Rise of the machines


Rob Conway, chairman of the GSM Association, challenged technology manufacturers in February to integrate in some capacity mobile broadband in to all their products by 2014.

He was addressing the Mobile World Congress, and referring to products such as cameras, printers, memory cards, printers and vehicles, among a multitude of other items. The opportunity, he said, is to embed SIM cards in 750 million new devices.

“We have only just begun the mobile broadband journey,” said Conway. “The embedded mobile broadband market can grow as chip prices go down and new usages are developed.”

Machine to machine communications, or M2M as it is known, is in its simplest form the integration of mobile SIM cards and a data modems in products to read and relay information via GPRS.

It is already a significant market; and represents the first roots of Conway’s vision.

The best-known example of M2M communication in the consumer space is probably the deployment of Vodafone SIM cards in TomTom’s satellite navigation systems, enabling transfer of up-to-date traffic information and relevant local information to users.

SIM cards are also used to monitor equipment remotely. In standard vending machines, they allow suppliers ‘live’ knowledge of stock and cash levels. Industrial and office equipment now commonly embed SIM cards to alert suppliers and engineers of errors or faults with the kit.

M2M communications are utilised by the catering industry to monitor temperatures and changes insides fridges and freezers, for example.
Billboards, wireless chip-and-pin machines, parking meters, burglar alarms and CCTV recording equipment all use M2M in some capacity.

But until recently, mobile network operators have looked at M2M communications as a niche curiosity. As a result, its uses have gone under-appreciated or ignored by many customer markets. It has been considered expensive and technically complex, despite its plain benefits.

Ovum analyst Steven Hartley points out M2M communication has been dubbed “the next best thing” for the past decade. Indeed, ABI Research recently claimed the M2M market space will be worth more than £8 billion by 2012. But such growth forecasts for M2M now appears more attainable than ever before.

The cost of mobile hardware and data has come down significantly, and the need for network operators to increase data revenues has become more pressing. The present economic climate requires companies to cut costs whilst maintaining productivity. Businesses and government agencies are being turned on to M2M, suddenly.

Says Hartley: “M2M has a better chance of success this time around. Data networks are more mature, modules are cheaper and, perhaps most significantly, operators have a greater incentive to make it work – as mature markets become saturated any new form of revenue is worth investigating.”

M2M products often require a specialist approach, compared to the simple operator model of measuring and charging data usage. Most require a specific software platform to translate data into information that is useful to specific clients.

M2M solution providers suggest network operators find it tough to develop such services themselves, and are instead looking to gain partnerships with specialists to manage the service and relay the information for a fee, whilst they earn corresponding data revenues.

US M2M developer Jasper Wireless claims there are more than 60 billion devices in the global market that could benefit from an embedded mobile data module. “Your computer, your printer, your fridge, your car; all things which can be connected,” says Jasper Wireless senior director Macario Namie.

Just one per cent of them (600 million) are optimised with some kind of embedded mobile data service at present, he reckons. “There is a massive market to fill – unlike the handset market, M2M is nowhere near saturation. This is the year for M2M, absolutely. Larger multinational operators have expressed a strong interest in M2M in the past 12 months. They are starting to understand the opportunity,” says Namie.

Traditionally, Jasper Wireless has provided M2M solutions under the ‘Global SIM’ brand to multinational corporations. It embeds wireless modules in GPS and telematics systems, office peripherals, patient care services and suchlike. It has served multi-market businesses as a single provider, managing local airtime provision in each of their operating markets. Clients have had a single supply contract and a single support contact.

But Jasper Wireless is changing its business model because of the increased interest in M2M solutions from network operators. Its network partners are looking for some M2M brand exposure too, and it is to make clear the network provider in each local market, whilst continuing to host and manage the M2M service.

Network operators tend to agree, so far, third-party collaboration is necessary for bespoke M2M solutions and relationship management.

O2 founded an M2M Centre of Excellence (to run alongside third-party clubs for dealers, distributors and data providers) early last year, to promote exclusive partnerships with leading UK M2M service providers. Announcement of the scheme was attended by a publicity statement about a supply deal for 30,000 M2M SIM cards with telematics service provider Cybit.

Vodafone’s UK wholesale team is also developing M2M solutions with outside businesses, such as TomTom, as a way to incremental revenues. The division is a central part of its growth strategy in the saturated UK market.

Full article in Mobile News issue 437 (April 20, 2009).

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