M2M Now Insight Report by Prestige Media

INSIGHT REPORT Automotive M2M

Fleet, Manufacturing & Remote Asset Management Smart Utilities mHealth Smart Cities

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CONTENTS

34 SECURE M2M

18 TALKING HEADS

44 2012

2013

2014

2015

2016

2017

FLEET MANAGEMENT

32 M2M MARKETS

INSIGHT REPORT 18

TALKING HEADS Dan McDuffie, Wyless’ CEO, has been busy with company acquisitions. But he’s still had time to reflect on the route ahead

M2M NOW INSIGHT REPORT In the first of our new series of specially commissioned Insight Reports, Matt Hatton of Machina Research gauges business prospects in five industry sectors: Automotive M2M; Fleet, Manufacturing & Remote Asset Management; Smart Utilities; mHealth; and Smart Cities

M2M MARKETS M2M is rising like a tide beneath your boat, not a tsunami, says Jim Dunlap

SECURE M2M SIMalliance’s Bruno Basquin urges us to focus on standards for secure interoperability

SECURE M2M Olivier Beaujard says the best protection in M2M is security tailored to your application

M2M MARKETS Major corporate announcements pave the way for a new-look Wyless with expanded capabilities

AUTOMOTIVE Paul Hartley tells you how market research must bend to meet the demands of ‘millennial’ drivers

M2M STRATEGIES How can you accelerate your success in M2M? Kfir Dan-Ari of Amdocs has one answer

FLEET MANAGEMENT Johan Fagerberg says the market has entered a growth period that will last for years to come

M2M BUSINESS MODELS How to create and deploy robust, scalable business models in five key M2M / IoT sectors

SMART UTILITIES Smart utility meters still have a long way to grow, according to Jacob Pereira of IHS

SMART METERING Prepare for changing business needs, says Olaf Vieselmann by learning from other verticals

SMART CITIES Santander takes its first steps to becoming an integrated smart city. Alun Lewis reports from Spain

M2M STRATEGY You need a global strategy to harness efficiencies, cut costs and grow revenue, says Alex Brisbourne

MOBILE HEALTH Anthony Cox of Juniper Research believes the longterm outlook for mobile healthcare is stable

C-LEVEL VIEW Kurt Busch, CEO of Lantronix, tells us all how to catch the internet’s ‘second wave’

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TALKING HEADS

Dan McDuffie: The USA is very, very complicated right now with the changing mix of technologies. It’s a disaster, and that’s great.

Carrying the wrenches Machina Research’s Matt Hatton talks to Wyless CEO Dan McDuffie about the M2M industry in 2014 and the company’s position in the market

Matt Hatton: Dan, you’ve made a couple of exciting announcements in the last few days in the acquisition of ASPIDER M2M and the hiring of Gilli Coston as CSO (chief strategy officer) (see exclusive article on pages 38-39). Can you tell me a little about the motivation there? Dan McDuffie: We see the global M2M opportunity for Wyless as a triangle: Europe, North America and Latin America, particularly the US, UK, Benelux, Brazil and Germany. I’m not saying we don’t care about other areas but if Wyless can dominate these it puts us in a very strong position. A lot of what we’re incubating in the US will go down well in Europe, where the market is very fragmented. There is a very large opportunity for an end-toend solutions provider in Europe. The customers are confused and the mobile network operators (MNOs) are not delivering, particularly to the

middle of the market. That’s the reason we are bringing ASPIDER M2M into the Wyless family: to bring the same end-to-end solutions approach to the European market. And Gilli has come aboard to oversee that internationalisation effort. MH: We’ll come back to the shift to ‘end-to-end solutions’. But first off, what do you think are going to be the key trends in machine-tomachine communications and the Internet of Things (M2M/IoT) in 2014? DM: There are a couple of significant trends, firstly the proliferation of broadband, and specifically a move to LTE. More LTE networks are being built now than any other mobile technology at any other time in the history of cellular communications. No-one has really thought about the impact that all of these network deployments will have. We’ve

▼

“We’ll start to see the SIM card quasideregulated. By 2015 we might see, for instance, the idea of a ‘MercedesBenz SIM’.”

March 2014

“You can have your head in the clouds with big data, or be down amongst the sensors, but there will always be people running around carrying the wrenches and building.”

Not only does this mean different services, it also means a shift in how those services are provided. Traditionally M2M was nationally-focused. Take a company like KORE. For the first five years 99% of their business was in the US before moving to the Australian market through an acquisiton. Then there was a gradual shift in the M2M world to global offerings with global SIMs. Tier 1 MNOs are focused a lot on that. But that’s all around a single SKU (stock keeping unit), which doesn’t work in the LTE business due to band fragmentation and costs. You need a multi-domestic strategy, which is where Wyless is focusing its attention. If you’re putting a lot of devices into any given market, you don’t want to use someone two continents away. For instance, it’s not realistic to see 200,000 US or UK SIMs in Brazil or Japan in a single deployment. The market is now suddenly moving in the direction of having a local operator in every country. LTE throws all the global roaming initiatives out the window thanks to pricing and latency. Take an example of two of our largest customers’ global applications. One generates 100KB per month and the other 100MB. The first can use roaming and has a single SIM card worldwide. The second can’t and he has to use six different MNOs and counting. MH: Doesn’t this just mean that MNOs will have to resolve data roaming? DM: Good luck. Firstly, there are technical problems with LTE. Secondly, most multi-country MNOs aren’t even able to resolve issues within their own business units to offer a price plan that realistically works across multiple territories. T-Mobile USA has come up with an innovative roaming plan for consumers and corporates but it’s limited to 2G on smartphones, and so we can expect MNOs will resolve some of these as time goes by and costs come down. But if you need to run a broadband application, be it surveillance, industrial networking or whatever, you won’t use a foreign SIM card. You either go local or you might eventually use MultiIMSI and IMSI swapping, once that’s viable.

