Many markets and businesses face stagnation or a falling trend. Not so with the M2M (Machine-to-Machine) market that promises an annual growth rate of 25-40% for the coming decade. The revenues in M2M will grow five times more than mobile speech and double as much as of mobile data.
By Mads Winblad, CEO, NextM2M A/S
Today M2M presents us with a growth potential that will surpass the revolution in mobile telephony that we went through since the early 1990’s.
M2M (Machine-to-Machine) is a technology using e.g. mobile telephony and internet to connect sensors, meters etc. with computers enabling us to remote control equipment, survey conditions, receive alarms and so forth while sitting at a laptop or smartphone on the other side of the globe.
Already, M2M is in strong growth within surveillance and alarms, transport, automation and reading of meters for power and gas. But the potential is substantially greater. We are just at the edge of the tornado. We will experience a development where M2M becomes the “Internet of Things” with no limits to where and how the technology might be exploited.
Trillion dollar revenues
Even today, we have more than 2 billion M2M connections of which more than 100 million are cellular, i.e. based on transmission via mobile networks. In 2022 it is expected to be 18 billion M2M connections of which 2.6 billion are based on mobile technology. At that time 22% of all mobile connections will be M2M compared to 2% at present.
The turnover in M2M solutions will explode from 200 billion US dollars in 2011 to 1,200 billion dollars in 2022. M2M based on mobile technology will increase in number of connections by 36% annually and in revenues approx. 25% annually. It is a growth that can benefit software developers, hardware manufacturers, network carriers and a plethora of IT-consultants.
However, these opportunities do not present themselves by themselves. There are conditions that have to be met before the dream of the M2M trillions becomes reality.
While growth and revenues are stagnating within mobile speech and data traffic, we are at the threshold of a growth market in implementing next generation M2M. The question is which businesses will get onboard, and which will be left behind as the train leaves the station.
The Internet of Things is next generation M2M. It is where objects of any kind can communicate with each other and with us humans via mobile technology and the internet, globally and ubiquitously.
In the Internet of Things we deal with billions of devices not only in business applications but in our everyday life. It might be equipment monitoring patients at home or the cows in the field; the temperature and humidity in the container; pollution of streams or the icecap at the Pole; the behavior of the deer in the forest or location of a stolen computer; goods at the supermarket; the content of vending machines; or the snow at the trail. Any item that can register anything will be able to communicate via mobile networks to the internet and back.
The implications are almost incomprehensible and so are also the growth potentials of the Internet of Things.
Simplicity the key
The M2M market is extremely complex with many different stakeholders, which have to be able to cooperate in an open and free way. Instead of proprietary codes and patents, the collaboration in the entire value chain must follow open source principles. This is especially true for the big players such as network carriers. Only by exchanging experiences and knowhow and build on common, open standards will it be possible to create workable solutions for the customers whether they are businesses or private consumers. A unit to be placed on an object and carrying out measurements or register changes has to de designed and connected to applications, which in turn must be able to communicate with the mobile network and internet as well as the databases that will run the whole setup.
This will only happen if all parties in the value chain work together. Because if the end result is not an easier, cheaper, faster, more efficient, more sustainable, less energy consuming or less polluting then the customer will not buy.
The demand is real
There are a number of factors supporting the continuous growth in M2M market. There is an increasing need for efficiency and better control of environment, pollution, recycling and energy consumption. Together with an increased demand for surveillance for security as well as in health and care sectors create an exponential growth market for M2M solutions. Add to that a substantial demand in business for innovation and efficiency in business processes where M2M can be the decisive enabler by monitoring and remote controlling machines, processes etc.
However, it is a condition that the technology and its use will become cheaper and accessible for all as one-stop-shopping.
In this respect mobile technology has an advantage. There are many M2M standards but the leading and dominating will be the standards of mobile telephony. Because both GSM and the internet are genuine global and genuine open standards they work well together and can exploit each others’ advantages and handle the large amounts of data that will be determining innovation and business processes of the future.
With reasonable mobile tariffs and mass production of modems etc., M2M solutions can become more cost efficient, and in this process mobile technology is the driving force.
Challenges for growth
Nonetheless, we face a number of challenges before we can realize the huge growth potential:
- The M2M ecosystem is too complex. Customers need one-stop-shopping where they can get end-to-end solutions that meet their needs now and in the future. The terms are that the different players in the value chain are able to cooperate in an open and transparent way in order to provide the customers with optimal solutions but also the freedom to choose the best suitable providers.
- Due to the complex ecosystem the market is not transparent for the customers. Business customers, who initially have to push the market forward are bewildered and have difficulties in creating an overview in order to build realistic solution models and ROI.
- It is not suitable to transfer all frequencies etc. to 4G or broadband without prior ensuring a technological migration path for 2G and 3G since a large portion of M2M traffic very well can be carried at narrow bandwidths.
- Data security must be handled efficiently. Who shall have access to which data must be determined in order for consumers to have peace of mind.
- There is a demand for competent counseling and expertise with knowledge of the entire value chain. It is not enough with vertical solutions e.g. within transport or safety. There is to a great extend a need for horizontal competences and knowledge that can be integrated with the vertical. This will support innovation and development of user-friendly solutions.
When we are able to deal with these challenges and each of us develops our part of the value chain in cooperation and openness, then we will all be winners. It places a large responsibility in the shoulders of the mobile carriers, and they must avoid the temptations of creating closed, proprietary systems, which will hamper the innovation, richness of ideas and wish to invest that are inherent in open source.
