many cases have the directrelationship with end users. Hence, ICT industry is facing anew set of actors between themselves and the end users. Theseactors are then both co-creators of IoT solutions, as well asconsumers of ICT service enablement for IoT.

As the main purpose of any business, co-creation shouldalso lead to a profitable outcome for involved entities. At thesame time, the customer should also benefit from the createdsolution. However, in order to find and define business oppor-tunities in the emerging IoT context, the burning question ofhow can we make profit with the IoT? should be preceded byhow can we create value by using the IoT? The latter questionhas two angles; first, creating value for end users and second,co-creating the value together with other vertical industries.

In this paper, we elaborate on the limitations of existingvalue chain for defining business models for the IoT in SectionII. In Section III, we describe the interactions required in futureecosystems of converging industries leveraging on the IoT. InSection III-B, we discuss the emerging perspective of valuenetworks as drivers of co-creation models for the IoT. SectionIV describes two examples of use cases for the Smart Cityto exemplify the need for new business perspective. Finally,Section V concludes the paper with final remarks.


II. LIMITATIONS OF EXISTING VALUE CHAINS ANDBUSINESS MODELS FOR THE IOT

Business models constitute tools which can help definingprocesses and mechanisms for value creation. They allowdefining for whom is the value being created and how revenuescan be obtained. However, business models are largely focusedon the perspective of a single firm. This means that theytypically explain how one company can deliver value to itscustomers and stakeholders by establishing relationships withpartners and suppliers within the internal logic of a firm.

[Fig. 1 about here.]

In the highly cross-industrial ecosystems around the IoT, itis unlikely for a single firm to provide a complete IoT solution.Companies require resources and knowledge from differentfields which do not necessarily belong to a single industry.Therefore, relationships must be built within and across in-dustries. Tight collaboration between the telecommunicationindustry and service providers from different industries, suchas Health, Automotive, Utility, Industry, etc., is needed toimplement IoT based solutions which can provide value.According to [2], business relationships can be put in fourmajor categories:

1) Cooperation: firms interact with each other and combinecomplimentary know-how or resources to achieve acommon goal.

2) Competition: firms compete over similar goals that cangenerally translate into customer and market shares.

3) Coopetition: comprises competition and cooperationhappening simultaneously. For instance, MNOs compet-ing on customers acquisition but cooperating on networksharing.

4) Co-existence: firms exist and affect each other indirectly,without direct business interactions. They exist as partof the same industry but do not cooperate or competeover similar goals.

These four business relationship categories fall within twomajor setups: vertical and horizontal. If we consider thetraditional value creation process of value chains, businessinteractions mainly consist of vertical relationships betweensellers and buyers. In contrary, horizontal relationships consistof interactions among similar firms, which usually involvecertain level of competition.

As discussed before, the IoT will necessarily bring morecooperation and coopetition, where players will need to estab-lish new ways of creating business. A traditional example ofvertical cooperation is the one established between Telecom-munication Equipment Vendors (TEVs) and Mobile NetworkOperators (MNOs). TEVs are the suppliers and MNOs are thecustomers, but they do work together to provide added-valuetowards final costumers. In recent years, this relationship goesclearly beyond just selling and buying telecom equipment.This vertical cooperation can also occur across industries.We can take the example of TEVs and MNOs cooperatingwith automotive companies to enable telemetry, infotainment,and even autonomous driving to vehicles. Hence, verticalcooperation refers to the concept of suppliers collaborating

with customers in order to satisfy their needs towards theservice they offer to end user.


Horizontal cooperation/coopetition can happen for variousreasons such as lack of resources, external market forces,or simply cost efficiency. This could be the example of anumber of MNOs sharing telecom infrastructure or licensedspectrum to reduce costs. These cooperative relationships canbe articulated in form of alliances, partnerships, joint ventures,consortia, or supply and marketing agreements [3].

Given this context, where cooperation and coopetition willbecome key enablers for the IoT market, it seems clearthat business relationships in IoT must be discussed in morecomprehensive topologies rather than value chains. Indeed, wemust use the concept of value networks to discuss, evaluateand propose new ways of cooperation (Figure 2). Accordingto [3], there are at least two reasons to establish cooperativebusiness relationships:

1) To reduce transaction costs and increase organizationallearning: a close integration and interaction betweensuppliers and customers can improve efficiency, increaseresource utilization, and ultimately, reduce costs.