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MH: What are the other key trends? DM: That dovetails nicely into what I believe will be the opening up of the SIM. We’ll start to see the SIM card quasideregulated. By 2015 we might see, for instance, the idea of a ‘Mercedes-Benz SIM’. There will also increasingly be a move towards providing end-to-end solutions. The data MVNO of the future is dead. That doesn’t mean you can’t sell data plans where you have to, and accept being commoditised or having to layer on tons of value. But there will be an increasing push to providing end-to-end offerings. Telit and CalAmp have already done this, as has Numerex. Also Telenor is talking about providing services all the way through to the Telenor cloud, but we think that Wyless is leading here because we’re doing it more broadly, across these multiple markets and MNOs and addressing the broadband sectors as well as traditional M2M and IoT. We’re also seeing the system integrators (SIs) getting more active. MH: Tell me more about what you see as the ‘end-to-end’ opportunity. DM: IoT devices are proliferating in the billions, and the remote management and connection of those things has never been growing faster. Customers are coming out of the woodwork, and it’s broader than traditional M2M. It might be a medical kiosk, or a coin counting machine. For these types of devices it’s not just about providing the connectivity. We now also bundle the devices, like an HSPA or LTE router, provide multi-operator support for redundancy, and support the client with site surveying such as coverage, location, and power. In some cases this will be through a sub-contractor, but Wyless is providing the complete end-to-end solution. This is very similar to what an SI would traditionally do. This will also eventually extend to OTA SIM management, allowing the customer to hot swap operators if coverage gets spotty. The result is that Wyless is taking fewer, larger, more complex deals where all the different elements make them much more profitable. This involves us building value and running for the lifecycle of the project. MH: Does that mean you end up specialising in particular sectors or types of customers? DM: If you think of Wyless in terms of the $100 million or $250 million company that we aspire to be then why wouldn’t you be broad enough to cover most sectors? That said, over a period of time you end up doing better in certain areas, either because of lower barriers to entry, or higher margins. I believe that tends to steer you unconsciously towards particular sectors. ▼

seen widespread deployments in the US, six national LTE networks in Brazil, and so forth. More LTE networks are being built now than at any other time in the history of cellular communications. Everywhere you look LTE is being rolled out: Bangladesh, Chile, everywhere. Traditional ideas about M2M data being limited to megabytes or kilobytes are going. Even traditionally low bandwidth applications are seeing dramatic traffic spikes. Usage-based insurance is doing more data than old fleet tracking applications courtesy of all sorts of add-ons like text blocking or in-vehicle cameras. It’s not unusual to see applications now generating 10-20MB per month, not to mention Gigs.

TALKING HEADS

“Microsoft, GE, Intel and Cisco will recognise that they need an IoT strategy and for that reason we’re getting into the big time now.” The way I look at it, when you’re an adolescent you try many things. As you mature you start to settle down and work out what you want to be when you grow up. And this is the process that’s happening with Wyless as we reach 10 years. We’ve been lucky to be able to diversify into new markets. In some cases we’ve thrown caution to the wind rather than be too deliberate. We’ve also disrupted ourselves occasionally, to keep up with the times. The beauty of M2M is its breadth. You can have your head in the clouds with big data, or be down amongst the sensors, but there will always have to be people running around carrying the wrenches and building. And implicit in this is a move to an SI or managed network model, focusing on providing IT solutions. Ultimately, there is a requirement for players to be ubiquitous end-to-end managed service providers. Most carriers and vendors are not. An endto-end semi-agnostic multi-layer business model is where the industry should be. MH: What about mobile operators and their role in M2M? DM: At the same time as the industry is moving towards endto-end services, MNOs are moving away from it. They’re increasingly bringing in partners: Telefonica O2 UK with systems integrators for UK smart metering, for instance, and thankfully a bunch of mobile operators with Wyless as a solutions partner in one way, shape or form. Also when you talk about the smaller deals, the tens of thousands of connections, you need service providers who carry the wrenches. That’s what Wyless is gearing up to do. We’ve been in this business for 10 years, we’ve passed that special ‘million managed connections number’ and we have almost 20 carrier partners today, which will grow to at least 25 by the end of this year. To get serious about any given country you have to put yourself in the market and partner with the operators there. Realistically in some countries you have to be there to win. You have to step up to the plate and invest. Nowhere is that more apparent than Brazil; but also the USA, the UK and Germany, for that matter. Partnering with the MNO is the cornerstone of our strategy and will continue to be. After all, without their networks this whole thing doesn’t work. MH: You’re in the US and Europe, but you’re also in Brazil through your recent TM Data acquisition. Where do you see the biggest opportunities? DM: The top four markets in the world are Europe, the USA, Brazil and China. If Wyless can dominate 3 of those 4 markets with this mix of end-to-end solutions then we are the big winner. The USA is very, very complicated right now with the changing mix of technologies. It’s a disaster, and that’s great. That is chaos breeding opportunity. It’s wreaking havoc for those in deployment and those about to deploy. How do they know what to deploy? That said, in every major market any given customer needs two operators to get 99% coverage anyway, the same holds true in Brazil as in the USA. It almost

