M2M and the Internet of Everything

Filed in Uncategorized by on May 14, 2013 0 Comments

M2M (Machine to Machine), the Internet of Things, the connected home, the connected car, smart grids, smart cities, and Google Glass. These are many of the most popular terms floating around that describe the next-generation uses and aspects of connectivity, and ideas that are stretching the frontiers of how data can be used. Cisco is calling all of it the Internet of Everything, and for the purposes of this blog, I would like to call it all that too.

In this post, I’d like to look at the current state of M2M, and in subsequent blog posts, we’ll explore slices of other Internet of Everything topics in-depth.

History of M2M
M2M applications leveraging cellular networks are not new. Telematics was introduced in the late 1990s. These M2M applications have been using 2 and 2.5G technologies, including SMS. However, M2M had stalled until recently because sustainable use cases were limited to telematics and some narrow verticals. Legacy M2M service providers found it difficult to make the services affordable enough to support broad expansion.

Despite its history, M2M has recently gained increased activity in the marketplace, and MNO revenues associated with it are expected to grow from $16 billion in 2013 to $31 billion in 2016. Why? Our analysis shows that there have not been any significant use cases to spark M2M growth, but rather the market is being propelled primarily because of MNOs desire in finding new profitable revenue streams.

MNO Challenges
There are widespread initiatives by MNOs to build themselves up as more than just connectivity providers by driving down M2M costs to spur growth. Large MNO groups have opened innovation centers to help application developers to find new use cases (e.g., Sprint’s M2M Collaboration Center) or partnered with vendors to help drive down the cost of the modules (e.g., AT&T’s 3G Connect). Some operators are also launching M2M service delivery platforms with self-provisioning and management and have white-labeled or internally developed application and provisioning platforms.

Our research also finds that MNOs are conflicted about what assets they will use to deliver M2M services over the next three to four years. According to a recent ABI Research report, through 2015, one half of all M2M connections will remain GSM/GPRS. Most M2M business cases depend on a long payback period to reach profitability – sometimes six to eight years. How will MNOs road-map M2M for M2M applications using 2/2.5G technologies currently or soon to more expensive 3G/4G technologies? Mobile virtualization, particularly for M2M provisioning, shows some promise in spurring migration.

Use Cases, What’s Next
So what use cases will get MNO M2M revenues to double to $31 billion in 2016? Four categories –  telematics; smart metering (electricity meters); RMAC (remote monitoring automation and control)  telemetry applications, including fixed asset management and “track and trace,” with cellular connectivity not integrated directly into a vehicle; and ATMs (embedded cellular connectivity). According to ABI, these four categories will constitute 93 and 91 percent of all M2M revenues in 2013 and 2016, respectively.

Most analysts are focusing on telematics and the connected car as one of the most promising use cases.  OEM telematics are factory-installed consumer telematics used for safety and security, concierge services, and infotainment. Examples include GM’s OnStar and Ford Sync. Aftermarket telematics are consumer telematics installed by the consumer or non-automaker third party for applications such as pay-as-you-drive insurance and stolen vehicle recovery. Commercial telematics are aftermarket or factory-installed telematics for non-consumer telematics applications, such as fleet management. ABI Research forecast that telematics will grow from $7.2 billion in MNO revenues in 2013 to $15.5 billion in 2016, roughly doubling.

Adding complexity and opportunity to M2M services is the possibility of new types of network connectivity via non-cellular networks and protocols – Wi-Fi, Zigbee, white space spectrum, Dedicated Short Range Communication, mesh networks and power line communications.

Ultimately, the Internet of Everything is a nascent market full of uncertainty. But there are many signs that it will become an ideal market for innovative players to address.

In what ways do you think the Internet of Everything will evolve in the near future?


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About the Author ()

Mark Beccue is a former Senior Market Analyst at Syniverse.

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