 | Issue: | Asia-Pacific II 2011 |
| Article no.: | 1 | |
| Topic: | M2M – what peril to growth | |
| Author: | Georg Steimel | |
| Title: | Chairman | |
| Organisation: | M2M Alliance | |
| PDF size: | 754KB |
About author
Georg Steimel is Chairman of the M2M Alliance, Europe’s leading industry association for machine-to-machine communication. Further to this role Mr Steimel consults for companies and institutions from all over the world on their M2M strategy and projects as well as on marketing and business development for innovative wireless markets and telematics solutions. With almost two decades of experience and business expertise in telematics and M2M, Mr Steimel has worked in various positions and projects in the B2B marketing and the telematics business unit of T-Mobile Germany. Mr Steimel previously worked for the German Car Manufacturers Association in the Department of Transport Policy. Georg Steimel holds a degree in Economics from Cologne University.
Article abstract
M2M will have a significant impact on mobile operators’ revenue growth; margins are minimal compared to traditional voice and mobile data markets, but M2M is a priority given the expected volumes. In addition to optimising business, manufacturing and service processes, M2M is creating new business models and revenue streams. Manufacturers can switch from product sales to product operation and services charged for on a pay-as-you-go basis. The green revolution will also depend greatly upon M2M-based smart grids for CO2 reduction.
Full Article
There is no doubt about the potential and the tremendous growth expected in machine-to-machine communication in the coming years. Even at current growth rates, the market is already changing dramatically. Prices for hardware and wireless communication modules have already dropped, making more and more M2M solutions affordable, speeding up return on investment and expanding the M2M market to new areas. It’s about time to become serious with M2M. The mobile revenue stream The mobile network operators are driving the M2M market in their search for new revenue streams. Although margins in M2M are minimal compared to their traditional voice and mobile data market, the expected volume in the M2M is whetting their appetite. mobile network operators consider M2M to be a priority growth segment. This has led vendors to increase their marketing and sales activity and to enhance their service propositions to respond to the specific requirements of M2M customers. Companies like Vodafone, Deutsche Telekom, Orange and Telefonica in Europe and AT&T, Verizon and Sprint in the U.S. have already set up dedicated teams to stake out their positions in this business and market awareness, acceptance and demand are increasing accordingly. M2M interoperability M2M is not limited to cellular communication. As a matter of fact, devices can be connected to the Internet by many kinds of technology, be it wide area networks, line based or wireless – including satellite communication, PLCs and near-field communications (NFC). Often, a combination of technologies is used as a hybrid system, a dual mode or a complementary solution. Transparency is a key benefit of M2M for businesses and society. Higher levels of transparency and management possibilities are achieved simply by connecting devices so they can exchange information. The formerly dispersed information regarding each individual part of a process when combined with the rest of the system’s information creates a complete system-wide picture and increases the level of transparency both for the ERP (enterprise resource planning) system and for consumers. With this sort of real time information, business decisions can be taken easier and faster. M2M enabling service In addition to business process optimization M2M is the basis for new business models, new forms of cooperation and helps create additional revenue streams. Manufacturers can use M2M to change their revenue basis from product sales to product operation and service. The office that needs printers and copy machines, for example, might no longer buy these devices, but would pay each time they used them. The manufacturer and operator would, remotely, control and send supplies of paper, ink, toner etc. As needed and would be responsible for the seamless operation and availability of the service. In many instances, M2M can even support the achievement of political goals. The reduction of CO2 calls for the restructuring of energy generation, distribution and consumption through the use of smart grid and smart metering technologies; these ‘green’ technologies, in turn, are based upon the use of M2M. Traffic management and the funding of infrastructure are much more feasible using innovative M2M solutions to register and apply distance based or even situation based road pricing. The German company, Toll Collect GmbH, operates the road pricing system for heavy vehicles (over 12 tons) on Germany’s highways. Currently, there are 665,000 on-board units attached to the automatic system. The accuracy and reliability of the system based on GSM and GPS has been stable during the past three years at 99.75 per cent. In 2010, Toll Collect billed 26 billion kilometres driven by trucks weighing more than 12 tons. M2M will be increasingly used as the basis for systems that promote sustainable development, usage oriented cost allocation and the increasingly efficient use of natural resources. Quality for tomorrow Long-term reliability, robustness and resiliency tend to be underestimated. Since M2M systems are required to operate autonomously over a period of 60 to 120 months, and malfunctions could easily jeopardize the business case of the solution, the M2M industry is taking quality aspects very seriously during the design phase and throughout the entire lifecycle of M2M solutions. The components used to build M2M systems must comply with existing standards, but that is not all. Since M2M systems are combinations of specific hardware, software, applications and telecommunication services the capability and reliability of the entire set-up needs to be verified, in the field, under real operating conditions. As more and more devices are connected, they will need to be managed and maintained in the field. New tools are available to help M2M service providers manage the thousands of connected M2M devices in the field and control their behaviour in daily operation. These tools can monitor the devices’ behaviour, their communications, the network’s connectivity, and activate and deactivate individual devices. In addition to these telecommunications orientated functions, there are also device related features such as remote device management functions, reset commands and software updates. A third group of functions includes security and applications related activities that need to be supported during the lifetime of an M2M solution – VPN (virtual private networks), encryption, AAA (authentication authorization and accounting), as well as application enhancements and updates fall into this category. Industry experts expect that these services will, in time, become more valuable than the M2M communications services. The simple term M2M envelops much more than the obvious multitude of opportunities in a wide variety industry sectors and devices suggests. Setting up an entire M2M solution requires a combination of many different disciplines including hardware design and integration, systems integration telecommunication services, administration, billing, and much more. Alliance for growth To bring all different parties from this complex value chain together in one community is a major goal of the M2M Alliance – an open industry association. It is the only M2M initiative that combines small and medium enterprises with large corporate from IT, electronics industry, telecommunication, and professional services in one organization. In such a community, the M2M sector can drive activities -independent of individual interests and constraints – to serve all parties and jointly promote new initiatives.
