M2M is Big, but Who will Make the Money?

There was a focus on M2M at the recent ETIS Gathering in Athens. We agree that the market is about scale but we still cannot quite see where the opportunities lie. The now famous statistic that by 2020 50 billion devices will be connected was quoted several times and was not in any serious dispute. Research from Machina sizes the overall market at $913 billion (714 billion euros) at the magical 2020 weigh point.

The market that is addressable by CSPs is $339 billion, according to Machina, but of that only $5 billion will be about connectivity. But connecting it all, and connecting it at a level of service that CSPs need to guarantee must happen as stage one. As with people, CSPs need to choose their opportunities. Low ARPU connectivity may be a model for one CSP, value added services might be the model for another.

Deutsche Telekom (DT), whose vision is ‘Connected Life’ and ‘Connected Work’, is trying to find the value added opportunities. The problem is that “no-one will pay for simple smart metering,” says Jurgen Hase, VP of M2M solutions at the company. Already the market is settling into segments and these are being prioritized and targeted. The most immediate segment is widely seen as the Automotive market, followed by Energy and Health. “We must go beyond access into areas such as device and asset management,” says Hase and DT has already set up a Developer Community.

Facebook was used to attract and build the community and attracted 600 new ideas from 140 countries. The winners gain funding and help from the CSP, who benefits from supporting the idea. One winner was the connected ‘emergency triangle,’ which would almost certainly save lives when cars break down in dangerous circumstances, by alerting on-coming traffic. Already DT is looking ahead, investigating offering asset management through a managed services offering and, according to Hase, a day may come when there is a machine equivalent of Facebook, for things. This would monitor and report, to you and to a Service Provider, what is happening in your kitchen, or your office. Your photocopier will be able to order ink and paper for you, which is probably more acceptable than a fridge that does the shopping for you.

All this looks good but the problem remains. How, exactly, do CSPs make money out of M2M? As a panelist from Telenor pointed out, even if an early opportunity lies in asset management, it is not sustainable. Companies will want self service, they will want to manage the tens and hundreds of thousands of SIMs themselves – they, after all, know their business, know what level of reliability and at what intervals reporting needs to happen, what events should trigger alarms.

As silence fell and the audience faced the fact that we have not worked it out yet, someone suggested that the real value of M2M is in the data. The billions of connections will create trillions of pieces of information, which, when sensibly analysed will be of enormous benefit to companies and consumers alike.

At a different event, someone said that the biggest cause of death after surgery in the US was patients not taking their meds. Whilst one conversation developed about how exciting it would be to be able to send a message to the patient, or to a patch on the patient’s arm that released the meds into the system, another, darker, conversation was concluding that the same information would be extremely valuable to those who evaluate claims for health insurance companies.

 

 

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Alex Leslie
About Alex Leslie 400 Articles
Alex was Founder and CEO of the Global Billing Association (GBA), a trade body focused on the communications sector. He is a sought after speaker and chairman at leading industry conferences, and is widely published in communications magazines around the world. Until it closed, he was Contributing Editor, OSS/BSS for Connected Planet.

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