 | Issue: | Asia-Pacific II 2011 |
| Article no.: | 9 | |
| Topic: | Connected machines – the M2M opportunity | |
| Author: | Thad Dupper | |
| Title: | CEO | |
| Organisation: | Evolving Systems | |
| PDF size: | 311KB |
About author
Thad Dupper is the President and Chief Executive Officer at Evolving Systems. He joined Evolving Systems’ leadership team to oversee sales, business development and marketing. Mr Dupper has more than 23 years experience in the telecommunications technology industry and has a proud track record of delivering innovative solutions to leading telecommunications companies. Earlier in his career, Mr Dupper was Mr Feierbach Vice President of Sales and Marketing for Expand Beyond, a wireless software company. He was also Vice President for international Sales and Business Development at Terabeam, where he helped pioneer the use of free space optics with telecommunications carriers around the world. Mr Dupper held positions as Senior Vice President of Dun & Bradstreet and Vice President of Teradata, where he oversaw data warehousing solutions for the communication industry. Thad Dupper holds a B.S. in Computer Information Systems from Manhattan College in New York.
Article abstract
In 2010, M2M device activations were up 55 per cent from the year before. This rapid growth is bringing joy and hopes of earnings to mobile operators; M2M is already a main driver of growth in some markets. To take advantage of this opportunity, operators need to invest in intelligent M2M platforms that adapt to shifting requirements for managing and communicating with M2M devices while reducing costs and network usage by enabling devices to only attach to the network when required.
Full Article
Fuelled by the worldwide economic recovery, the global wireless Machine to Machine (M2M) market displayed accelerating growth in 2010. Analyst, Berg Insight estimates that shipments of wireless M2M communication units – modules, integrated terminals and chipset based solutions for enterprise applications increased by 48 per cent to a new record level of 37 million units. The number of new M2M device activations was 37.3 million, up 55 per cent year-on-year. In the future, market growth is likely to continue to be strong. Berg Insight forecasts that shipments of cellular M2M devices will grow at a compound annual growth rate (CAGR) of 25.1 percent to reach 95.7 million units by 2015. During the same period, the number of cellular M2M connections is expected to grow at a CAGR of 32 per cent to reach 294.1 million, supported by a decline in yearly churn from nearly 25 per cent in 2009 to around ten per cent by 2015. Highlighting the growing importance of the M2M market to wireless operators, Tobias Ryberg, Senior Analyst, Berg Insight, commented: “M2M and connected devices is now one of the main drivers behind the growth in mobile subscribers in Europe and North America. All of the world’s largest telecom operators now have several million M2M subscribers in their mobile networks”. While it lags a little behind Europe and North America in terms of market maturity (outside Japan at least), Asia-Pacific is now the fastest-growing regional market in the world for M2M with the number of M2M subscribers growing by 53 per cent during 2010 to reach 19.6 million by the end of the year. Another analyst organisation, ABI Research identifies telematics and energy-related applications as providing impetus to market growth. This rapid growth, both real and projected, demonstrates to wireless operators across the Asia-Pacific region that the opportunity presented by the M2M market is huge. However, the opportunity is not straightforward. To capitalise on projected growth, providers must be flexible. Rather than simply treating the M2M model as an extension of their existing mobile offering, they must be prepared to reduce their reliance on legacy business processes and established specialised M2M infrastructures and start to build a new approach to this fast-growing sector. Assessing the challenges The attraction of the M2M market to the region’s wireless operators is clear: leverage existing spectrum and network assets; drive revenue growth by wireless-enabling new devices and business processes; and maximise profits by avoiding customer acquisition and support costs. But success in the market is not guaranteed. There are significant challenges in serving it, starting with its fragmentation into a variety of industries, business models, devices and connectivity requirements. The value chain for M2M devices bears little resemblance to that historically used by traditional mobile phones and associated devices sold by network operators today. From production and testing, to distribution, provisioning, support and lifecycle management, the participants and processes are different. Many devices also have a longer supply chain and ‘shelf life’, which together with a lack of insight into the retailing or installation process, poses real challenges to operators. Equally, device manufacturers, and even regulatory bodies, can demand longer continuity of service for M2M devices, challenging how operators manage technology transitions. Another issue of concern is the threat that M2M devices could pose to the public network. In disaster or emergency situations, for example, operators must be able to prevent the network being overwhelmed by millions of M2M devices spontaneously attempting to attach to the network. Equally, it is important that low-cost wireless modules that happen to have poor protocol implementations do not overload the network. These, and other, challenges can be summarised into three main, interrelated categories: commercial