Remote - M2M Special Issue 2012 - (Page 10)

Feature Article 2020: A Brave New World of Three Trillion Connected Devices Jason Voiovich, Director of Corporate Marketing Logic PD Twenty billion connected devices by 2020. It’s almost an unreal number. Even so, Ericsson CEO Hans Vestberg famously upped the ante to 50 billion. But before we dismiss these numbers as nothing more than public relations hyperbole, it pays to step back and have a deeper look. Are those grand estimates on the mark? Are they too low? What if the real number was just under three trillion connected devices? In 2004, no one saw the potential of the tablet computer until Apple and Amazon disrupted the business model and opened the door for exponential growth. Machine-to-Machine (M2M) technology is poised to follow the same pattern. In order to unlock the potential of the small business and consumer market, the M2M market needs its own answer to the iPad hardware and the iTunes store. However, before we make the “trillions versus billions” argument, we need to understand where today’s M2M estimates come from. A bit of recent history. In 2004, the biggest market for tablet computers was the rugged computing market with defined transportation, military and medical applications. Projections called for strong, linear growth as specialized market tablet computers displaced desktop terminals and paper records. What researchers in 2004 couldn’t see was the disruptive shift in the demand curve driven by Apple’s iPad and Amazon’s Kindle. A fresh approach to the tablet hardware was important, but what really transformed the tablet PC market was a new perspective on user experience. Early tablet computing manufacturers strove to adapt the technology of the time (desktops, laptops and complex desktop software) into a handheld format. Their concept of innovation was their ability to mold those factors into an untethered business tool specifically designed for key markets. A cleanable tablet connected to patient medical records to replace a paper chart, or a droppable tablet for construction site foremen to optimize project labor. But the broader market was ready for something different. The interface needed to be simplified and standardized, dozens of configurations became one core device. Software needed to be simplified and more task-specific, the program became the app. To meet the flexibility requirements of the broad market, Apple, Google and Amazon created an ecosystem of software and accessory developers to create literally millions of unique user experiences. In fact, a vast majority of apps sell fewer than 1,000 copies. Here’s the situation, all estimates point to strong but nonetheless linear growth in connected devices through the last part of this decade. Berg Insight projects a 32 percent CAGR for the global cellular M2M market through 2015. If we extend that growth rate through 2020, we end up with a projection of just under 1.2 billion cellular-connected M2M devices. It’s likely the WiFi-connected market will see similar growth, raising the overall projection to 4.7 billion devices by 2020. That’s a big number. Even so, we still find our projections for connected devices at odds with Vestberg’s prediction by an order of magnitude, not to mention the much more gaudy three trillion device number mentioned earlier. The Grand Disconnect: M2M Hyperbole? So why are the predictions about the size of the M2M market so at odds with professional efforts to perform rigorous market sizing? It’s not so surprising when we consider the methods used to conduct a typical market size analysis. In order to estimate the number of potential buyers for “product x”, researchers must define a market space with measurable boundaries. The final result is a raw number, along with some margin of error, based on how researchers segment the market. To help control for error, researchers use a variety of qualitative and quantitative methods to triangulate on a best estimate. But immature markets, M2M among them, defy this type of rigor. They’re unpredictable. Nevertheless, in an effort to provide meaningful data, researchers rely on known (or at least knowable) vertical market applications and associated customer bases: telematics, industrial controls, telemedicine and others. Going beyond currently envisioned markets involves a high degree of guesswork and leads to less reliable results. If we want to be closer to understanding the larger potential for M2M applications, we need to move away from traditional analytical approaches. We need to look for a parallel case of broad adoption of a previously niche market technology. Ideally, one that moved from vertical-market-specific applications and crossed the chasm to the broad business (and consumer) markets. It just so happens we have a convenient example, the tablet computer. What the tablet market offers is a powerful case study in asking a different set of questions about the fundamental application of the technology and allowing users, not technology developers, to decide its evolution. 10 www.RemoteMagazine.com Sizing an Immature Market: The Problem with the Vertical Approach The Real Challenge to Broad Adoption: User Experience So what does this mean for M2M? The exponential growth of the tablet market tells us that the future of M2M is much more than a new piece of hardware. A new business model is needed to allow organizations to meet the vast long tail of unmet M2M applications in the global small business market. In this new world, a real estate agent in Chicago and a textile broker in Mumbai would be able to purchase the same M2M platform hardware, download one of many apps customized to their niche business needs and deploy their own solution. This isn’t a story of thousands of big customers buying tens of thousands of specialized products, but rather of millions of small customers buying billions of standard devices. In fact, when we use the same eight-year growth rate of tablet computers from 2004 to 2012 to re-estimate the M2M market from 2012 to 2020, we arrive at a new estimate of a staggering 2.96 trillion connected devices. What does a world of nearly three trillion connected devices look like? Manufacturing billions of devices will drive hardware costs down to the point where it makes sense for connected light bulbs to tell us their energy use; where it’s cost effective for you and your doctor to monitor hundreds of pieces of biometric information in real time; where we can trace invasive insect species by electronically tagging thousands of vulnerable trees. When we consider applications like these, even three trillion may be too conservative an estimate. The key to taking advantage of this growth is a fundamental change in perception of what M2M means in terms of user experience, hardware platforms and open software ecosystems. We need to divorce ourselves from the limiting notion of delineated vertical markets in order to think clearly about the needs of broad markets. The customers are waiting. Logic PD is a product innovation expert with the ability to discover, design, develop and deliver products under one roof. For more information please visit www.logicpd.com. Broad Market Applications for M2M: Making Hyperbole Possible http://www.logicpd.com http://www.RemoteMagazine.com

Table of Contents for the Digital Edition of Remote - M2M Special Issue 2012

Remote - M2M Special Issue 2012
M2M – The New Service Paradigm for Smart Manufacturing
Making Energy Smart
Java Embedded M2M Wireless Modules: Smart, Small, Cost Optimized
2020: A Brave New World of Three Trillion Connected Devices
New Products
Industry News
Managing the 2G Sunset

Remote - M2M Special Issue 2012