Episode 7

Speaker 1: Accelerators from Beyond Now.

Speaker 1: Hello and welcome to Accelerators by Beyond Now. Join us as we speak with industry leaders and explore the big opportunities ahead in 5G, IoT, AI and Cloud, and the role of the ecosystem. We discuss how to stay ahead and what technologies innovation and business models are driving the industry to accelerate.

Jeremy Cowan: Hello and welcome to Accelerators by Beyond Now. My name is Jeremy Cowan. I'm Editorial Director and co-founder of IoT Now and VanillaPlus. And it's a pleasure to be your host here. We have two guests today. The first is from the well known global IT and services company Giesecke & Devrient in the form of Carsten Ahrens, Carsten is CEO of G+D Mobile Security. Carsten, thanks for joining us.

Carsten Ahrens: Thank you very much for having me.

Jeremy Cowan: And I'm delighted to have Sam Colley with us. Sam is CEO at one of G+D's largest acquisitions, Pod Group, a provider of internet of things, SIM cards with global coverage in 185 countries. Sam, welcome to Accelerators' podcast.

Sam Colley: Thanks for having me, Jeremy.

Jeremy Cowan: Great to have you here. Gentlemen, it's fair to say that the connectivity and security sectors in which you're both so instrumental are going to help decide whether IoT finally fulfills its true promise in business and consumer sectors. As we'll touch on later by some yards sticks, IoT has yet to live up to the hype though the jury's probably out on whether that was just down to too much hype. Anyway, there's still so much in IoT for us to be excited about, I want to explore that. Carsten, can I come to you first? Can you tell us a bit about the history of G+D in IoT?

Carsten Ahrens: Yeah, well, will be my pleasure. I mean just a very quick intro to G+D. I mean, many people are using our products every day without noticing it. We're a privately held company and have been around for more than 170 years. And you know, we are in the banknote business, we're in the bank note processing business. We're a manufacturer of payment cards, health cards, access cards, licenses, passports, security gateways, and so forth.

Carsten Ahrens: So many people are actually using our products every day. And one of the things that we are also then busy with is the manufacturing of SIM cards and then the evolving and the evolved technology that came from this. Just recently, this week, we have actually been celebrating this 30th anniversary and birthday of the SIM card and maybe not everybody knows, but the first one was actually delivered by G+D to a Finnish operator 30 years ago.

Carsten Ahrens: And obviously we did not stop there. We were also then the first ones who really got full speed engaged in what we now call the eSIM, this goes back more than eight years actually, even before I joined the company. And yeah, we have always been at the forefront of this and we believe, and I think we talk a lot more about that, what eSIM actually means for IoT, but this has really been the founding and the cornerstone of our engagement in developing our connectivity business, which was still and still is very much centered around plugable SIM cards to the next level and then to the internet of things.

Jeremy Cowan: And what led you to acquire Pod Group Carsten? What attracted G+D to this major acquisition?

Carsten Ahrens: I mean, obviously we're always on the outlook of trying to identify new opportunities to develop and grow our business. But let me share a little anecdote because a couple of years ago I got the pleasure to be invited to a demonstration of IBM Watson. You know, there are not so many IoT IBM Watson demo centers in the world, but one is actually here where we sit in Munich and we got invited and they were doing the demonstration, lovely demonstration.

Carsten Ahrens: But then on the way back I was scratching my head and said, "Well, they're missing out on a few things because they're taking two things for granted. Number one, and I think we all know what IBM Watson is, right? I mean, it's an artificial intelligence engine and obviously sucking a lot of data and then doing good stuff and analysis on the data that they receive. But then I was thinking, how can you take for granted number one, that data is coming and how can you take for granted that B or two, that data is coming uncompromised because this is basically what they are assuming.

Carsten Ahrens: And this is one of the reasons why we sort of started to get engaged because we are doing connectivity, but we can also make it safe. And this was one of the triggering points where we said, we got to do something more with the technology that we have. And then we came across a Pod. We also used to work with another partner before Pod. This was then more through what we call a referral model. So the connectivity revenue would have not come through our books. There were also then some limitations in that set up technically, which I think Sam can expand about, well later on. So we can do more things now since we have the whole stack in our premises and in our control.

Jeremy Cowan: That's kind of neatly anticipated my question. Sam, I wanted to turn to you and ask you much along the same lines. What is it that you are now able to do together that wasn't possible before the acquisition and also how has your customer offering developed?

