M2M - December 2011 - (Page 8)

FEATURE M2M & Embedded Strategies: Telematics, CE, mHealth, Metering & Smart Buildings for 2011-2016 Anthony Cox Juniper Research The M2M Business Case Operators including Vodafone, O2, Telefonica, Verizon, AT&T and Sprint are putting significant resources into developing Machine to Machine (M2M) business units. There is an increasing sophistication in how the market is viewed by all stakeholders, with after-market installation being replaced by embedded mobile strategies and SMART (self-monitoring, analysis and reporting technology) systems. Meanwhile, several specialist companies including Jasper Wireless, Sierra Wireless and Numerex have made significant inroads in developing the M2M ecosystem through partnerships with the operator community in the last year. While this bodes well for the M2M market in the long-term, in the immediate term, uptake of M2M is still relatively modest in most industries for several reasons, including market fragmentation, high costs relative to ARPU1 and lack of buy-in M2M Stakeholders from potential stakeholders. The stakeholders within It is also important to the M2M value chain vary note that some M2M use from SIM and module M2M Service Revenues, Percentage Split by Eight Key Regions, 2016 cases are more dependent manufacturers to operators on revenue from pure conand service providers and nectivity than others. In the case of stolen vehicle recovery for instance, encompass a variety of companies offering different degrees of service the M2M business case relies more on “connectivity readiness” than onalong the way. Hardware aside, there is an increasing realization that going connectivity. the complexities of deploying long lasting M2M projects across multiple In other cases, revenues from pure network capacity are not split out at different industries call for a level of attention that operators themall, though there is inevitably a cost associated with this traffic. This brings selves may not be able to or want to offer. Within the M2M value chain, to light an important point: much of the potential within the business case therefore, there is room for M2M enablers, specialists that bridge the gap of the M2M specialist relies on connectivity enablement and features that between the connectivity and the provision of a complex M2M service might be described as “enhanced connectivity,” that is, managing the conusing that connectivity. nections once in place and allowing new devices to be added to an existing roll out in a seamless manner. M2M Forecasts At its simplest, M2M refers to machine to machine or machine to mobile communications, that is the use of networks to transfer data from machines rather than individuals. In practice, implicit in the M2M concept is the idea that such communication allows for analysis of data, which passes through the M2M network providing a significant value-add. Thus, the pure connectivity facilitated by M2M allows for SMART technologies, such as the Smart Grid where, connected electricity meters are able to inform users, and the companies that use them of data such as electricity usage trends. According to the mobile operator Orange, “M2M refers to the capacity for machines, assets or objects, to exchange data with other machines, people or information systems”. While M2M can be put to use in virtually any industry there are six main vertical segments that are considered to be the most promising for M2M roll out: • Consumer and Commercial Vehicular Telematics • Smart Metering • POS, Retail and Banking • Consumer Electronics • Healthcare and Remote Patient Monitoring • Smart Buildings and Security Two pillars support the business case for M2M from the end user perspective: increased efficiency and cost savings. The operator community, meanwhile, has embraced M2M in the last couple of years, with operators such as Vodafone and Verizon creating their own M2M units and several operators forming alliances to extend their M2M reach. Nevertheless, M2M continues to be hampered by the complex nature of M2M roll outs, long lead times and low ARPU. In addition, M2M needs to be considered as a business which is related, but not identical to, the standard cellular business of connecting subscribers. According to Jahangir Mohammed, CEO of Jasper Wireless, “The key metric that operators should consider is margin. Of course, the key to high margins in a low ARPU business is eliminating costs. Operators should therefore choose a highly automated M2M platform so as to reduce the costs of providing these services.”3 The M2M Market Place Juniper Research forecasts that M2M will support industry revenues of more than $35 billion in 2016, the final year of the report’s forecasts. While revenues directly attributable to M2M connectivity and enablement will be a relatively small proportion of this amount, there is nevertheless a fertile business opportunity for specialists to offer services surrounding connectivity to both operators and industry participants. As can be seen in the chart above, the developing markets of North America, Western Europe and parts of Asia (notably Japan and South Korea) will dominate the M2M market in the year 2016. While ARPU is traditionally known as Average revenue per User In the 1 case of M2M it stands for Average revenue per Unit, since it is objects and devices that are being connected, not individuals. Please note that for the purposes of the forecasts within the full report 2 Consumer and Commercial Telematics are dealt with separately. Source: Sony Ericsson Opinion piece: 3 http://www.ericsson.com/ericsson/corpinfo/publications/ericsson_business_review/pdf/310/310_opinion_realize_the_promise_of_m2m.pdf Juniper Research provides research and analytical services to the global hi-tech communications sector, providing consultancy, analyst reports and industry commentary. For more information visit www.juniperresearch.com. 8 www.M2MSolutionsOnline.com  http://www.ericsson.com/ericsson/corpinfo/publications/ericsson_business_review/pdf/310/310_opinion_realize_the_promise_of_m2m.pdf http://www.juniperresearch.com http://www.M2MSolutionsOnline.com

Table of Contents for the Digital Edition of M2M - December 2011

M2M - December 2011
The Next Chapter In M2M Market Development Who’s The Architect for the Internet of Things?
M2M & Embedded Strategies: Telematics, CE, mHealth, Metering & Smart Buildings for 2011-2016
Cinterion Launches High-Speed Automotive M2M Module
New AppZone Lowers Costs and Speeds Up Time to Market
Global Machine Condition Monitoring Market to Reach $2.4 Billion by 2017

M2M - December 2011

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