Macheen Flips The Model

If you have been following our METISbits opinion pieces, you know we have briefly mentioned start-up Macheen before. Since then, Macheen has moved on. This week they announced that Lenovo selected Macheen as worldwide partner for embedded broadband to be integrated in 45 Lenovo product models and the Lenovo cloud. With their existing agreement with Dell (NetReady), Macheen now serves 2 of the top 3 worldwide PC manufacturers (see our analysis of HP, Dell, and Lenovo here). In addition, Macheen broadened their footprint from the US, Germany and the UK to include nine European countries today with China, Brazil and others on the roadmap for this and next year.

Macheen’s market opportunity is to provide out-of-the-box, always-on connectivity to laptops, tablets, and other non-phone devices that are largely sold without any cellular connectivity, commercial Wi-Fi, or data plans today. To capture the opportunity, Macheen created a cloud based platform that enables device makers and VARs to sell their devices with connectivity (embedded 3g radio and Macheen SIM) included out-of-the-box. Backed by a global set of network operator relationships, Macheen manages the entire process, including payments, settlements and customer service. Device partners focus on new content or service offerings that turn their devices into recurring revenue opportunities with constantly-connected customers. Macheen does not disclose all operator and enabler agreements they use to make it all work, but Three UK, Sprint, KPN International and simfonics are some of their partners.

Macheen flips the current business model of selling laptops, tablets and other devices with mobile broadband in different ways.

  • First, they focus on creating revenue opportunities for device makers that go beyond selling devices.
  • Second, they focus on increasing the connectivity rate of previously unconnected devices rather than focus on what they call the “elite” market, i.e. those that already have a full data plan.
  • Third, rather than the operator data plan, the device and its capabilities are the focal point of the sale; the embedded connectivity is just there during the lifetime of the device.

The Macheen platform enables new application delivery options such as:

  • Paying only for those services or applications that you want anytime, anywhere. For example news, social networking or cloud-based productivity applications including email or sales/CRM packages like salesforce.com.
  • Provide flexible, no-contract payment options on a service or application basis to purchase 15 minutes, 30 minutes, one hour, daily or monthly session plans. For example Lenovo Mobile Access powered by Macheen.
  • Enable an enterprise account or vertical industry solution to be delivered to the end user with any combination of network applications “hot” and prepaid. For instance remote wipe or support capabilities can be configured to be always on. Also, built-in policies can be enforced, such as whether the end-user is allowed to buy other Internet access on a different account.
  • Enable sponsored airtime models. In return for sponsored advertising or other promotional offers, users can gain limited free access to the entire Internet or anytime access to sponsored sites, services or applications.

In addition, it is a hassle free method for users to get online without the need to buy USB dongles or shop for data plans and install SIMs.

While we believe Macheen is on to a good thing, we expect some hurdles on the way:

  • Operators are starting to bring multiple devices into one contract. Smartphones have the capability to serve as a personal hotspot for tablets, e-readers, laptops, etc. With one data plan for all devices, out-of-the-box connectivity for your new tablet will be provided through your smartphone or you will have more SIMs from one operator under one data plan, including your fixed BB.
  • Net neutrality might become an issue with out-of-the-box connectivity that allows only certain sites or applications to work.
  • As Macheen users get more accustomed to being online whenever they want, they might churn to an operator monthly or yearly data plan that is more affordable rather than buying spot access.
  • Sponsored access deals rely on the size of the footprint and user base that Macheen is able to build.
  • There will be plenty of employees that bring their own device without out-of-the-box connectivity, in these cases the Macheen SIM will have to be installed after the sale, making the model less attractive.
  • With (free) Wi-Fi available in a growing number of locations, users are less likely to purchase spot mobile access. Macheen will need to build out agreements with Wi-Fi operators such as Boingo.

Operators used to bundle content, access and device. Now devices bundle access and content. The connected consumer ecosystem will be turned upside down and Macheen is one of the start-ups that are making it all possible.

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About Pim Bilderbeek