Sam Colley: Yeah, I think obviously with G+D you know they come with years and years of experience in eSIM and lifecycle management and really what the partnership with G+D enables Pod to do is really kind of accelerate its eSIM offering. And I think there's been lots of kind of barriers to entry for adoption of eSIM, and really, I think a lot of that comes down to how much of the stack you can control and how much you can innovate together, both on the kind of core network side and the eSIM lifecycle management side. And so now obviously with the combination of the two, we can look to really innovate how we are delivering those services to the market. And then also G+D come with a lot of well established relationships, particularly in say the carrier community.

Sam Colley: That really helps the conversations because they are truly one of the most trusted partners out there when it comes to eSIM and security and the handling of what is relatively sensitive data. Really the way it's evolving our product is just kind of accelerating one of our key messages, which was around this kind of ENO, the enterprise network operator, which is really about enterprises taking more ownership of the IoT stack and control of the network and control of the different elements that fit around connectivity and essentially really enabling us to deliver more of a turnkey solution for the IoT connectivity as a whole.

Jeremy Cowan: Carsten, is there anything that you'd add to that in the way that the offering has now developed and the changes enabled by the acquisition?

Carsten Ahrens: I think Sam has covered it well, I mean, let me maybe add one or two aspects that may sound a little bit more technical, but when we look at IoT applications, we sometimes talk about a hamburger model or a technology stack that by coincidence is actually seven layers. And it starts with the embedded operating system at the bottom. Then we have the chip that runs that operating system. Then we have the module in which we kind of solder that chip. And then the module goes into a device that should be then connected.

Carsten Ahrens: Then you have the connectivity layer, then you have an applications layer, IoT applications layer. And then you have what I was talking about in the beginning here, which people like IBM Watson, but many other companies are addressing is the data analytics piece, which I think is going to be also a centerpiece moving forward. Will also by the way, a lot of the value will eventually be created. And when we looked at this, we found that we are actually ticking a lot of boxes. And I think Sam talked about it. I mean, we have a significant embedded voice capability.

Carsten Ahrens: I mean this year we'll approaching 500 million embedded voice licenses that we would have shipped. So we're clearly the market leader there. We're working with the leading chip manufacturers there, and we're working with module makers, device makers all the way up the stack, but we had not that connectivity piece. And when I mean the connectivity piece, I don't just mean the contracts that typical MVNOs would have to be able to serve connectivity around the world, but it is also then the management capabilities where Pod I think has done a phenomenal job in creating their own core network and really being in control of what's going on there rather than just being a reseller which many MVNOs are doing actually.

Jeremy Cowan: As I said at the outset, Sam, there's been a lot of concern that the IoT sector has yet to deliver fully on its promise. Obviously it's come a heck of a long way. Firstly, is that a fair criticism? And if it is, why has it fallen short? And maybe I can come to you Carsten afterwards to talk about what happens next, but Sam first.

Sam Colley: Yeah, I think obviously if we look at the numbers that were being touted five to seven years ago in IoT, we are nowhere close to hitting those in terms of number of connections and applications delivered, but has it completely under delivered? You know, no, I think there's been a lot of progress at the same time but there's still a long way to go. And I think some of the reasons for that really are just that the ecosystem is still really fragmented. Every day you see a new piece of technology, which is kind of great, but then how does it fit in with what already exists and how do people adopt that technology? And really particularly, even if you just look at the IoT kind of silo or part of it, I mean, that in itself is really complex. If you're an enterprise looking to build an application it can kind of be overwhelming at times.

Sam Colley: And that's one of the things when we were talking to enterprises, we found that this administrative burden maybe some security fears as well, and the ability to actually monetize it and have a centralized data view was a massive challenge. And so I think that's one of the big objectives for Pod and G+D. And again, I come back to this ENO strategy as really becoming an enabler and having a turnkey suite of products that enables an enterprise to really kind of develop and deploy applications without that administrative burden. And that comes from the platform to manage it, the billing services alongside it, the eSIM management and the flexibility to control your subscriptions tomorrow, but also in three years time.

Sam Colley: so you can avoid this kind of vendor lock in, which is also means that very quickly you can become on priced competitive and whatnot, or even as things scale you start to lose the economies of scale on your application. I think a lot of those problems are starting to be addressed. And I think hopefully with G+D and Pod together, we can kind of lead the charge in simplifying the connectivity kind of siloed like ecosystem, but then also expanding that into device management and possibly even into some more kind of platform plays as well, looking at towards kind of end-to-end solutions. But really the biggest barrier has just been the complexity, in my opinion.

Jeremy Cowan: Carsten, would you add anything to that about what happens next? What needs to happen next?