2) To handle resource dependency: this means that cooper-ative entities can share knowledge and exchange accessto resources.


The second reason is particularly important in the complexproducts and services enabled by IoT. We can take the previousexample of vertical cooperation to enable connected vehicles.In this example TEVs and MNOs cooperate to handle resourcedependency while offering connectivity as-a-service to theautomotive company. The automotive company, together withan MNO and a TEV, co-creates value in order to offerconnected cars to end users. TEVs and MNOs are unliketo pursue a car manufacturing venture to offer services toend users. Therefore, such a vertical cooperation with theautomotive industry lets them get into a new emerging market.This kind of value co-creation cannot be fully explained froma single-firm perspective.

It should be highlighted that along with emergence of moreapplications of IoT, new actors are appearing to cover gaps inthe market. These new actors, such as dedicated IoT commu-nication providers, may take over the role of traditional actorssuch as MNOs or TEVs for enabling IoT based solutions.Therefore, any actor who is capable of providing connectivityfor the IoT solution, given that it possesses the requiredresources and competences, can replace traditional actors inIoT value networks as long as it is able to fulfill the needs inthe vertical industries.

The creation of IoT services can benefit from this valuenetwork perspective to identify and define new business op-portunities. This perspective is explained in Section III-B.There are two concepts that are widely used in the literatureand refer to this perspective: value networks and businessecosystems. Along this paper, we will consider that both termsrefer to interconnected communities of diverse actors that are


interdependent of each other and interact to create and capturenew value [4].

It is now clear that business models based on value chaindefinitions fall short to describe the complex context posedby many IoT solutions. We need to go for more complexrelationship tools based on value networks instead. However,how can we create or use business model tools when we needto embrace a value network perspective? In order to providean answer to this question, we look into relevant theories. Todo so, we take as an example the context of Smart Cities, asthey constitute a market where many industries come togetherand offer IoT services with the aid of ICT. In particular, wefurther expand on two of the main building blocks of anySmart City:

• Intelligent Transport Systems (ITS); to show how ICTvalue chain integrates with transport value chain andcreates a new value network.

• Healthcare and Wellbeing (H&WB); to showcase theneed to involve health, governmental, and ICT firms inservice development for IoT towards the development ofinnovative business models.

The final objective in both cases consists of highlighting thefact that different firms, based upon different value chains,can cooperate and exchange their expertise and resources toco-create value.

Even though there are emerging frameworks addressingbusiness models in value networks, there are no tools readilyavailable in the IoT context yet, which can provide a method-ology to use business resources as input, and obtain businessopportunities as output. This might happen in the future andconstitutes today a hot research area. However, even if there isno dominant design and development framework for businessfor IoT, this is the strategy leading to success: collaborationand service development in value networks.

III. UNDERSTANDING VERTICAL AND HORIZONTALRELATIONSHIPS IN THE IOT

In order to understand complex business relationships inthe IoT value creation process, we need to differentiate be-tween Vertical and Horizontal relationships (Figure 3). Verticalrelationships represent the seller-buyer, or supplier-customer,relationships (Figure 3-a), while Horizontal relationships rep-resent the case where two or more firms offer similar service(or value) in the value creation process (e.g. a MNO and anIoT communication provider as in Figure 3-b). Since the focusof this article is on competition and cooperation as the mainfactors of driving value creation in IoT, in our discussionswe classify the relationships in four possible categories: i)vertical competition, ii) vertical cooperation, iii) horizontalcompetition, and iv) horizontal cooperation (as presented inTable I). For the discussions, even though we focus onrelations among vertically positioned actors, we also benefitfrom similarities with horizontal relationships.

[TABLE 1 about here.]

The general factors increasing level of competition withinthe ICT industry in the context of IoT are four [5]:

1) Increased overlap between firms’ competitive goals. Inthis case, tap into new solutions based on connecteddevices. We even argue the goal is to achieve controlover generated data.

2) Increased maturity of ICT industry, particularly in coun-tries with high penetration rates of mobile technologies.

3) Increased similarity between firms in terms of offeredservices, due to adoption of common standards, and

4) Decreased resource dependency between firms, due toavailability of of-the-shelf technologies.

