|Europe II 2013
|M2M – from promise to practice
|Vice President of Marketing
Macario Namie is the Vice President of Marketing at Jasper Wireless; he has worldwide marketing responsibility for product, corporate and web marketing for both the Jasper Wireless and M2M.com brands. Prior to Jasper Wireless, Mr Namie was Director of Worldwide Product Marketing at WebEx. Mr Namie has also held senior marketing roles at ePeople and Lycos and formed his own company focused on staff augmentation for customer support organizations.
Macario Namie hold a B.A. from the University of California, Berkeley.
M2M has been on the horizon for years. Now, though, technology costs, the system, the nearly ubiquitous availability of mobile connectivity and the push by utilities, insurance companies, auto companies, governments and service providers have all come together to bring M2M to the public. Within the next few years, our cars will be connected for entertainment and emergency services, our homes for smart metering, security, assisted living for the disabled and elderly. Our forks might even be wired to count calories.
Machine-to-machine (M2M) communications has a long and colourful history. Since wireless M2M connections came into existence in the mid-1990s, countless concepts have sprung up around the innovative and inventive ways they can enhance or even save our lives. With the growth of M2M usage, the number of connections around the world has grown extremely quickly. Seeing this pace of progress, analysts are predicting anything from 20 billion to 50 billion M2M connections by the year 2020. Ericsson’s bold forecast of 50 billion connected devices by 2020 raised a few eyebrows a couple of years ago, but it has been quoted far and wide ever since as the benchmark to which we’re all working.
These predictions speak volumes about the potential impact of M2M for all of us – not just in terms of a revenue opportunity for businesses and mobile operators, but as a technology that will genuinely revolutionise our lives. Some of the wilder concepts of the life-changing potential of M2M may seem far-fetched to many, like the apocryphal refrigerator that will order your groceries, or the driverless cars that will ferry us about. Perhaps, the futuristic vision of a metropolis of self-driving cars is not so far away; we’ve already seen that Google’s driverless car has been certified to drive on roads in Nevada, and the Institute of Electrical and Electronics Engineers (IEEE) predicts that self-driving vehicles will make up 75 per cent of traffic by 2040. When it comes to ways of using M2M, unlike other mobile technologies it is not limited by the number of humans on the planet – we are really only bound by our imagination.
In Europe, Frost & Sullivan expects M2M revenues for European operators to grow as application adoptions widen. The industries which are currently taking off in terms of immediate enterprise opportunities in Europe are the utilities sector, automotive, security and health care. Frost and Sullivan also see the consumer electronics market as one with strong future revenue opportunities.
The connected life
Whilst M2M is simply the interconnection of devices, it enables a connected life. Connected life applications could include anything from the connected car, to remote clinical monitoring; assisted living; home or business security; pay-as-you-drive car insurance; smart meters; traffic management; electric vehicle charging, or building automation. Many of these connected home applications are already in use across Europe and future cases are limited only by the scope of your mind’s eye.
Machina Research, the specialist M2M research and consulting firm, on behalf of the wireless carrier trade organisation, the GSMA, predicted that connected life applications will have a US$4.5 trillion impact on the global economy by 2020 in terms of new revenue streams, new business models, efficiency savings and improving service delivery. Further to that, Machina believes that the market is currently worth US$2.5 trillion and operators could potentially realise US$1.2 trillion of this revenue.
In order to understand why these projections are so high and assess the real impact M2M is having today, it is essential to look at what real technologies and use cases are currently underpinning the huge numbers of connections. We can pinpoint a few vertical sectors that are accelerating more than the others. In particular, as we step into 2013, an extremely hot area of growth is the connected car, which is especially taking off in more developed regions such as Western Europe.