Carsten Ahrens: I think to maybe just add to your question, I would also concur with the judgment that it probably has not delivered on the promise, and yes, there's been very high numbers were put forward, 25 billion devices connected in 2025. Gartner was talking about a million devices connected every hour to the internet. I think it is with many technologies that we have seen come to the market in the past, the prognosis were super high. Expectations were super high. They were a little bit disappointed but then at one point it really took off. And I have absolutely no doubt that this will be the same thing here with the IoT. I think maybe it's a little bit over promised and Sam was mentioning a lot of points why it probably has not delivered.

Carsten Ahrens: It is too complicated for many people who are interested in it. They're not really interested in building high sophisticated solutions, I think they're just interested in the data so who can help them to really plug everything together and make it work. Not just in one place, but in many places in the world, because most of the enterprises aren't necessarily interested in doing a deal with one operator in one country, but they have subsidiaries in many countries like we have, and the solution has to work globally, that's one thing. Also, the people that are building devices, if you solder a chip into the device and you need to have profiles, you need to have remote management capabilities. So there are a number of technology glitches, so to speak, but they have all been solved now, this is the good news.

Carsten Ahrens: They've all been solved technically. So it isn't really an issue any longer of having technology and components available. It is more an issue of bringing them all together. And this is again, why I'm so excited and why we have done this step with Pod. Because again, I mean we are now basically covering the whole stack and it can make that available for people to build these applications on top of it. And we will eventually build these applications, also ourselves.

Jeremy Cowan: Staying with you, Carsten, there's a lot of work going on in IoT worldwide to create platforms that manage everything from devices, through connectivity and data to applications. Yet the joke goes that platforms are what's left behind when the trainers left the station. What do you believe is the future for platforms in IoT?

Carsten Ahrens: I've heard that and I've actually said it also myself, but in a way you also need the platform to get onto the train.

Jeremy Cowan: True.

Carsten Ahrens: But you have to be there on time to catch the train. And so I think just the platform play is not sufficient. I really don't think so and I think there's a lot of activity in this space and it's quite easy to do a platform and try and squeeze yourself into the middle of a value chain, not adding a lot of value, but trying to get control and trying to be the gatekeeper almost. This to me doesn't work and I think there will be disappointments in some of those business models. At the same time obviously we have to come up with something that is scalable and that has re usability.

Carsten Ahrens: We cannot build silos and things like that, so in that aspect, I think a platform can make a lot of sense. And in a way, I mean, we've also built platforms. Management platforms, support has built some platform technology. We are built it with our eSIM capabilities so it's nothing wrong per se, but you have to do some technical, heavy lifting in order to have a role to play in this value change, just putting some software in the middle that more or less anybody with a lot of engineers can program is not sufficient. That will not work.

Jeremy Cowan: Sam as Giesecke & Devrient and Pod Group evolve, who is proving to be your typical IoT customer. Indeed, is there such a thing?

Sam Colley: Yeah, it's a good question. I think, we're still only five months in so far, so who will be our typical customers probably yet to be defined, but I think it's a pretty broad range. And Pod comes from a place of working with a lot of SMBs in particular and enabling them with kind of tools and things they wouldn't be able to get otherwise to launch their IoT applications. And obviously G+D come from the other end of the spectrum, working with huge MNOs, huge automotive companies and really kind of... I think what we're looking to do is pull together a solution that can deliver something for everyone. And I think that's really where this whole enablement piece comes in and building a modular platform so it's not simply connectivity enablement.

Sam Colley: We are looking to enable the other parts of that connectivity ecosystem as well on either a modular basis or as a full turnkey suite. I think we're still exploring a lot of exciting opportunities that have arisen due to the combination of the two companies and the resulting product. And I think it'll be a pretty broad kind of portfolio of customers when things start to settle down, but it's certainly exciting to see some of the conversations that we're already having.

Jeremy Cowan: Carsten, you seem to be involved in quite a lot of industry verticals, some very interesting areas if I was just to pick one, the automotive sector, which is not only topical, but very important for a variety of reasons, including environmental possibilities. Could you tell us about your work with tier one car makers and across the automotive sector as a whole?

Carsten Ahrens: When I started to talk about G+D in the very beginning of the call, I said that we're celebrating 30 years of SIM. And then we started eSIM eight years ago, and it actually did start in the automotive sector because the people wanting to build connectivity into vehicles initially for telematic services and actually for things like eCall, which was then mandated to be included in every vehicle from a certain point in time. They obviously realized that you cannot have a plugable plastic card in a vehicle because the vehicle is on the road for 17 years, an average, and you have dust, you have vibration, you have moisture and the contacts might not stand that for a long time and you will have interruptions and so forth.