A clear example of vertical competition can be found whenMNOs and TEVs compete for customers on IoT connectivity(Figure 3-c), where the TEV also plays the role of IoT com-munication provider. In this case the drivers for competitionare no exception to the four factors mentioned earlier. Anincreased maturity can be seen in the ”future telecom” marketfor enablers of IoT services. This maturity is leading telecomindustry towards overlapping goals between TEVs and MNOs.TEVs either possess or want to get access to resources whichMNOs need to build their IoT business in order to provideconnectivity for IoT. Therefore, a TEV may establish similarcompetitive goals with its current vertical cooperator, an MNO,thus inevitably leading to vertical coopetition.

A. Coopetition in the IoT for the Telecommunication Industry

In vertical coopetition, competition and cooperation arepresent in terms of both/and; it “represents a situation where itis not possible to choose between contradictory dualities”[6],therefore, they happen simultaneously. As a consequence ofvertical competition with cooperators, if a customer like anMNO perceives its supplier as a competitor to get a new IoTcustomer, it may decide changing the supplier. This can be animmediate effect of ”negative feelings” as a consequence ofcompetitive relationship.

Surprisingly, observations show that in most cases firmsstay in the vertical coopetitive relationship [7]; the reasonsinclude industrial drivers, relational drivers, and firm specificdrivers. The industrial drivers in telecom industry relate firstlyto maturity of the market. Even when the future telecomecosystem includes service providers from other industries,the level of maturity is not going to decrease.

Relational drivers of vertical coopetition are straightforward.Vertical cooperation is a consequence of complementaritiesamong actors. Relational benefits are generated when involvedactors in the relationships achieve a high level of interactiontowards a common goal in their business; a phenomenonpresent in vertical cooperation. The emergence of non-ICTservice providers in the value network, the need for co-creationof value, and the transformation from value chains to valuenetworks are vouches for relational drivers.

The drivers for horizontal and vertical coopetition are notalways homologous. However, one common driver is directeconomic benefits [8], but these economic benefits do notshare a common reason. On the one hand, high cost structureof deploying a specific product (e.g. Cellular Networks forIoT provisioning) gathers two competitors to cooperate inorder to reduce costs. On the other hand, high cost structure


of implementing a service without the original supplier (i.e.,changing supplier or develop in-house) keeps the competingcooperators in the vertical coopetition. Hence, the economicbenefits in vertical coopetition are generally the outcome ofrelational benefits.

In a future research outlook, a comprehensive tool that canaccommodate the profitable perspective of all active partnersof the IoT co-creation process is required; considering a newperspective on business models.

B. New Business Model View for the IoT based on ValueNetworks

A business model can be generalized as a way to explainhow firms create and capture value. Some definitions discussbusiness models as activity systems, including which activitiesare performed, how they are linked, and who performs them.Others include a value proposition and how a firm is organizedand positioned to create a profit potential, with the objectiveof customer-focused value creation. In general, a businessmodel should express the logic of a firm; describing thevalue a company offers to customers and the network ofpartners creating and delivering this value to generate profitand sustainable revenues [9].

Even though existing business model tools consider thebusiness relationships, they are typically focused on the valuegenerated by individual firms. A proposal on ecosystem busi-ness models suggests that value creation in IoT needs activeinvolvement from all relevant actors. In fact, developmentof services based on connected devices requires diversity inresources and activities from a network of actors [4]. Thisperspective is an emerging trend to explicitly develop businessmodels that leverage on vertical cooperation within and acrossindustries, creating services based on the IoT.

In the IoT value networks, firms are interconnected anddepend on each other, usually evolving around a specificcore, which corresponds to shared and common assets [4].Common assets could be present in the form of platforms,technologies, processes, and standards that are fundamentalin their businesses. The role of business models in networksis to exploit the common assets and coordinate the valueco-creation process in vertical cooperation, while ensuringprofitable outcomes for the actors involved [10]. In Table II,we compare the two perspectives.

[TABLE 2 about here.]

The network-centric business model framework described in[9] is suitable for developing IoT services; it uses the businessmodel concept to understand business planning in a valuenetwork. The framework contains of three elements:

1) Business network development: actors enter a valuenetwork with their individual business models and de-termine their role within the business network.

2) Business opportunity development: initial business op-portunities are identified based on firm-centric businessmodels. They are further developed and exploited in anetwork-centric business model.

3) Business model development: starts from technologicalpossibilities and matures towards commercial exploita-tion that are collectively understood in the value net-work.