doesn’t matter which two. And LTE is the great equaliser in this changing landscape in the US between CDMA and GSM. The biggest opportunity is the global growth of bandwidth for next gen applications and that is something that transcends boundaries. The more markets we address the faster our business grows. Period. MH: Do you think this uncertainty is slowing growth in the US? DM: In some verticals it’s accelerating. In others it’s slowing. The utilities market, for instance, has never really taken off but is showing some signs of life now but technology problems have thrown a wet blanket over the whole sector. In others that have deployed 2G, the early adopters, you’re seeing a lot of problems. There will be an AMPS-like analogue-digital switchover problem on the 2G GSM landscape. Several million devices are still sitting on older networks. They’ll go out of service and have to be truck-rolled. It’s already happening. The flip-side is that we’re seeing a huge take-up of mobile technology over private networks into the multi-location retail and enterprise sectors that is truly unprecedented. More and more applications are running over mobile, regardless of what you call it, M2M, IoT or Fixed Mobile Broadband. MH: What about M&A? Are you expecting to see much movement in 2014? DM: Just a few weeks ago we saw the acquisition of ThingWorx by PTC. Talk about opening the year with a bang. This tells me that the big boys like Microsoft, GE, Intel and Cisco will recognise that they need an IoT strategy and for that reason we’re getting into the big time now. The stakes are getting higher and higher. Yes, I expect to see continued consolidation of the type we saw in 2013. There are too many equipment companies. If you look at the router business there are lots of companies providing industrial network routers for instance. Too many players. And each has a management platform. The same is true in the cloud business. In Wyless’s space it seems reasonable that there will only be a couple of global players. It’s like the post deregulation US long distance market in the 1990s and the CLECs in the early 2000s. There were dozens that got consolidated into just a few national players that exist today. That’s not to say that there aren’t smaller players around that will survive just fine by differentiating, but there will certainly be a top tier. And I expect to see consolidation here too. Wyless has certainly looked at our peers and our customers to find cool and interesting companies to add, in order to bring in particular features or scale. You’ve seen us do that already not least through the TM Data and ASPIDER M2M acquisitions we’ve already discussed (turn to pages 38-39: The changing face of Wyless), and I suspect before too long we’ll see more of that as well. One never knows Matt!

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INSIGHT REPORT Figure 1: M2M connections by sector 2012-22 [Source: Machina Research, 2013] 20 18 16 14 12 10 8 6 4 2 0

2012

2013

2014

2015

2016

2017

2019

2020

Agriculture and Environment

Automotive

Construction

Consumer Electronics

Emergency Services & National Security

Healthcare

Intelligent Buildings

Manufacturing & Supply Chain

Retail and Leisure

Smart Cities & Public Transport

Smart Enterprise Management

Utilities

1 M2M: A growing opportunity, but storms persist

The author of this Insight Report is Matt Hatton, Director of Machina Research

2018

In December 2013 Machina Research published its annual review of the state of global M2M adoption1. From 2.6 billion connections at the end of 2012 the global M2M market is set to grow to 18.2 billion in 2022. The biggest sectors in terms of volumes of connections are Consumer Electronics and Intelligent Buildings, the latter predominantly focused on security and home automation. Between them these two sectors account for around 70% of across the forecast period. The growth in connections is illustrated in Figure 1. The technology of choice for these two sectors is WiFi, as well as a range of other short-range technologies (such as ZigBee and Z-Wave). As a result, short-range communications dominates M2M, accounting for 73% of all connections. Cellular technologies will grow from 190 million connections at the end of 2012 to 2.6 billion in

2021

2022

2022. The major sectors are automotive and utilities – the latter being mostly smart metering – which between them account for 59% and 16% respectively of all cellular M2M in 2022. Manufacturing & Supply Chain, and Healthcare are also quite significant users of cellular connectivity with 82 million and 116 million connections respectively in 2022. Globally US$1.3 trillion in revenue will be generated in 2022. Consumer Electronics leads the way, generating US$500 billion, with Automotive second place with US$282 billion. Machina Research’s analysis finds that around two-thirds of global M2M revenue comes from the sale of devices. The vast majority (90%) of service revenue is accounted for by ‘service wrap’, that is to say the product or service that rides on the back of the M2M connectivity. Only 10% comes from connectivity. For this reason much of the focus of players in the M2M value chain, particularly mobile network operators (MNOs) is on being a full service provider, supplying the healthcare, fleet management or smart meter solution, rather than simply providing connectivity.