Carsten Ahrens: Then the idea was born that a chip would have to be soldered in the car and when it's soldered in the car, you need to have these remote management capabilities. So we were the first ones coming up with a pre-standard version, and then we all know the history of how it evolved. We were then also developing the first solutions that were then fully standardized by the GSMA. And then also then thanks to the work that we're doing with Apple, we started to build a consumer value proposition as well in parallel to that. And now we are actually quite excited that we have come up with a solution, which we call dual SIM, dual active. It's an industry first solution that we have launched together with a well known Bavarian car manufacturer here, where you can basically not only have an eSIM, it's basically a dual eSIM, if you will, in the telematics unit in the vehicle.

Carsten Ahrens: The first one would then be used for telematic services, updating your navigation system, controlling your battery status whatever, but then you also would like to have another connectivity into the vehicle for entertainment services, Spotify, Netflix, and what have you, and many manufacturers have had the approach and still have the approach that this is sold through the car manufacturer. Some other manufacturers have discovered that that might not be the way forward because you have car centric connectivity, which is telematics, and they have consumer or driver centric connectivity in the vehicle, which means that it could be quite useful to actually use an existing data plan that you have purchased and where you pay already for your gigs and 10 gigs or whatever your plan is, and hardly ever use it all up in a month.

Carsten Ahrens: So there's sufficient bandwidth and capacity available on your data plan. You just bring in another SIM and activate it in the vehicle and use the vehicle electronics, the vehicle stereo, and you save the power on your phone and also have better connection for these services using an external antenna. And we are quite excited about that because the first vehicle with this is now coming out. Again it's an innovation that we have developed together with a car maker.

Jeremy Cowan: Very interesting, Sam, we've obviously been talking a lot about enterprise customers and possibilities. What can you tell us about small to medium size businesses, the SMBs are they a significant customer base yet? And what are the use cases?

Sam Colley: Yeah, I mean for Pod they are a significant customer base and the use cases are pretty horizontal from telematics to retail, to healthcare and even into kind of manufacturing and industrial IoT as well. So there's kind of a lot of need for this kind of new technology across the industry, particularly for SMBs. And I think if we really want IoT to scale, like all of the predictions then SMBs also need access to all of the latest technology, but it needs to be affordable, simple, and accessible. And I think that's one of the biggest challenge today in that the MNOs do a great job serving their large customers. But there's this whole long tail of SMBs that can sometimes feel a little underserved if they can't afford to pay pretty huge price tags for access to things like eSIM or even this idea of the decentralization of networks as we look at private networking in either LT or 5G moving forward.

Sam Colley: And so I think there's a huge market there in the SMB space. But going back to some of the things I mentioned earlier, the access needs to be simple and cost effective and affordable. And really that's what part of our platform is really targeting and really trying to accelerate the availability of these new technologies. Some of the things that G+D have been developing specifically for that kind of SMB space. And so I think it'll continue to be a big part of Pods custom portfolio. And from our perspective, it's also really exciting to work with SMBs. They're often at the forefront of IoT with new ideas and developing new technology. To be part of that and watch them grow has always been something that we've enjoyed and we wanted to continue to enjoy and to continue to deliver value really.

Jeremy Cowan: Carsten, you referenced the importance of the ecosystem earlier. Could you give us an idea of what kind of companies are your key partners and what kinds of collaboration models you are adopting with them?

Carsten Ahrens: We have actually already now over the last five years or so significantly broadened our customer base within G+D and even more so we are going to do that together with Sam, and he already spoke to that with the SMBs and so forth, but obviously we'll continue to work with the MNOs. We have active relationships with some 400 mobile operators in the world. I mean, they will give us the connectivity, they continue to run the SMD, or we are going to continue to run the SMDPs and SMSRs, the famous eSIM management platforms.

Carsten Ahrens: So they'll continue to be our customers and also partners. And as Sam said by the way, I mean, some of them also have difficulties to address the long tail because their billing stacks are just not ready for low R pool IoT device businesses. I really think we can also help them and we will bring traffic to them, into their networks, which I think is a great partnership possibility there.

Carsten Ahrens: And then obviously there will be the device makers. I mean, we did speak a lot about eSIM, the new technology is already around the corner. It's a real tongue breaker, it's the EIUICC. So it's integrated embedded UICC basically it's an eSIM without a dedicated chip so it sits on the basement controller. Here we are going to continue to expand on the partnerships that we have with the various device makers and also chip makers.