flexibility, technological adaptability, and process efficiency, for each of which solutions are now beginning to emerge. Commercial flexibility The potential of the M2M market is not lost on any wireless operator and, therefore, even at this embryonic stage, price pressure already exists. More importantly, the development of the market depends on operators being able to stimulate innovation and support new business models where the price per device per month can be measured in pence rather than pounds. In addition, operators need to support ‘comes with data’ pricing models where the cost of the device includes a quantity of mobile data – whether time-limited (first years’ service included), transactional (includes the synchronisation of the first 1,000 digital photos), or volume-based (first ten GB of data included). Technological adaptability Due to the fragmentation of the market, operators need to offer a M2M platform that supports a variety of use cases and applications. Again, the connectivity requirements of M2M devices and applications can be completely different to those of traditional mobile phones and mobile data devices. Many M2M devices are ‘infrequent transmitters’ – this means they only need to connect to the wireless network a few times a day, week or month, will often connect for a short time, and may only send small amounts of data. Treating these devices the same way as mobile phones – which are typically always-on, sending and receiving data frequently and spontaneously – is inefficient and ineffective. Instead, operators need to deploy a M2M platform that adapts to shifting requirements for managing and communicating with M2M devices. Process efficiency The drive for efficiency is a direct consequence of the need for commercial flexibility and technological adaptability. Operators need to strip out costs and improve their agility. Specialised M2M infrastructure can help here also, bringing new approaches to managing and provisioning M2M devices. Without this specialised infrastructure, operators risk adversely impacting the economics of M2M business models, both for the cost of connectivity and the impact on the device itself. Finding a solution So how can operators across the Asia-Pacific find an appropriate solution to this diverse range of challenges? In certain cases, operators have already established M2M management and application platforms, together with an ecosystem of partners, resellers and integrators. These platforms naturally leverage the existing wireless network but have specialised M2M devices and gateways, and a M2M management platform responsible for asset management, diagnostics, billing, device management and a customer web portal. What these operators urgently require are dedicated intelligent M2M solutions capable of complementing these platforms, integrating to the network using standard protocols, and enhancing any existing management platform with a dedicated solution for intermittent transmitters. The goal is effectively to connect a ‘black box” to the management platform, that hides the complexity of managing temporary wireless access while giving the operator fine-grained control over connectivity and message delivery. Evaluating benefits This approach – dedicated intelligent M2M solutions, which we are now beginning to see come on stream, offers operators a range of key benefits as they look to tackle the challenges of the new connected world. Chief amongst these are the need to remove overhead costs. This new solutions approach helps operators avoid the permanent allocation of network database capacity and numbers to devices that are intermittent transmitters, while allowing them to reduce the utilisation of signalling capacity and network resources by enabling devices to only attach to the network when required. The approach also enables operators to support a variety of use cases including temporary network access that is device-initiated (push) or network-initiated (pull) and allowing external systems to ask a device to attach over a second bearer such as general packet radio service, GPRS, (shoulder tap). It also helps operators to minimise their deployment risk. It makes use of current signalling protocol standards and doesn’t require any proprietary changes to network interfaces. And, critically, it mitigates risk to the operator’s network by minimising the impact on upstream network systems (e.g. HLR/HSS, SMSC, SDP) through overload protection and flexible rules for the quarantine of devices that behave aggressively to towards the network. Finally, operators benefit from reduced Total Cost of Ownership through the ability to deploy a single platform that seamlessly supports 2G (GSM/GPRS/EDGE) and 3G (W-CDMA/HSPA) networks. Driving market growth So the M2M market opportunity is clearly an exciting one for operators across the Asia-Pacific. The market in the region is now maturing quickly. So, operators will need to move fast to give themselves the best chance of maximising profit and market share, but at the same time they have a responsibility to help drive the wider success of the market. Ultimately, their success in achieving these objectives will be at least partly dependent on their ability to embrace new approaches. Operators need to be aware that in this new connected world, it is costly, inefficient and wasteful to treat all devices the same. The development of the market depends on their ability to stimulate innovation and support new business models. If operators fail to embrace new business and technological approaches, they risk of stifling innovation and blocking the development of this exciting new market before it reaches fruition.