1 See report “M2M Global Forecast & Analysis 2012-22” (December 2013) for more detail

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While the opportunity is undeniable, there are also significant challenges. Almost everywhere one looks in M2M, disruption persists, and this will continue into 2014. Issues include 2G (and 3G) refarming and the associated uncertainty for customers; the challenge of supporting a global subscriber base and associated issues such as interoperator alliances, IMSI swapping and permanent roaming; roles in the M2M value chain as all participants seek to be all things to all clients; and the increasing need to evolve to a new platform approach for the internet of things. These, and many other issues, will continue to vex the great and the good of the M2M industry in 2014. This report examines five of the most important vertical sectors for M2M. Each also represents in microcosm some of the issues affecting the wider M2M market in some way. It is structured by sector but also delves into those key issues affecting all of M2M.

2 Automotive: For MNOs it's the big beast, but there are challenges The connected car has captured the imagination during 2013. The automotive sector has seemingly embraced connectivity as a way to enrich the driving experience, improve the interaction between original equipment manufacturer (OEM) and customer, and, perhaps, even make a little extra money. In February 2013 GM announced that its 2015 models would all be rolling off the production line with embedded connectivity. And GM is not the only one: manufacturers such as Audi and BMW are in the vanguard of a new push for connected cars. There is also an increasingly healthy ‘aftermarket’ for application-specific devices brought into vehicles. Stolen vehicle recovery solutions, such as Tracker or LoJack, and the likes of Coyote have been growing in popularity for some time, while 2013 saw a leap in the popularity of usage-based insurance, given a helping hand in Europe by the European Court of Justice ruling on sex discrimination in car insurance. The increasing popularity of usage-based insurance (UBI) in the US is testament to this not being solely a regulatory drive. On the subject of regulation, Europe’s eCall, Russia’s ERA GLONASS and Brazil’s Contran-245 mandates are on the horizon promising even more connections.

Automotive Snapshot Connections 2022: 1.5 billion Revenue 2022: US$282 billion Key applications: Navigation, usage based insurance, stolen vehicle recovery, emergency call, internet access, entertainment Key technologies: Cellular Source: Machina Research

Automotive is also the sector upon which the mobile industry has pegged much of its hopes in M2M. Almost 60% of cellular M2M connections are in the auto sector2, and it accounts for 32% of mobile network operator (MNO) expected service revenue in M2M. However, this is a market with challenges. Automotive OEMs and MNOs must learn to trust one another and work together. The car industry and the telecoms industry have different heritages and this has given rise to a mismatch in terms of approaches. The car industry is global, with long development cycles, rigorous safety requirements and a commercial model based on one-off sales. In contrast, the cellular industry is local or regional, focused on rapid turnover of products, works on a best-efforts basis and has an ongoing long-term relationship with its customers. Both can learn from each other. The mobile industry has already moved in the direction of becoming more global through alliances, such as the Global M2M Association (GMA) and the M2M World Alliance, and technical solutions for localising connectivity which culminated in the GSM Association’s announcement of an embedded SIM specification in December 2013. These initiatives are testament to a willingness on the part of MNOs to evolve to meet the needs of the automotive sector. But such rapid change inevitably brings growing pains. The sharing of knowledge should not be one-way. The automotive sector can also learn a lot in terms of building an on-going relationship with a customer and it is also the best way to work with third party application developers. A more open application development environment would pay dividends in terms of providing a superior user experience. However, manufacturers remain cautious towards the open app ecosystem. They believe issues of security and reliability mean that they need to maintain a high degree of control over the system. Combine this with a highly fragmented application development environment, with different operating systems (OSs) for different OEMs, this is a less-than-appealing target for

2 Source: Machina Research report M2M Communication in the Automotive Sector 2012-22 (November 2013)

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application developers. Many application developers protest that automotive OEMs do not provide enough support or revenue share for the applications, or enough help on content discovery. However, there are reasons to be positive about the future. There is increasing use of standardised application development environments including traditional mobile OSs, and vehicle-based initiatives from the likes of GENIVI. It is moving slowly, but the application environment is gradually opening up. The model for who pays for which services and how is also far from resolved yet. For aftermarket devices such as connected navigation devices there is a simple set of models for payment. However, for applications that reside on the built-in vehicle platform, the financial flows are not so clear. Mobile operators are looking at ways to resolve the question of ‘split-billing’ across multiple devices. For instance, in January 2014 Amdocs was selected by AT&T to support the AT&T Drive Studio connected car initiative. The concept of privacy has also reared its ugly head in discussions of connected cars during 2013. Most prominent was the case of Tesla which, during a very public spat with New York Times journalist John Broder, admitted that it was tracking him and all other Tesla drivers. This raised concerns about the extent to which drivers were content to have their every move watched and, in other cases, their data sold, even anonymously. This is a thorny issue and one that those who seek to benefit from M2M will need to resolve. The final challenge is more fundamental. Connectivity stimulates a fundamental change in the relationship between driver and car. There is evidence suggesting that people are moving away from the concept of owning vehicles. The success of companies such as Zipcar and Mobility are testament to this. The automotive OEMs are even getting in on the act. BMW, in conjunction with Sixt, launched DriveNow a car shared ownership company. As such there is potentially a shift occurring which will see drivers give up car ownership in exchange for these new business models which are largely facilitated by connectivity. In another example, BMW’s Connected Drive Remote application for electric vehicles (EVs) seeks to integrate driving into a multi-modal transport planning application, including public transport. This illustrates a shift in mentality from selling hardware (i.e. cars) to acting as a transportation service provider. It’s possible to overstate this shift but there is certainly a richer and deeper experience being developed than simply selling vehicles. While the last development might indicate that there will

be less demand for cars overall, the changes in the industry are certainly not bad news for car manufacturers. Connectivity offers automotive OEMs a greater opportunity to build a direct and long-term relationship with the customer which they never previously had. This might allow them better cross-selling and upselling opportunities, for instance for servicing or parts. It also offers the opportunity to better monitor usage to appropriately engineer the product. This could allow OEMs to use cheaper materials, safe in the knowledge that they are monitoring them for problems, allowing them to reduce the cost of manufacture. There’s also the outside chance that they may also be able to make some money.