Carsten Ahrens: We did talk about the automotive market here. We can also help them with a little bit also then beyond what we're doing with just the EUICC sales, some of them already talking to us on some technology that Pod can bring from the technology stack that Pod has developed and then application developers actually, and hardware makers. I think for the IoT for specialized solutions will hopefully also then become partners. We see ourselves pretty much as an orchestrator of this ecosystem moving forward and reducing the entry barrier so that the adoption of IoT eventually will happen and will happen much faster at a much bigger scale.

Jeremy Cowan: Staying with you Carsten. Can I ask you just to look ahead down the road, what G+D and Pod Group will look like in say two to three years time?

Carsten Ahrens: That's a great question. And first of all, I really I've been around in telecommunications now for 30 years. I think we're all probably heavily underestimating the potential of 5G. For me this is not just another G you know, it's not from 4G to 5G. I really think it's going to be a game changer and you can address millions of devices per square kilometer. You have the capabilities to have massive mobile broadband applications, massive IoT also then ultra reliable connectivity. So I would almost say the sky is the limit and all these devices need to be connected in a secure way, and they need to be able to be also disconnected if something goes wrong. Let's not forget, I mean this is probably the biggest machine mankind has ever built or will ever build, the internet of things.

Carsten Ahrens: And so we better make it safe because if this data gets sent across these networks and it gets compromised and it's sent to an algorithm and the algorithm will do the analysis and do thinking badly, I think we're going to create something which is going to be pretty difficult to manage. And so I think the security aspects will be paramount in the future. And I really think that we have good ingredients to be a good citizen and a good partner and a driver actually, by taking down some of these barriers to adoption, making things scalable but making them safe at the same time.

Carsten Ahrens: I think we're just in the beginning of that journey. And as I said in the beginning the technology is there, we'll continue to invest. I mean this business is 1100 people with Pod now 1,150 people out of which almost 500 are developers. And then you have another 200 that are running our data centers with four nines 99.99% availability. I think you need to have that in order to be prepared. And I wish to think that we are well prepared and I'm really looking forward to these partners that we just talked about to join us and build something which is going to be very useful because at the end of the day, I can only repeat, it's just about the data.

Carsten Ahrens: The rest is just plumbing and heavy lifting, which we can help with. But we wish to make people get the data and do something really useful with it. And I think to close, maybe with this. I really believe that IoT can play a major role also in helping us to become more efficient and do less carbon emissions. If we can play a role here to support with this, I would be very, very happy.

Jeremy Cowan: That's a really neat summary. Sam, I'd just love to know how you think your services will change in a couple of years.

Sam Colley: Yeah, sure. I mean it's definitely kind of difficult to predict given the speed at which IoT evolves and new technologies are being delivered and arriving all the time. We've always tried to adopt and incorporate new technologies into our services as they come to market. And so exactly how it'll look is a little tricky, but you know, one of the big trends is that over the last few years, we've really been looking to evolve out of being in a traditional MVNO and just kind of selling megabytes and minutes, and really looking at all of the different services we can we offer. And that's really where this ENO concept that we talked about before came out and that's really delivering value to the enterprise and all of these different disparate solutions to the enterprise. So they can really focus on generating value and building applications.

Sam Colley: But one of the things to make that happen really is that all the whole of the ecosystem just needs to be more interoperable. And this data needs to be available, not just in one place, but across different applications. If you've got an application to Carsten's point, that's trying to save the world one device at a time and create sustainability through a supply chain, you can't have siloed data pools, that information needs to be shared, and it needs to be relatively transparent and available so that the consumer can access it as well.

Sam Colley: And so I think really I see the product evolving, as I say, beyond just connectivity and starting to kind of work more closely with enterprises to manage their data and get access to their data and possibly even manage their devices so that a device that's battery powered for example, can last longer. And again we'd need less of them. And there's lots of different things within IoT that can create efficiencies and not just the data itself, I would say. But I think it was very exciting to see where it can go particularly with G+D's vision and product stack as well. It'd be great to maybe touch base in three years time and reference this conversation and see where we got to. But yeah, it's exciting times for IoT and we're excited to see where it goes.

Jeremy Cowan: Likewise, well, gentlemen, we can talk about this for a long time, and there is a lot to be excited about, but I'm afraid we are out of time. I really want to thank you both for candidly sharing your time and your experience with our listeners. Thanks very much, Carsten.

Carsten Ahrens: Thank you very much.

Jeremy Cowan: And Sam, thank you too. I've learned a lot from that.

Sam Colley: Great. Thanks Jeremy. Thanks for having us. Appreciate it.

Jeremy Cowan: Finally, ladies and gentlemen, thank you too, for joining us around the world. Until the next time it's bye from me, Jeremy Cowan, and from everyone here at Accelerators by Beyond Now.

Speaker 1: Accelerators from Beyond Now.