The machine-to-machine (M2M) market may still be in its infancy, but the infant is reaching maturity with all parts of the M2M stack – components, devices, networks (connectivity) and services - making rapid strides.
Jamie Moss, analyst at Informa, points out one of the main changes: ‘It is no longer about how many M2M connections you have, but about the incremental and cumulative nature of the market. It is now about partnering and about how you partner to provide a long-term solution.’
This view is certainly borne out by the flurry of partnering announcements made prior to and during the Congress. Moss says: ‘To create a long-term business means durable technology must be used that can last the lifetime of a vehicle,for example. The industry has worked hard to develop modems and Sims that can withstand extremes of heat and cold, vibration and the impact of a crash.’
For example, Sierra Wireless used MWC to launch the latest 2G/3G/4G versions of its AirPrime embedded wireless modules, which are the first to be equipped with a powerful multicore processor with a dedicated application core and integrated M2M functionality, and built-in connectivity to secure cloud services.
The 2G versions are powered by the world’s first dedicated M2M system-on-a-chip built in collaboration with ARM. It includes a 2G EDGE modem, a dedicated high-speed ARM application processor, and a unique implementation of the ARM Cortex-M0 processor to enable ultra-low power operation – all of which is designed to be ideal for long-term M2M applications such as smart meters.
‘This has set some useful precedents for the hardware in the M2M space and that is now benefiting the market in general. We are also getting some scale now with the likes of Sierra Wireless, Telit, Gemalto and others now installing substantial volumes of around 10 million units a year,’ says Moss.
Identifying M2M Sims
Work has also been done to help carriers establish which Sims on their networks are in M2M devices. Gemalto developed its M2M identification model in the shape of a Sim in a chip form factor. The Sim number ranges are known now by the operators and enterprises, so when they pop up on the network they know it is an M2M chip.
Companies such as Starhome also have the expertise to help identify M2M devices on the network. ‘We can examine the traffic to analyse usage pattern because an M2M device acts differently to a human subscriber: no voice traffic, for example, so that helps the carrier understand it is an M2M device and then we help to manage it,’ says Shlomo Wolfman, COO and co-founder of Starhome.
The key consideration is how to keep costs down if an enterprise’s activities are distributed around the world, or its M2M devices are being moved around the globe. The enterprise does not want to be stung by higher roaming rates every time an M2M device crosses a border. Instead he wants to keep costs down by only paying local rates to the mobile connectivity provider.
Controlling roaming costs
There are a number of approaches being put together to help enterprises. Starhome, for example, specialises in helping enterprises control roaming costs through device management expertise, data centres and its relationships with over 200 carriers, which enables it to negotiate roaming deals.
Vodafone, on the other hand, as the world’s largest mobile operator in terms of presence across the most countries, has its own roaming arrangement across its dedicated M2M platform: the Vodafone Global Data Service Platform (GDSP). It provides a pre-provisioned, ready to use global Sim that acts as a local Sim wherever it roams.
Even so, Vodafone has assembled a wide range of partners along the M2M value chain to help it provide enterprises with an attractive service.
‘That’s fine if you are as big as them,’ says Moss, ‘but if you can’t do that maybe you club together with other carriers; that’s where over-the-air-provisioning comes in.’
Mobile network M2M alliances
For example, in July 2012 US-firm Jasper Wireless, a cloud-based M2M platform provider, forged an M2M alliance with a number of carriers: the Netherland’s KPN, Japan’s NTT DoCoMo, Canada’s Rogers Communications, Singapore’s SingTel, Spain’s Telefónica, Australia’s Telstra and Russia’s VimpelCom; Etisalat announced it was joining at Mobile World Congress 2013, as did Australia’s Optus Business, a subsidiary of SingTel.
The alliance is conducting trials of a worldwide Sim card on a connected management platform, which will allow for more collaboration between partners in the M2M stack and help boost a wider adoption of M2M.
‘The Sim switching platform portion is now done,’ says Moss. ‘It will go live and will be sold to enterprises. They will know that whatever country they activate an M2M chip in, they will only be charged the local rate and if the embedded device moves country, it will switch over to another alliance carrier if there is one in that country.’
Tier One mobile infrastructure providers, such as Ericsson, are also getting in on the act to help their carrier customers find new revenue streams in the M2M world.
‘It is significant that Ericsson has got together with SAP and Gemalto to help carriers have a targeted approach to enterprises thanks to Ericsson being their platform provider,’ says Moss.
Ericsson’s partnership with digital security expert Gemalto means it can offer an integrated M2M solution based on eUICC (embedded universal integrated circuit card). The link up with SAP is designed to sell cloud-based SAP solutions and services to enterprises via operators around the world in the form of a software-as-a-service (SaaS) offering.
Ericsson’s Device Connection Platform and Service Enablement Platform will be used in conjunction with SAP’s enterprise business solutions.
Putting the enterprise in control
Informa’s Moss explains: ‘It’s all about giving the enterprise customer total control and flexibility about how his devices are connected. Forget about the ARPU per connection, this is all about creating margin by volume. If carriers want to be profitable in the M2M market, they must make it as cheap and easy as possible. They need to provide predictive, proactive systems to make the whole process as automated as possible for the enterprise to encourage them to participate.’
It is worth noting that M2M is rarely about creating a revenue stream for enterprises. It is usually about helping them do their business better. Enterprises might not make any profit out of M2M, but they should make a lot of savings. Driving efficiency in the business is the key here. M2M is about helping businesses do what they already do, but do it better.
Moss says: ‘The automobile manufacturers use M2M telemetry and in car infotainment systems to help them make better, more attractive vehicles, so they can sell more cars. It reinforces the business model. If an enterprise can’t come up with the business model for using M2M then they shouldn’t be doing it.’
That might seem obvious,but it is a crucial point. In the consumer electronics space there are a lot of manufacturers trying to understand the business case for having connectivity.
‘There must be a good reason for it,’ argues Moss. ‘Amazon created the Kindle as a way of selling e-books. The connectivity aspect of the Kindle is not being used as a differentiator. Rather it is part of the fundamental business proposition for creating the device in the first place.’
Sharing the M2M pie
‘It is not about winners and losers in this space,’ says Moss. ‘It is about core competences and partnerships; companies need to combine, quite literally on the modem, Sim and connection, so everyone gets a bite of the pie, depending where they are in the partnership chain.
‘We will see some consolidation,’ he continues. ‘Some people think that the carriers will be restricted to the connectivity layer, but they may buy companies in other areas of the M2M stack and own that IP.’
Some carriers are fighting to get a bigger slice of the pie beyond connectivity revenues by launching their own vertical platforms. Telefónica, for example, has a smart meter and smart metering platform on top of what it gets from Jasper Wireless.
Now M2M is starting to scale up and, as they say, the big guys don’t come in until the stakes are high. ‘Take Huawei,’ points out Moss. ‘It is looking to provide bulk quantities of a million M2M units per contract. If it succeeds, it may wipe out some of the specialists or buy their specialist expertise. It is the same as happened in the GPS space six or seven years ago.’