3 Fleet, Manufacturing & Remote Asset Management: Today’s M2M colossus shows the depth of possible benefits for M2M Some of the oldest M2M solutions deployed globally have been associated with heavy-duty enterprise processes such as fleet management, manufacturing and remote asset management. There has long been a substantial demonstrable economic benefit associated with the tracking of goods in the supply chain or keeping tabs on location and performance of

Fleet, Manufacturing and Remote Asset Management Snapshot Connections 2022: 219 million Revenue 2022: US$24 billion Key applications: Fleet management, manufacturing Key technologies: Cellular, satellite, RFID Source: Machina Research

heavy industrial equipment. Such was the benefit that it was worth the painful inception which typically involved stitching together customised devices and application logic. The advent of a more platform-focused M2M, with re-usable network, service and application elements, has reduced the cost and complexity of deploying M2M

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solutions3. It is also heralding a much more widespread adoption of M2M in the sector and for a much more diverse range of reasons. As well as the usual location tracking and remote diagnostics, M2M is increasingly being used for a diverse range of processes that are more and more intrinsic to the business process: • Reduce costs. Numerous industrial processes can be streamlined with M2M. This ranges from reducing fuel consumption (companies can save 5-15% of fuel across the fleet by implementing monitoring according to Telenor) to improving the efficiency of delivering products to vending machines (US-based Imperial Vending saw a 45.5% reduction in route count and a 76.8% increase in average revenue per route courtesy of improving operational efficiency by reducing the number of journeys and optimising route planning). • Shifting from CapEx to OpEx model. There are numerous examples of firms using M2M to switch business models from CapEx to OpEx approaches, for instance US-based Sealed Air. The firm sells air pockets for use in packaging. Where previously it sold machines to customers, now it charges according to usage, using embedded connectivity to monitor consumption by the customer. • Comply with regulations. A range of industrial processes are now subject to regulation that implicitly or explicitly requires connectivity. This ranges from cold chain distribution to lone worker safety. • Monitoring for maintenance and compliance with warranty. The industrial sector can make use of the ability to monitor devices to understand what the maintenance requirements might be. This can be driven by a number of different motivations. In the case of Gerber Technology’s Gerber Cutter Z7 fabric cutting machine, the company remotely monitors the environment in which the machine is installed, allowing it to both monitor performance for research & development (R&D) purposes, and to ensure that the users are complying with warranty restrictions on temperature, humidity and use. Increasing numbers of businesses have M2M as a critical part of their core service offering, rather than simply being a useful adjunct, or only sporadically applied. This importance is reflected in the announcement from GE of its initiatives around the ‘Industrial Internet’. Furthermore,

the ability to stitch together M2M data into a wider business process is also symptomatic of two major changes occurring in the M2M sector today: the evolution to the Internet of Things and the requirement for greater understanding of data analytics frameworks. Whether it is referred to as the Internet of Things, Internet of Everything or the Industrial Internet, there is a very definite evolution occurring currently from the old M2M incarnation focused on transmitting application-specific sensor data. The new IoT involves the drawing together of a wider range of data sources (including M2M connected devices of different types and also corporate and other IT systems) and stitching these together with more sophisticated applications. It is also in the industrial sector where the value of data analytics will come to the fore. With the shift to the Internet of Things it will become increasingly important to manage and react to the data generated by a diverse range of devices. The greatest value is created where realtime data analytics can be applied to mission-critical business processes, to add value or reduce costs. The various stakeholders will make great strides in 2014 in addressing issues of data management, ownership, security, privacy and consent, as well as taking the first faltering steps towards monetising this immensely valuable asset. NB. In the sector segmentation presented in Section 1, this sector equates to Machina Research’s ‘Manufacturing & Supply Chain’ sector.

4 Smart Utilities: The juggernaut rolls on The benefits of smart metering have been pored over in some detail in recent years. For government it offers a key way to hit carbon reduction targets. For householders it’s an opportunity to reduce household bills and carbon footprints. For the utilities it reduces or removes the cost of manual meter readings, offers an opportunity to address both technical and non-technical (i.e. theft and fraud) losses, and allows them to differentiate their service offer from those of rival firms, which is notoriously difficult in such a commoditised market. It’s also an opportunity to balance out demand and thus improve the efficiency of electricity production, in particular by reducing the requirement to build additional generating capacity.