Further on, the framework considers a time dimension thatbegins with service development, moving to a pilot phase andending in a market phase. For the pilot phase, entrepreneurialactivities are highlighted as the expectation of having an actorsteering the development and taking care of “identifying thebusiness opportunities to be exploited and facilitating devel-opment of the networked business model” [9]. The emergingconcept of business models in networks are in an early stageand do not count with dominant frameworks of development.However, as we present in the section, they are implicitlyoccurring in different IoT activities.

In future IoT research, it would be beneficial to developsolutions and services considering resources and capacitiesfrom cooperating firms, providing interfaces for technical andbusiness resources.

IV. USE CASE: NEW MODELS FOR SMART CITIES

ICT is transforming business models in different verticalsectors. The mobile ecosystem has also changed from asituation where business relationships were mostly bilateral toa situation of cooperative business networks of providers thatcombine value propositions1. New business models are emerg-ing in the digital economy, radically transforming establishedindustries. In this section we discuss how these value networksapply to specific cases of a Smart City.

Smart Cities

A common definition of Smart City is the use of ICTto sense, analyze and integrate the key information of coresystems in running cities in order to optimize existing services,while offering new possible services to citizens. We considerthat a Smart City consists of five major building blocks [11]:

1) Economic, Social & Privacy Implications,2) Developing E-Government,3) Intelligent Transportation Systems (ITS),4) Healthcare and Wellbeing (H&WB),5) Digital Built Environment.In order to make a city smart, two approaches exist [12]:

Top-Down, and Bottom-Up. The Top-Down uses an ICTsystem that has an overview on all urban activities as well asthe tools to interact with infrastructures, gathers vast amountsof data and adjusts parameters to optimize the city operationsthrough technology. The Bottom-Up approach is about thecitizens in the center of innovation; this approach, ratherthan working towards centralization, embraces a distributedapproach.


1As presented by the 5G Infrastructure Association on “5G EmpoweringVertical Industries”. The 5G Infrastructure Association is a collaboration ofEuropean companies working towards the development of the fifth-generation(5G) mobile networks. It is a partnership between the EC (European Com-mission) and most relevant telecom actors.


A better solution is a proper mix of them. By meansof communications, it is possible to enable the creation ofsmart solutions in the bottom-up approach that addressesidentified and local needs; while top-down solutions providegeneral development frameworks to ensure interoperability ofsubsystems. These solutions enable non-ICT service providersto offer IoT services; a set of services where the value is co-created among ICT actors and non-ICT service providers. IoTin the context of Smart City covers a broad area includingseveral industries. In order to narrow down the scope, wediscuss ITS to bring examples of merging ecosystems in orderto co-create value for end user and H&WB to highlight relevantmotivations towards network-centric business models for theIoT.

A. Intelligent Transport Systems (ITS)

ITS applies advanced ICT technologies to surface trans-portation in order to achieve enhanced safety and mobilitywhile reducing environmental impact of transportation. Thisapproach requires a mix of traditional transport servicestogether with ICT solutions in order to optimize transportservices and offer Over The Top (OTT) solutions. In order toenable optimization or OTT services, the transport operatorsneed to cooperate with ICT actors instead of implementing thesolutions by themselves. A further step towards offering yetanother service, enabled by this compilation of actors, is alsopossible. An example is utilizing bus stops as a connectivityhot-spots for MNO subscribers in a newly created valuenetwork.

Figure 4 illustrates the case where the transport value chain,step-by-step, integrates with ICT value chain and creates anew value network. In the primary transport value chain, thetransport operator interacts with the passengers through theadvertisement company that owns the bus stations (Figure 4a).In the next step, an MNO connects the buses and trains ofthe transport operator via IoT-based SIM cards, while TEVenables connectivity and manages the vehicles via an IoTconnectivity platform. This process allows transport operatorsto offer optimized transport (as an IoT service) and multimodalroute planning (as on OTT IoT service) to the passengers(Figure 4b). Meanwhile, the passengers have indirect relationwith the advertisement company that owns the bus stops.The presence of this advertisement company, as part of thetraditional transport value chain, enables another co-createdvalue for passengers, i.e., cellular/WiFi connectivity hot-spotsin bus stations (Figure 4c).

