M2M beyond the hype - Connect-World

M2M the operator’s opportunityoptimize business processes, etc.4. Win-at-all-costs strategy - big volumesneeded to survive in this low margin businessThese ‘more of the same’ approaches cannotwork. M2M does not answer the needs ofclassic telecom consumers or enterpriseservices, so it needs to be addressed in adifferent way.Analysts predict, at least, 50 billionconnected objects by 2020, but only smallpart of these will be connected using cellularM2M technology. So, mobile operators haveto change their way of working and movefrom Machine-to-Machine to the ‘Internet ofthings’ (IoT).M2M is a technology, but the IoT is a conceptthat includes a blend of devices, applicationsand network technologies (mobile, fixed,in building LAN, short-range technologies:WiFi, ZigBee, RFID, etc.).IoT forecasts predict 12 billion objectsconnected by 2020 (source: MachinaResearch) including the 2.1 billion cellularpoint-to-point M2M connections. Operatorswith converged mobile and fixed networkswill find it simpler to evolve from M2M andimplement the IoT.From cellular to converged technologiesCellular M2M technology provides point-topointconnections. For convergent operatorsusing a fixed network is appropriate for highdemand M2M bandwidth connections (e.g.camera surveillance, digital signage, etc.).However, the future IoT will not only be pointto-point;it will involve one or more steps ofaggregation and only some connections will becellular or fixed point-to-point.In the future, IoT solutions will combine awide variety of network, device, software andapplication technologies to meet the user’sneeds. Today, we tally M2M connectionsbased on telecom operators’ reports ofM2M cellular connections or the number ofdedicated SIM cards. In the coming years,though, M2M reports will be able to detail thenumber of connected objects and give clearlydefined performance measurements.From connectivity to a solution-centricapproachTo maximize the M2M/IoT opportunity,telecom operators need to adopt a solutioncentricapproach to the market. Telecomoperators provide the connectivity layerscentral to the M2M value chain. Telecomoperators are also forging worldwidealliances to extend their connectivity beyondtheir home regions.Today, for each end-to-end solution sold, 15per cent of the value is for connectivity, 30per cent for the device and 50 per cent for theapplication. Moreover, market pressure androaming regulations are pushing down thepricing and transforming connectivity into acommodity so telecom operators have to sellmore than connectivity to build revenue.Telecom operators should offer:• smart connectivity using a web-basedplatform to manage and control M2M cellularconnectivity;• a reinvented pricing strategy;• an enriched servicing platform withdevice management functionalities;• an ‘easy to connect’ integration layer forapplications;• new go-to-market and partnership models,developed jointly with solution providers,to offer integrated end-to-end solutions thatinclude device, application, connectivitycapabilities, service delivery platforms, SIM/device visibility and troubleshooting.Given the large number of M2M applicationsin each vertical sector (automotive, energy,healthcare, intelligent buildings, consumerelectronics, security, smart cities andtransportation, etc.) it will be a challenge fortelecom operators to pick the right battles.Telecom operators will be able to capturepart of the application revenues throughinnovative partnership and business modelsand through a disciplined acquisition strategyin niche solution providers with a specificexpertise. We have already seen differentmoves form telecom operators in thisdirection such as AT&T and Xanboo, Verizonand Hughes Telematics, and Vodafoneand Zelitron. More M2M mergers andacquisitions are expected. This strategy willhave to be correctly balanced with existingpartnerships to avoid or manage possibleconflicts with other solution providers in thesame sector.National and international channel strategieswill also be a key selling point depending onthe capabilities of the alliances.Last but not least, the value is not in thetransport of the data but in the data itself! Bigdata can drive a significant part of the newrevenues. Legislation covering the usage ofthe data collected, though, is likely to have asignificant impact not only on the way the datacan be used, but upon its commercial value.Cost saving solutions or value-added servicesM2M solutions have been in use for morethan a decade, helping companies to optimizetheir business process and reduce theircosts. Most M2M solutions are in place tomeet essential needs - tracking and tracingof delivery processes or transport services,vending machines refilling or technicalintervention, alerts, billing data, energymetering and the like.Cost savings will remain a key driver ofM2M solutions, but it also opens a newlandscape for innovative solutions thatgenerate sources of service revenues.M2M will ease people live and change howcompanies operate.Education of potential users regarding thecapabilities of M2M will be essential. A goodexample is the ‘smart city’ concept, wheregreat amounts of data can be collected andaggregated using different technologies toenable, for instance, traffic management,green traffic lights for ambulances, sensorsto trigger public lighting networks, rain andsnow detection, work-order management,service dispatching and so forth.Value managementIn the past years, telecom operators focussedonly on connectivity and fought to do deals atany price. Considering the above points, and thecommoditization of M2M connectivity, telecomoperators will increasingly focus on effectivedelivery - key M2M success factor- and theprofitability of end-to-end solutions. Telecomoperators, though, will have to go beyondconnectivity and move-up in the value chain byoffering end-to-end solutions including device,smart connectivity, application and support.This will require strong partnerships and/orselected acquisitions.M2M is a strategic necessity for telecomoperators with converged networks. M2Mcan deliver a growing source of revenuesif operators transform themselves and stepoutside their core business and then evolvefrom the machine-to-machine technology to afull-scale ‘Internet of Things’ strategy. •30 • Europe II 2013