3 For more on the role of platforms in streamlining the M2M sector see the Machina Research White Paper “M2M platforms are re-cast for the age of the ‘Internet of Things’” (September, 2013): https://machinaresearch.com/news/white-paper-m2m-platforms-are-re-cast-for-the-age-of-the-internet-of-things/

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Smart Utilities Snapshot Connections 2022: 1.7 billion Revenue 2022: US$62 billion Key applications: Smart metering, smart grid Key technologies: Powerline communications, mesh, cellular, low power wide area Source: Machina Research

The main push typically comes from government. Many are setting aggressive targets for the deployment of smart metering, most notably the European Union (EU) requiring that 80% of electricity meters are smart meters by 2020. Many other countries, including China and the US, are also pushing smart meter adoption through stimulus packages and the mandating of roll-outs. There are three main barriers to adoption. The first is logistics. The act of deploying hundreds of millions of smart meters worldwide is going to be challenging, particularly where it is unclear what the long-term requirements might be for functionality and connectivity technology. The second is user acceptance. There has been increasing push-back against smart metering in various countries including Australia, Germany, the Netherlands and the US. The third is cost, smart meters currently cost around US$100 a unit (although China is pushing for lower prices) so the cost of a full roll-out can run into billions of dollars; some studies find that the benefits outweigh the costs but not all the relevant experts agree. There seems to be inexorable pressure for smart metering, however, and Machina Research does not expect that these limitations will ultimately restrict the size and scale of the market. A range of different technology types will be used. In some countries in Europe, and rural areas in the US, powerline communications (PLC) currently dominate, while in many other locations private wireless networks – either mesh or point-to-point – are being deployed. Machina Research categorises these types of technologies together as “MAN” (Metropolitan Area Networks). This reliance on MAN technologies may change as MNOs change their pricing policy to target M2M applications and public wireless networks aimed specifically at M2M are rolled out. The utilities sector is a particularly attractive target for

some of the low power wide area network technologies, such as On-Ramp, SIGFOX and Weightless, which are gradually being introduced around the world. These technologies are designed specifically for M2M and with network capabilities to well suit a number of categories of M2M device. Wireless networking is always a trade-off between power consumption, traffic speeds and cost. The calling card of these emerging low power wide area (LPWA) technologies is that they typically significantly compromise traffic speed in return for lower costs and longer battery life. In many cases in M2M that compromise is perfectly acceptable in light of the characteristics required by the application. Many do not require the low latency and high bandwidth offered by other technologies designed for real-time communications. Smart metering is one of those applications. LPWA offers a significant opportunity to accelerate and extend the deployment of M2M globally. Cheaper devices reduce the barriers to entry to M2M, while the availability of such a long battery life opens up previously untapped opportunities. LPWA will also substitute for some of the more established technologies such as cellular and WiFi. Overall, Machina Research estimates that the LPWA technologies have a total addressable market opportunity of over 15 billion connections by the end of 20224. The fact is that a diverse range of technologies will be required to handle connectivity in every household. For some, cellular will be fine, but others will require an alternative approach which might include mesh, powerline or low power wide area.

5 Healthcare: Wellness is just the opening gambit Healthcare and Wellness Snapshot Connections 2022: 829 million Revenue 2022: US$71 billion Key applications: Clinical remote monitoring, worried well and assisted living Key technologies: WiFi, Low Energy Bluetooth, ZigBee, ANT+, WWAN Source: Machina Research

4 In June 2013 Machina Research delivered a webinar on this subject. To access a re-run of the session visit https://machinaresearch.com/news/webinarrevolution-evolution-or-distraction-machina-researchs-view-on-emerging-low-power-wide-area-wireless-technologies-in-m2m/

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Healthcare remains one of the most complicated and fragmented M2M sectors. Unlike automotive and consumer electronics that have achieved global scale and a reasonable level of technology standardisation, healthcare is split by national certification and privacy regulations, unique reimbursement/payer structures and a medical culture that has typically lagged in the adoption of new technology. In addition to these macro factors, the medical sector is also traditionally organised by categories of disease/anatomy (e.g. cardiology, oncology, pulmonology). As a result, many M2M and IoT health solutions are typically focused on monitoring or treating a specific condition, each with its own approach to device development, connectivity and application development, leading to a fragmented marketplace and less-than-ideal economies of scale. Efforts by Qualcomm and others to offer a single platform to connect diverse devices and applications are gaining some traction, but M2M/IoT in healthcare is still in the early stages of growth and acceptance on a global scale.

Inadequate infrastructure Despite these complications, Machina Research expects healthcare to benefit significantly from the adoption of M2M. As an area of nearly unparalleled private and public expenditure and importance to public welfare, the current infrastructure of most healthcare systems is inadequate to address the growing challenges of demographics, poor access to patients, and steadily rising healthcare costs. The innovative usage of M2M and other technologies provides a uniquely hopeful path to improve access to healthcare services, increase compliance with medical treatments, reduce costs and add improved flexibility of treating patient populations. While government regulatory bodies and industry standards bodies continue to make progress towards improving the pace of innovation for medical M2M devices and services, the overall pace of adoption remains slow. In the relative absence of low-cost wirelessly connected medical devices, consumers and medical professionals are increasingly pushing the boundaries of acceptable technology for use in medical offices, facilities, emergency vehicles and in the field. With increasing adoption of smartphones, tablets, wearable monitoring devices and mobile applications more common in the consumer context, the medical community is facing the growing “consumerisation” of healthcare. This use of technology is changing how consumers, healthcare providers and their patients interact. “Wearables” became one of the hottest buzzwords in the

