M2M adoption has increased by more than 80% over the last year, with more than a fifth of companies now actively using the technology, according to Vodafone’s second annual ‘M2M Adoption Barometer’, a global survey of the machine-to-machine (M2M) market, out today (3 July 2014).
M2M, which connects previously isolated machines or devices to the internet to make the ‘Internet of Things’ possible, is set to grow from 4.4 billion connected devices this year to 10.3 billion by 2018.
The survey, carried out by Circle Research, captured the views of more than 600 executives involved in setting M2M strategy in seven key industries across 14 countries, making it one of the leading global surveys of M2M implementation.
Three sectors have emerged as front runners in M2M with nearly 30 % adoption rates: automotive, consumer electronics, and energy and utilities. Automotive is the most mature of the sectors where M2M is now seen as an enabler for additional services such as remote maintenance and infotainment.
M2M adoption in energy and utilities is also growing rapidly as ‘smart’ home and office services such as intelligent heating and connected security gain popularity.
Vodafone’s report shows that the consumer electronics sector is at the forefront of a shift from the warehouse to the living room. This uptake is being fuelled by the use of M2M in connected devices such as smart televisions and games consoles.
The research shows that nearly three quarters of consumer electronics companies will have adopted some form of M2M by 2016, whether for new products, logistics or production.
Similarly, the report anticipates that 57% of healthcare and life sciences companies will have adopted M2M technologies by 2016. Take-up in the transport and logistics sector will be driven by fleet management benefits, as M2M-led routing, job allocation and maintenance schedules become even more evident.
While more firms are seeing a return on investment from M2M than last year – 46% of respondents cited a ‘significant increase’ compared with 36% in 2013 – there are still some barriers to adoption, including managing security concerns and the challenges of global deployment.
As predicted in last year’s Vodafone M2M Adoption Barometer report, the US has been overtaken by the Asia Pacific region as the geography with the widest adoption of M2M. This year’s report suggests that by 2016 the gap will be negligible with all regions close to a 55% average for adoption.
Erik Brenneis, director of M2M at Vodafone, (pictured below) said: “This year’s report leaves no doubt that momentum is accelerating as companies begin to realise the commercial potential of the Internet of Things. This technology is transforming whole industries as companies find new ways to operate and engage with their customers. M2M is moving from the back-office to centre stage.”
Last year’s report made three predictions:
• Falling costs will speed adoption
• Smaller organisations will embrace M2M faster
• Manufacturing/consumer electronics will lead growth
At a briefing in London yesterday (2 July) Brenneis reviewed the predictions saying that adoption has increased from 12% to 22% and that falling costs were certainly factor, although this was a more or less important factor according to sector: declining costs has certainly boosted M2M adoption in the consumer electronics market, for example.
The adoption rate for smaller companies now stands at 18% and at 29% for larger companies, so while they are closing the gap, they haven’t yet caught up. However, Brenneis said he expects to see the same rate of adoption by 2016.
The percentage of consumer electronics firms (separated from manufacturing this year) adopting M2M has increased to 29% and should maintain that lead until 2016.
Reviewing the big picture, Brenneis said that the number of pioneer companies with an M2M project in place rose from 12% to 22%, while fast followers declined from 39% to 33%, partly because some have jointed the pioneers. The percentage of laggards who haven’t seriously considered M2M increased from 17% to 22%.
Brenneis said: “We think this is because there was an overconfidence before with companies not realising the complexity and cost of implementing M2M projects.”
Phil Skipper, head of M2M business development at Vodafone, (pictured below) said: “One of the major trends we’ve seen is the move from internal M2M projects and external ones. There are two main M2M business models: one is cost avoidance, where M2M is used to drive down costs. The second is harnessing M2M to get generate more revenues using a company’s infrastructure.”
He continued: “It is quite easy to justify making the investment in the internal model as it increases productivity and customer service. But when companies look to leverage their infrastructure to generate more revenue the RoI is less predictable as it relies on customers changing their behaviour.”
However, Skipper said 75% of companies said they are looking to implement external M2M projects. “This shows they have a high confidence in their ability to deploy and use M2M and that they feel ready to monetise it.”
He added that companies are now saying that the RoI is positive with 98% reporting that they have ‘seen some return or significant return’. Skipper said: “The RoI question becomes less important for 50% of companies once they begin roll out. It is getting over that initial hurdle that is important.”
Vodafone has delineated the main ingredients for implementing as successful M2M project:
• Having the right process and strategy in place
• Having an adaptable culture and workforce with everyone included and senior management project champions
• Having the technological capability and readiness
• Having the right security in place (72% said security breaches are a major concern, but only 12% said that it was a barrier to adoption).
Brenneis finished by outlining four predictions for the coming years:
• What you do with your data will become more important (starting immediately)
• 4G will improve the RoI equation for many M2M solutions and enable new ones (2-5 years)
• Manufacturing and automotive companies will outperform expectations (next two years)
• Security and privacy standards will emerge (2-5 years).
The report concludes that M2M is maturing and it is increasingly being use to improve customer-facing processes – delivering better, more consistent, service and increasing differentiation to create a competitive edge.
Brenneis said: “Those customers who invest and commit to M2M will see the biggest returns, such as TomTom, which has invested a lot and is now seeing the benefit. There are barriers to M2M, but there are solutions in place to overcome them, such as with security.”
The report is available to download from: https://m2m.vodafone.com/barometer2014