The connected car
Of all the connected life applications, the connected car is arguably the most widely applicable example, relevant almost ubiquitously around the world, across disparate regions, markets and societies. Every automotive original equipment manufacturer (OEM) now has a strategy for the connected car, and it is only a matter of a few years until their strategies are fully realised. Machina Research predicts 90 per cent of cars sold in 2020 will have some form of embedded connectivity, a massive increase on the ten per cent sold with connectivity today. This has a ripple-down effect upon such downstream service providers as Netflix (content streaming service born in America and recently launched into the UK) and Amazon, who ready themselves to cater for this ecosystem.
Traditionally, the connected car is thought of as a vehicle that could have on-board vehicle telematics for diagnostics and safety features like remotely managed and controlled door locks. Indeed, ABI research states that there are already 89 million insurance telematics subscribers worldwide and predicts that by 2017, 49 per cent of new vehicles will ship with safety and security telematics.
There are numerous other examples of what a connected car might lead to. Pay-as-you-drive insurance promises more accurate, fairer schemes. Electric vehicle charging is a vital component of a society moving towards greener, renewable energies.
The EU initiative, eCall, a system that makes an automatic call to the emergency services in the event of a collision, and brings rapid assistance to motorists involved in accidents. eCall aims to bring the emergency services to the scene of an accident within a rapid time frame. As well as automatically calling the emergency services if a car is in a collision the eCall system can wirelessly activate airbag deployment and send GPS coordinates to local emergency agencies. eCall will be a mandatory requirement for all new cars made after 2015.
There is also satellite navigation, stolen vehicle recovery and driverless cars, each serving a clear purpose. Finally there are car-sharing services such as ZipCar, which is already live in Europe. These services enable users to locate cars located close to their location and rent them on an hourly or daily basis.
But the hottest element of the connected car phenomenon lies in infotainment services. Passengers can enjoy longer journeys thanks to the ability to watch movies downloaded from the Internet, play games online or stream music. A recent study by the University of California found that connected drivers with in-car infotainment systems are happier than their unconnected counterparts. This is no surprise in the context of a world where we have access to on-demand entertainment wherever we go, and are almost pathologically bored if we are without such stimulation. As LTE starts to gain traction around the world, the reliability and speed of in-car infotainment services will increase, as will the breadth and quality of services offered to consumers, and this will drive uptake. To put some figures around this, ABI research expects automotive infotainment shipments to reach 50 milion by 2017.
While the revenue opportunities in M2M are undoubtedly significant, the business models for how such services will be monetised are still in flux. For example, if you take the connected car, there is debate over how best to charge consumers. As consumer appetite for content remains strong and will only grow in tandem with in-car infotainment service, there is a leaning towards novel transactional models and away from subscription-based models. This is because consumers today want the flexibility to buy content and services at a time and place that suits, as they do when buying songs over iTunes – so if someone has to make a long journey one weekend, they can sate their appetite for entertainment on the spot. Whereas, if that same person were asked at the beginning of the every month if they would be happy to commit to £25 in advance for the promise of some great content in return, or at the start of a year to commit to 12 x £25 per month, they would most likely steadfastly refuse to add another subscription to a long list of monthly bills. So, micro-transactions enable consumers to purchase digital content on-demand, and everybody in the value chain stands to benefit from impulse buys.
This is also a good example of where two-sided business models may offer the best approach for players in the value chain. Mobile operators and over-the-top (OTT) content, service or app providers are looking to partner together to make more appealing, bundled offers to consumers and jointly generate revenue. But striking the happy balance is not easy, and there is a way to go until operators and OEMs are in harmony with one another regarding the best way to price these services. Yet what is certain is that there are consumers to be satisfied in the M2M-enabled infotainment market, and money to be made in doing so.
The auto vertical is just one area where the opportunities for innovation are abundant, and where the business strategies are steadily being consolidated. If you look at an exhibition like Barcelona’s Mobile World Congress 2013, you’ll see a plethora of connected devices on show, from the soon-to-be commonplace smart meter, to the bizarre calorie-counting connected fork. It’s not hard to prove that M2M is well on its way to bringing to fruition the potential suggested by years of increasing hype. Many of us already are, or soon will be, living a connected life.