mobile industry in 2013, including the growing adoption of devices designed to track human vital details, physical movement, and daily behaviours. Wearables are split between medically certified devices and consumeroriented devices with the consumer versions generating the bulk of adoption. Due to the growing popularity of devices such as the FitBit, Nike+ Fuelband, the Misfit Shine, Motorola MotoActv and Jawbone UP, consumers can easily measure their daily activity efforts, heartbeat, blood pressure, caloric expenditure, galvanic skin response and even sleep patterns. While health data from the vast majority of consumer-focused wearable devices cannot be used directly by medical personnel to make clinical decisions (for example, due to lack of Food and Drug Administration certification of most of these devices), the growing popularity of these devices will give consumers and their medical providers important details on an individual’s activity level and changes in key vital signs that can help quantify physical behaviour that is generally not the focus of existing wearable medical devices. Lowcost consumer fitness devices will increasingly complement medical monitoring devices and testing to provide a more complete picture of a patient’s health and behavioural patterns.

Wearable technology The burgeoning variety of wearable devices and associated mobile applications presents a unique challenge to the medical community as to how it should best access and incorporate fitness device data in their patient records. To bridge the divide between medical and fitness data, US-based company Validic has developed an mHealth API that provides a Health Insurance Portability and Accountability Act (HIPAA) compliant approach to integrating patient data from both medical and fitness devices for evaluation by doctors and their patients. Validic’s platform is already compatible with data from more than 80 fitness and medically-certified devices and their associated applications including wearable devices, connected weight scales and other home monitoring devices. This represents an important step forward in the consumerisation of healthcare by providing a secure, standardised means of utilising data from wireless mHealth devices. Platforms such as Validic and more medically focused platforms such as Qualcomm’s HealthyCircles will provide more accessible and secure means of integrating patient data from a diverse landscape of devices and applications. Consumerisation of the medical industry is also being driven by creative uses of other technologies familiar to consumers, such as video calling and gaming console

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INSIGHT REPORT

motion detection devices. Video conference calling for medical purposes, utilising consumer video calling platforms, typically falls foul of privacy and security regulations. As a result, there is a growing field of applications such as Vsee, Vidyo, TelemedicineIM and Secure Telehealth that offer the medical community a secure means of video calling with patients. Utilising a broad array of connected devices such as laptops, tablets and smartphones, these applications provide substantial benefits to medical practices and patients by limiting patient travel for in-person appointments. Physicians from the prestigious Partners Health organisation in Massachusetts claim that their use of such platforms can increase the total number of patients evaluated in a day by as much as 40% with even greater potential in the future. The strategy of extending limited medical resources through consumer technology is also behind the innovative business model of San Diego-based start-up, Reflexion Health. It has developed a cutting-edge application that monitors and corrects physical therapy exercises that patients execute in their homes. Using the Kinect motion detecting device from Microsoft’s xBox gaming consoles, Reflexion Health’s application can assess the movements of patients performing physical therapy down to joint alignment, body positioning and other elements that determine whether a specific exercise has been done correctly. While Reflexion’s approach does not necessarily fit into conventional M2M categories, it is a dynamic example of how connected consumer devices are being increasingly leveraged by the medical community to improve healthcare delivery, increase patient compliance with doctors’ orders, and reduce overall costs by limiting the need for in-person patient visits to medical facilities when a perfectly suitable home-based option is available.

6 Smart Cities: The sector with the x-factor Population growth and mass urbanisation has put an increased strain on infrastructure and resources, while economic pressures have loaded greater incentive on developed economies to reduce costs in the delivery of public services. These two pressures have encouraged various branches of government to look to ‘smart city’ initiatives. The Smart Cities sector is one of the most diverse in M2M

in terms of the applications being supported, the motivations for doing so and the associated commercial models. There are certain applications, such as Public Space Advertising, that are firmly in the commercial space, and have a set of comparatively well-defined dynamics. The majority of applications, however, are implemented for a public benefit such as safety (e.g. CCTV), improving transportation (e.g. connecting road signs, or tracking public buses), improving the environment, or reducing the cost of providing public services (e.g. connected street lighting).

Smart Cities Snapshot Connections 2022: 747 million Revenue 2022: US$29 billion Key applications: Public transport, parking, CCTV, digital signage Key technologies: Cellular, Mesh, Dedicated Short Range Communications (DSRC) Source: Machina Research

The fact that the majority of Smart Cities applications are ostensibly public, i.e. concerned with applications and services that are usually funded by and provided for the general public, means that it has unique access to funding. Smart Cities have been given a big push in the last five years thanks to the economic downturn and the need to implement stimulus packages. In 2009 in the US, President Obama, signed off an economic stimulus plan worth US$819 billion. The plan was intended to stimulate the US economy and was partly earmarked for public infrastructure projects including technology projects such as smart grids. Towns such as Dubuque in Iowa have applied for a stimulus package to invest in smart city technologies to streamline its utilities and transport system. In Germany a project to implement real-time information on German trains was funded by the Konjunkturpaket I and II economic stimulus packages administered by the German government. Another unique characteristic of the Smart Cities sector is that its main stakeholders are not traditionally profitrelated. This has the effect of accelerating its evolution in a number of ways. Because the motivation for funding Smart Cities is not traditionally commercial, Smart Cities offer an interesting model for how proprietary data might be shared with third party application developers in the interests of producing