B. Healthcare and Wellbeing (H&WB)

Services based on IoT and connected devices are beginningto play a key role in preventive healthcare as they can provideremote connectivity and access to relevant patient information.These services can also support healthcare workers by dis-seminating clinical updates, schedules, learning material, andreminders [13]. Pilot projects have been useful to demonstratethe potentials; however, the market implementation has beenlimited to date [14]. This is mainly due to lack of evidenceshowing the value in terms of cost and health outcomes. The

lack of standardized developments also limits the assessmentof the usability and value of some solutions. Moreover, isolateddevelopments create business barriers [14]; for this reason, thedevelopment strategies should consider the integration withexisting health system functions to complement objectives ofcurrent systems.

From the perspective of telecommunication industry, MNOsand communication providers are in a position to support theneeds of healthcare industry by providing remote monitoringand access to medical data. The main challenges are relatedto generation of an integrated value proposition and the rolesthat communication providers could take. These roles canspan from just connectivity providers to system integrators. Inrecent years, we have seen how incumbent MNOs are creatingseparate units to target the health sector. In this case, they takean active role in the development of solutions in combinationwith a network of service suppliers that coordinate and inte-grate their efforts.

The pivotal role of integrators is also crucial for homecaresolutions, where there is a complex environment of actors thatare subject to intense collaboration. This complexity oftenresults in unclear and unbalanced distribution of costs andbenefits; since many times most of the benefits are not taken bythe actors making the largest portion of the investment. Thisis a factor which slows the adoption of services that couldbe overcome by developing business models from a networkperspective, ensuring a profitable outcome for all involvedactors.

The 5G Infrastructure Association proposes a systems’ inte-gration for business models to transform healthcare delivery byICT. The suggestion consists of having flexible strategies thatallow each actor to focus on its core competences. For this,the key is to provide interfaces between business roles. Themain point is that the association recognizes the importanceof service development in a multi-stakeholder environment2.

The design of business models for healthcare services hasalso received attention from multidisciplinary groups whichemphasize the importance of cooperation between differentactors in the service design and provision. Collaboration isessential even at the stage of defining requirements, whereall key actors must be involved [15]. These actors are theintermediary coordinator connecting companies, the dedicatedtechnology specialists, and the healthcare specialists; they haveto set business relationships to exchange value in any service[15].

V. CONCLUSIONS

When discussing business opportunities in the IoT, firmsneed to collaborate and be aware of novel network-centricbusiness models. In this process, the key concern is how eachfirm can position itself within the business network in a waythat it guarantees its profitability as part of a larger group;not only a single firm. The challenge is that firms need to

2The 5G Infrastructure Association has provided a framework for a commonsetup to develop and discuss roles and relationships; particularly amongtechnology providers. The current framework is available in a white paper onthe “eHealth Vertical Sector”, which is available online: https://5g-ppp.eu/wp-content/uploads/2014/02/5G-PPP-White-Paper-on-eHealth-Vertical-Sector.pdf


accept these new market rules where they will, individually,perceive less control over the final customers and the entirevalue proposition.

In this paper, we have used Smart City as an example ofcontext where ICT plays the role of enabling IoT in tworepresentative use cases: ITS and H&WB. In both cases,the gradual integration of non-ICT industries with traditionalICT value chains are forming new emerging value networkswhich define how value can be created in the ecosystem.The emergence of value networks shows us the importanceof co-creating value together with involved entities in thenetwork. The value networks then change the typical structureof value creation in value chains. The change is in shiftingfrom unilateral relationship among suppliers and consumers,towards vertical cooperation.

In the future, new tools to define these new ways of interac-tion among companies will need to be designed. Companieswill need to define their own business models, but in con-nection with the value network. They will need to understandhow to define a business model that is aligned with the valuecreated by the value network in the IoT ecosystem. Under-standing such complex business interactions is fundamental,and this paper aims at making the ICT technical communityaware of such need of pursuing a stronger interaction betweenICT experts, vertical players, and final users; all interactingtogether in the IoT ecosystem.

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Amirhossein Ghanbari - is a strategy managementconsultant in the telecom industry at NorthstreamAB, Stockholm. He received his MSc Degree inElectrical Engineering and Licentiate Degree in ICTfrom KTH. While being in KTH, he has beeninvolved in projects with Huawei, Ericsson, Nokia,Samsung, Deutsche Telekom, Orange, and Siemensin the area of Internet of Things. His research inter-ests are the economics and business relationships inwireless communications; and IoT in specific.

