The VAST universe of M2M

Future M2M ecosystems will be complex and span many industries, including telecom and electronics. Unlike current M2M markets, which are highly segmented and often rely on proprietary solutions, future M2M markets will need to be based on industry standards to achieve explosive growth. A run down of the multiple industry targets and possible solutions are listed below M2M Industries
Automotive	Insurance
Automotive OEMs (Manufacturers of Cars, Light-Trucks, Motorbikes)	Insurance Carriers - Property & Casualty
Heavy Equipment
	Telecommunications
Energy and Utilities	Cellular, WiMAX, Cable and ISP
Combo Electric/Gas
Electric, Gas, Waste, Water	Travel & Transportation
	Car Rental
Government, Local/State/Federal	Freight Airlines
Defense and National Security	Freight Forwarders & Arrangers
Environmental, Transportation, Public Works	Freight Services
Postal	Gaming
Public Safety and Justice	Global Distribution Systems/CRS
Scientific	Hospitality
Social Services	Passenger Water Transportation
	Port Operations
Industrial and Manufacturing	Rail
Construction/Architecture/Engineering	Shipping
Fabrication & Assembly	Truck Rental & Leasing
Forest Products	Trucking
Mining
++++++++++++++++++++++++++++++	++++++++++++++++++++++++++
M2M Solution Areas
Automotive	Travel and Transportation
Embedded Device Lifecycle Management	Security operations
Pervasive Computing/In-Vehicle	Track and Trace
Energy and Utilities	Cross industry
Asset Management	Business Continuity
Infrastructure and Systems Management	Business Process Management and Integration
Automatic Meter Reading	Business Operations
	Inventory/Warehouse and Shipping
Financial Services/Banking
Automated Solutions	Management
ATMs	Production/Operations and Logistics
Kiosks	Security and Disaster Recovery
Point of Sales
	Computer Services
Government	Security
Regulatory Compliance
Security & Surveillance	Customer Relationship Management
Tracking Management	Field Services Effectiveness
Transportation Management	Sales Productivity
Healthcare and Pharmaceutical	Digital Media
Patient Care and Services	Distribute Digital Media
Physician Office Automation
Computerized physician order entry	Mobile Commerce
	Cashless Mobile Payments
Insurance
Mobile Workforce	Product Lifecycle Management
	Engineering and Analysis
Retail
Logistics	Supply Chain Management
Self-Service solutions	Supply Chain Management Services
Kiosks, ATMs
Point of Sale	Surveillance and security
	Security event management
Telecommunications	Security systems and operations
Network Infrastructure
Network Management
Service Management

M2M Challenges for the Telco

Almost all major mobile operators have announced initiatives for driving growth in the wireless M2M market over the past few years. The results are now visible with the growth of subscriptions and customers. As per Berg insight, the world’s ten largest operators by revenue had 68.2 million M2M subscribers (representing 3% of their aggregated base of total mobile subscribers) at the end of 2011, an increase of around 38 percent YoY.

China Mobile is believed to have emerged as the world’s largest provider of M2M connectivity during 2011, with an estimated 14 million subscribers at the year-end. AT&T established a clear leadership in the US with 13.1 million M2M subscribers, up 40 percent year on year. Meanwhile Verizon Wireless’ M2M subscriber base increased modestly to around 8.6 million. Vodafone held the number three spot with approximately 9 million M2M connections, ahead of T-Mobile and Telefónica, which ended the year with around 6–8 million M2M connections each. China Telecom entered the top ten with around 4.5 million M2M subscribers, racing ahead of Telenor, Sprint and Orange at 2.5–3.5 million connections each.

As per Global Information Inc. (An information service company partnering with over 300 research companies around the world), M2M is a US$ 1.2 Trillion opportunity by 2020. The M2M opportunity is definitely large for operators too and it not only promises a steady source of revenue from connected consumer devices but also offers an entry into diverse sectors where they can promote their bouquet of services. Telcos in turn need well defined directions and strategies to conquer this burgeoning market.

At the same time, M2M market development represents a very complex set of inter-related elements from the business model, to the supply chain, to vertical applications, to ongoing support challenges. Designing an M2M business involves optimizing all of these elements. In this post, I would try and assess these challenges and deduce certain critical success factors.

Lower Average Revenue per user (ARPUs): Since the amount of usage of the connected devices is significantly lower than a regular user, the realized revenue per user is much lower compared to the traditional mobile business.  The usage may vary but in most use cases, the reporting of statistics will also be done over long periods of time. Therefore, new revenue will be distributed over large numbers of subscriptions.

Note that the there are exceptions in case of video surveillance and video based use cases where the data usage will be significantly higher.

Customized products and services:  Telcos need to re-think and act differently when designing M2M solutions. Products and services should meet the exact requirements of M2M customers and include M2M tailored product and service solutions, self care support, flexible billing/tariff models, customized roaming arrangements depending on geographies of the customer, etc.

Special SIM cards: M2M imposes new future demands for SIM cards. They not only need to be flexible for personalization and profiling, they increasingly need to meet industrial grade of reliability, security and quality of service.

Solution provider positioning: Like in traditional mobile business, Telcos providing M2M connectivity are stuck in the usual dilemma - whether to act as dumb pipe or provide additional services to enhance the overall customer usage and experience.

