Vertical M2M applications burgeoning
Vertical M2M applications burgeoning
The growing diversity of enterprise sectors that are now making use of machine-to-machine (M2M) services, and the burgeoning range of services they are using, is helping to drive the number of M2M connections globally. Anne Morris investigates.
At the same time this very diversity is creating an enormous challenge when it comes to servicing different enterprise needs: as commented by Informa Telecoms & Media in a white paper on M2M communications.
It says that "there is no such thing as a 'typical' M2M deal, tariff or profit margin...Building scale is a persistent problem. Navigating the fragmented ecosystem is a top barrier to success [for communications service providers (CSP)]. There's a strong desire to build large partner communities, but less clarity about how to monetize these relationships."
As services providers seek ways to build economies of scale and create a less fragmented ecosystem, how will this affect their ability to meet the individual needs of vertical sectors?
According to Sheridan Nye, senior analyst at Informa Telecoms & Media, the largest global operators are now investing in partnerships and R&D to create the necessary ecosystems and services in specific verticals.
"Other CSPs will focus more on 'horizontal' applications that can be repurposed for different verticals," Nye said. "Asset tracking is an obvious candidate. Others will build a profile within their national markets, focusing on domestic enterprises and industries."
Verticals that are currently the leading target industries for CSPs include transport and logistics, utilities, automotive, financial services and health. Nye noted that personal healthcare monitoring will grow initially in the consumer "fitness and wellness" segment. "The clinical telehealth market is growing, but is subject to complex regulatory and structural issues that vary by country," she added.
Agriculture is also a big emerging area. "Growers need to continuously monitor and adjust conditions in green houses and monitor the whereabouts of livestock. M2M offers new capabilities for optimising yield at low cost," said Nye.
improving efficiency, new services
Indeed, improving efficiency and lowering costs is one of the three broad benefits for enterprises when deploying M2M. The other two are to enable new services and business models and to gather commercial data.
"A typical new business model enabled by M2M would be where a one-off product sale becomes a services relationship," said Nye. "For example, connectivity in passenger vehicles offers OEMs the opportunity to build an ongoing relationship with the car owner, whereas previously they may have had very little aftermarket contact, if any at all. This relationship can later extend to the second and even third owner, using the on-board diagnostics to market vehicle servicing, parts and accessories."
One interesting side effect of M2M, according to Nye, is that it reveals the internal processes and concerns that normally would be unknown outside of a particular industry.
"For example, a consumer packaged food supplier such as Unilever wants to be able to monitor ice-cream cabinets in retail outlets. Ice cream is a high margin product and one of their biggest revenue sources. M2M allows the supplier to manage deliveries and inventory, but also to alert the shop owner to any problems with temperature or power supply."
Nye noted that some of the most innovative applications are emerging where enterprises want to gather data from customers about how their products are consumed.
"One of the more speculative examples we've heard about include a vending machine that can 'friend' you on Facebook," she commented. "The idea is that the machine can identify regular customers and display targeted special offers. Time will tell if these consumer-oriented services are as important as meeting core business needs such as stock management and asset tracking."
how service providers are helping
In addition to connectivity, service providers can add value at a higher level, by providing security, performance management, data management and decision support tools.
Recent research from ABI Research suggests that the M2M software market will be worth US$3.85 billion by 2017, rising from 110 million cumulative connections globally in 2011 to about 453 million cumulative connections by 2017.
ABI Research also noted that a key challenge remains the complexity of developing, deploying, and managing M2M applications over cellular networks. However Informa's Nye comments that it's also important to recognize that many M2M applications will never require high bandwidth, and that only part of the M2M market will be enabled by cellular connectivity.
ABI said two key M2M software platform markets have emerged to address the challenges of deploying M2M over cellular: connected device platforms (CDP) and application enablement platforms (AEP).
"CDPs enable the cost-effective deployment and management of M2M connections over cellular networks. AEPs enable quicker and less expensive application development as well as granular remote device management," the research company said.
Ultimately, ABI believes that "core CDP functionality is going to become an increasingly commoditized aspect of the network, better left to third parties that can amortize development costs across multiple MNO customers," said practice director Sam Lucero.
"The more nascent, and smaller, AEP market will grow quickly as application developers seek to offload core functionality, such as data normalization, data modeling, and providing a rules engine, onto third-party platforms, rather than developing the application on a completely customized basis," Lucero concluded.
Read more about M2M on the Orange Business Services website.