Deutsche Telekom Courts Startups for IoT Spark

Cultivating partnerships with startups and entrepreneurs is a priority for any telco determined not to be sidelined in the digital future. Yet with their stodgy reputations and buttoned-down corporate practices, many operators are not recognized for their ability to attract and work alongside young talent.

Germany's Deutsche Telekom AG (NYSE: DT) is determined to prove it does not fall into that category through a new incubation program with Cisco Systems Inc. (Nasdaq: CSCO) and Intel Corp. (Nasdaq: INTC). Unveiled in July 2015 under the "Challenge Up!" banner, the initiative provided mentoring and support to a group of 12 startups -- picked from among hundreds of applicants -- working on Internet of Things (IoT) products and services. When it wrapped up earlier this month, the operator was quick to commit itself to the program for another year.

IoT growth expectations give Deutsche Telekom an obvious incentive to reach out to IoT boffins. The operator's T-Systems International GmbH IT unit is already developing IoT services for organizations in the automotive, energy and healthcare sectors, although it has admitted it will miss original expectations for such "intelligent network solutions" this year. Deutsche Telekom also has high hopes for Qivicon, a platform supporting various smart-home services, but needs to attract more technology partners to make it fly. (See T-Systems Looks to Restructuring for Recovery, DT in Smart Home Deal With Major Euro Telco and DT to Bring Smart Home Into Netherlands, UK.)

Growth Areas: Performance and Original Targets (€B)

Source: Deutsche Telekom.

Senic, one of the Challenge Up! startups, looks set to be among them. The German company has produced a wireless device called Nuimo that allows users to control a number of household appliances, including lighting, room temperature and music systems. "Senic will be integrated in Qivicon," says Elias Drakopoulos, Deutsche Telekom's senior vice president for European B2B.

Drakopoulos is equally keen to see technologies developed by other Challenge Up! participants included in the operator's business offerings. "The focus of Deutsche Telekom's Europe B2B area is on solutions and applications that will help our business customers to take the first step into digitalization," he says. "Many of this year's winners, including… ProGlove and Waylay, do just that."

Pointing the Way Forward

Deutsche Telekom's Elias Drakopoulos believes IoT startups could help the operator
drive sales of enterprise offerings.

ProGlove's smart glove is designed to help workers in the logistics and manufacturing industries perform more efficiently, while Waylay's automation system is aimed at businesses that want to integrate IoT with IT systems and online services. Both play to Germany's "Industrie 4.0" efforts to bring digitalization into the workplace and on to the factory floor.

That broader initiative, the importance of Germany's manufacturing industry to Europe's economy and the absence of a European Google or Facebook all help to explain why the region's startups might turn to Deutsche Telekom for support. But there is no indication Deutsche Telekom is perceived to be a second-best option, according to Drakopoulos. "We have not had difficulties in addressing startups," he says when asked if Challenge Up! needs a web-scale partner to lure bright sparks. "We received over 1,000 ideas in the initial phase which confirms that Deutsche Telekom is seen as an attractive partner."

Next page: A symbiotic startup strategy