Andres Laya (S’12) - is a PhD student at the Com-munication System Department from KTH RoyalInstitute of Technology, in Stockholm. He holds anMSc Degree in ICT from BarcelonaTECH (UPC).He has been involved in projects with Ericsson,Nokia, Orange, Telecom Italia, Sony Mobile andAalto University in the area of Machine Type Com-munications. His research interests are in the area ofInternet-of-Things, and the business implications ofconnected devices in different industries.

Jesus Alonso-Zarate (SM’13) - PhD (2009)and MBA (2016) from Universitat Politecnica deCatalunnya (UPC). He is Senior Researcher, Headof the M2M Communications Department, and Man-ager of the Communications Technologies Divisionat CTTC in Barcelona. Since 2010, he has publishedmore than 120 peer-reviewed scientific papers inthe area of M2M communications. He is recipientof various best paper awards and is very activein internationally collaborative R&D projects (withindustry, ESA and H2020).

Jan Markendahl - received his PhD in Techno-economics from KTH Royal Institute of Technol-ogy in 2011, where he was appointed AssociateProfessor in Wireless Infrastructure Deployment andEconomics in 2012. He worked more than 20 yearsin R&D, business development, management andmarketing at Ericsson, Nokia Networks, Telia andconsultancy companies. His research interests in-clude Mobile networks and services, Internet-of-Things, business modelling, cost structure modellingand analysis. He is currently responsible of the

VINNOVA project “IoT Ecosystems”.


LIST OF FIGURES

1 Smart and connected value creation as information loops in the Internet of Things. Adapted from [1]. . . . . . . 82 Value chain and value network representation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93 Vertical vs. Horizontal relationships among involved actors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104 Gradual integration of transport and ICT value chains, which creates a new value network. . . . . . . . . . . . . 11

FIGURES 8

Analyze

Act

Aggregate

SenseSmart device

infomartion loop

Connected deviceinfomartion loop

Communicate

Fig. 1. Smart and connected value creation as information loops in the Internet of Things. Adapted from [1].

FIGURES 9

Added Value

Supplier

Customer

Value Chain Value Network

Fig. 2. Value chain and value network representation.

FIGURES 10

TEVTEV

MNOIoT

CommProvider

IoTEquip

Vendor

Customer Customer

Solid lines represent“vertical”

relationships

Dotted lines represent

“horizontal”relationships

Customer

(a) (b) (c)

MNO

TEV

MNO1

MNO2

IoTEquip

Vendor

Customer

IoTComm

Provider

Fig. 3. Vertical vs. Horizontal relationships among involved actors

FIGURES 11

Transportoperator

Ad.company

TEV

MNO

TEV

MNO

End user

Transportoperator

Ad.company

End user

Transportoperator

Ad.company

End user

(a) (b) (c)

Fig. 4. Gradual integration of transport and ICT value chains, which creates a new value network.

FIGURES 12

LIST OF TABLES

I Examples of vertical and horizontal relationships in the IoT service provisioning . . . . . . . . . . . . . . . . . 13II Firm-centric and network-centric business models, based on [10]. . . . . . . . . . . . . . . . . . . . . . . . . . . 14

TABLES 13

TABLE IEXAMPLES OF VERTICAL AND HORIZONTAL RELATIONSHIPS IN THE IOT SERVICE PROVISIONING

Competition Cooperation Coopetition

Horizontal

MNO - MNO

Competitionover market

share inmobile

subscribers

MNO - MNO

Roaming inmobile networks

MNO - MNO

Cellularnetwork sharing

Vertical

TEV - MNO

Competitionover offeringIoT service

platforms forthird parties

TEV - MNO

TEV enabling IoTplatform and

MNO enablingcellular connectivity

TEV - MNO

Simultaneouscompetition overa customer and

cooperation overanother customer

TABLES 14

TABLE IIFIRM-CENTRIC AND NETWORK-CENTRIC BUSINESS MODELS, BASED ON [10].

Level of analysisType of busi-ness model

Firm level Network level

Firm-centric focus on how a firm cre-ates value and exploitsan opportunity.

focus on business relation-ships and external actors thatinfluence the business of afirm, either as suppliers, part-ners or customers.

Network-centric

focus on the positionand role that one firmhas inside a value net-work.

business model approach thatconsiders the configurationof a value network creating acombined value proposition.

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