M2M beyond the hype - Connect-World

Building the marketM2M - growth pathsby Judi Gill, Director of Market Analysis & Strategy, ClarityThe machine-to-machine (M2M) market will challenge communications service providers’(CSPs), in ability to meet the demands it will make on networks, back office systems andbusiness strategy. The M2M market is still in its early stages, trying to prepare for the futurethat requires full integration between CSPs, customer organizations and end users. CSPswill need all their expertise in networks and large-scale operations to deal with competitionfrom utility companies, local authorities, insurance companies, dedicated M2M providersamong others.Judi Gill is the Director of Market Analysis and Strategy at Clarity, where she is responsible for the company’s go-to-market positioningand activities. Ms Gill has worked in the telecommunications IT sector for over 20 years. Ms Gill started her career at Accenture, andhas since worked at operators and software providers around the world including BT, Optus, ADC, Bharti Airtel, MTN and Telcordia.Judi Gill holds a Bachelor of Commerce from the Australian National University, and a Diploma of Business Administration from theAustralian Graduate School of Management.It’s easy to get carried away with M2M andthe vision that the Internet of things willenable every device to connect with eachother to integrate all the strands of users’lives - from their household appliances,to the transport they use and the servicesthey consume. However, achieving thatseamless environment in which every devicecommunicates ubiquitously with everythingelse that can have a chip installed is complex.Add to that the burgeoning M2M applicationsin the business-to-business market andthe management and assurance burden isincreased. What is clear though is that this isa large opportunity for all involved even if thedetails are obscure today.Although the business models are unknown,there will be many ways to generate revenuestreams from M2M services. There are twoextremes of the M2M market in its currentform. At one end there are low ARPUpropositions that typically involve greatnumbers of deployed devices but need littlebandwidth, such as logistics where a vehiclecan report its location every couple of hours.Communications service providers, CSPsoften facilitate such services by providingthe network, but third party M2M specialistsprovide the service. One-stop M2M serviceproviders handle the business from provisionto activation to monetization, while the CSPderives revenue from the capacity consumedby the services. This business model is wellestablished and the CSP and M2M serviceproviders work together to offer simple,low cost and effective solutions. There is noreason why a CSP would seek to change thatsituation, although there is nothing to preventthem replicating the services offered by M2Mspecialists. Typically such a model is pay-perunit,with fairly flexible payment operationsand the providers have the knowledge andexpertise to continue to deliver them to thesatisfaction of customers and users.At the other extreme, there are sectorspecific,highly sensitive, solutions deployed,for example, to monitor oil pipelines or aperson’s health. Although these types ofsolution may not require great bandwidth,they require an extremely high level ofreliability and security across the networksof multiple CSPs. Given the critical nature ofthe service, it will generate premium revenueseven if it doesn’t clog the network.42 • Europe II 2013