Different operators follow different approaches to the above problem and stay closer to one of the two ends of the spectrum.  Within this, while some companies take a “defensive stance” focusing just on value-added services, certain other operators have followed a multi-sided business model, acting as a consulting partner for the end customers to resolve their key business issues at hand.

Not only is the M2M market very different from the handset market—but different M2M customers have very different requirements. An operator's ability to respond to those requirements directly affects the win rate. The idea is to develop solutions working side by side with businesses along with all the process to create and deliver specific final products to fulfill the businesses diverse needs.

In certain cases, it may not be possible for a telco to take an end-to-end approach to the entire M2M market as they do not have the full set of required skills. In such cases, partnerships with other solution providers or system integrators will be the key to success.

Alliances: With world-wide requirements hitting center stage for most global customers, an alliance between multinational operators is the logical next step to provide seamless coverage in multiple continents. This way, the companies can promote the sale of more M2M devices across various verticals such as consumer electronics, automotive and energy. In addition, the group of operators can also align to create more business models, new products and services and reduce the time to market and operational costs.

The partners also benefit from scale arguments when negotiating M2M devices, modules, API standardization and M2M platform roadmap development.

Although, a single large global alliance is missing, there are a few alliances cropping up in different parts of the globe.

KPN, NTT DoCoMo, Rogers, Singtel, Telefónica, Telstra and Vimpelcom have created one covering large parts of Asia pacific and Europe. Another one is based on deals between Vodafone and Verizon. While another large alliance covers multiple European and North American operators like Deutsche Telekom, France Telecom, TeliaSonera, Everything Everywhere and Sprint.

Critical success factors

Key success requirements for cellular network operators’ wireless building M2M businesses will include:

• A Clear Strategic intent and direction:  M2M must be on the road map for cellular operators and requires a distinct strategy. With the M2M market still in an emergent state, carriers need to act now and deliberately.

• Innovation is the key to success:  It’s hard to foster technology innovation and create new businesses at the same time. Focusing on new values - such as extended communications infrastructure for M2M, new user experiences and connected device component developments (such as new SIM cards formats for M2M) are all examples of innovation that will help the market develop faster.

• Alliances and partnerships:  The focus should remain on the complete ecosystem and not on owning everything. No single operator can achieve the R&D, implementation as well as system integration. There are several players in various layers of the ecosystem and the success can only be driven by alliances between various players.  There are also many categories of partners to work with, but determining which potential partners will be define the future success of any player.

Approx $ 4 Billion Software opportunity for M2M

I had described the three layers of a connected device ecosystem viz., Hardware, Communication media and Software. This post talks about the opportunities for various players in the Software space.

As per ABI research, the software platform revenues would grow to $3.85 Billion by 2017. In its report, the author classifies this into two areas - Application Enablement Platforms (AEPs) and Connected Device Platforms (CDPs).

AEPs like the Application developers in Smartphone ecosystem will help in decreasing the M2M application development time and extend application reach. AEP application development functionality seeks to abstract away from the developer those aspects of the application that are common across many M2M applications such as data normalization and a data rules engine. Of course, the possibility of an app store can not be denied. CDPs automate the provisioning and management of M2M module connectivity, which is critical in this low ARPU market.  CDPs also provide connectivity monitoring, real-time charging and policy control, and can integrate with existing BSS and OSS platforms.

http://www.abiresearch.com/press/facilitating-the-promise-of-billions-of-connection

Evolution: Machine 2 Machine to Internet of Things

Although, the two terms in the world of connected devices are sometimes used interchangeably, there is a significant difference in the two. In my view, its a logical path of progress from the M2M ecosystem towards IoT ecosystem. On one hand, M2M is more holistic concept involving communication in any form between two dumb devices, the IoT refers to the next generation of communicating terminals involving data transfers over IP networks at a higher layer.

In the connected devices paradigm, there are three well separated layers of operation as shown in the figures below. The maturity level of the components in the three levels provide the key differentiation between the two ecosystems.

 In the M2M ecosystem, all three layers are lesser evolved than in an IoT ecosystem.

The three layers will see evolutionary changes in the next 3-5 years to reach a maturity level in the IoT ecosystem. The video below gives an interesting understanding of IoT phenomena and how it may affect our lives in the near future.

The future definitely looks exciting and a lot more interactive :)

The Internet of Things

The real internet of everything!

Big data gets Bigger!

With the growth of wireless subscribers, network operators are already facing the issues of prioritizing different types of customers. While, there are various types of algorithms applied based on profile, usage and network availability, the near future brings an interesting question to the forefront - Man VS Machine.

Operators will soon be faced with the dilemma of prioritizing humans or machines that speak with each other sending myriad of messages, texts and exchanging information. By 2020 researchers expect there to be more than 6 billion wireless subscribers using smartphones and at about the same time, a competing study by Swedish communications giant Ericsson predicts that there will be over 50 billion intelligent machines fighting for bandwidth with these Smartphones.

Big data will become bigger and will need better analytics and mining capabilities. In parallel, solution providers will need to develop compression techniques to optimize the information exchange. For operators, the opportunities lie in developing customized tariff plans for  varying types of usage.

The wireless landscape is definitely changing with the proliferation on m2m!