Sponsors M2M Now

INSIGHT REPORT

superior applications and services. The motivation of the ‘owners’ of the data, e.g. municipalities, is generally not commercial profit. It is in creating a better living environment. Therefore, these municipalities should be willing to hand over city-generated data (such as bus location, environmental factors, or road congestion) to third parties with few restrictions. The motivation is to see independent application developers come up with applications that help the population cope with the challenges of urban living, and thus improve their lives. Thus far the willingness of cities to provide this data has been mixed. Certain cities, such as Helsinki, have been very willing to do so. Other cities have put in place strict requirements regarding data use that will inevitably inhibit growth. The horizontalisation of smart cities application support provides a stimulus to the creation of new applications and services, in what could be considered a test-bed for the Internet of Things (IoT). One of the key elements in the evolution of the IoT is a connection to third-party application developers and service providers. It is in openness to third parties that smart cities provide a potential crucible for innovation. As well as the sharing of data with third parties, Smart Cities has a particularly strong motivation for encouraging another quintessential element of the Internet of Things: stitching together multiple vertical applications. Smart

Cities is one of the key ‘Subnets of Things’5 where there is tremendous potential value delivered from stitching together multiple applications, for instance in changing traffic lights to give buses faster transit through a city. Today, the majority of Smart City applications are deployed as retro-fit point solutions aimed at solving a single well-defined problem. Over time this vertical approach gives way to a more horizontal one, with the establishment of a central smart city platform controlling multiple applications. We have already seen this type of development in certain cities, in particular where it is a greenfield deployment, but it will become increasingly common as a way to further streamline services. From the municipality’s perspective it will facilitate more efficient and effective control of public infrastructure and services, will permit economic efficiencies and will play a critical role in achieving environmental objectives such as reducing CO2 emissions and possibly other social objectives such as reducing crime or improving public information services. It also provides a blueprint for other M2M application sectors to follow. The motivation behind smart cities is not financial profit so much as improving life in the built environment or reducing the cost of providing services. Potentially, the savings are enormous and the revenue associated with providing those cost reductions for municipalities is driving major vendors, including Cisco, Ericsson and IBM, to pursue the Smart City in an increasingly aggressive way.

www.machinaresearch.com

5 See Machina Research White Paper “White Paper - Big Data in M2M: Tipping Points and Subnets of Things” (February 2013) for more details on Subnets of Things and the use of M2M data.

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M2M Now

COMPANY PROFILE

Company Summary

Key Differentiation

Amdocs has over 30 years’ experience supporting communication service provider (CSP) mission critical systems including CRM and billing. The global company uniquely combines a market-leading business and operations support systems (BSS & OSS) and network control product portfolio with value-driven professional services and managed services operations. With revenue of US$3.3 billion in fiscal 2013, Amdocs and its 20,000 employees serve customers in more than 70 countries.

Amdocs is skilled in developing highly scalable solutions, using best-in-class charging and billing capabilities. Its solutions are available on-premise or as a Software as a Service (SaaS) model. It also has valuable experience managing the complex relationships between CSPs and application service providers (ASPs), including partner management and settlement. A further differentiator is the partner operator portal, which allows operators’ partners to handle ordering and tracking for SIMs and devices. Amdocs also provides a unified platform for retail, wholesale, MVNO, partner and M2M, offering significant cost advantages for CSPs.

Company Credentials There are strong synergies between Amdocs’ core business of highly scalable and robust billing, charging and customer care, and the requirements of M2M. Amdocs won TMCnet’s award for “Best Provisioning Platform for M2M” and was listed by Connected World as one of the world’s top 100 M2M companies. Amdocs was selected by AT&T to support its Drive Studio connected car initiative, demonstrating the trusted relationship Amdocs has with leading tier-one carriers in the M2M space.

Competitive Pressures

Company Summary

Key Differentiation

Cycle30 provides a cloud-based billing platform, the Pivot™ platform, for global communications providers, enterprise customers and M2M connectivity. It offers an open and flexible architecture, which helps clients realise revenue more quickly without the traditional billing system stress.

Cycle30 identifies three key credentials that allow it to effectively address the M2M requirements of operators, based on its hard-earned experience in supporting operator billing. Firstly, it is focused on simplifying back office complexity. Secondly, it can offer a much more rapid solution; as little as 4-8 weeks for deployment versus 9-18 months. Thirdly, it puts the human element front and centre. Much of the heritage of the organisation is in high-touch industries and environments focused on customer service. As such, it starts from the customer and works back.

Company Credentials The background of Cycle30 is different from most comparable organisations. It is owned by a telco, which gives it a unique perspective, and many years’ experience in resolving realworld problems. It also has a radically different approach, focusing above all on simplification, taking a complex process and removing the pain points, based on the experience it has gained as a telco billing platform. Cycle30 provides the cloud billing element of the Device Cloud Networks (DCN) proposition.

M2M Now

As the M2M market matures, CSPs are looking for scalable, reliable solutions with rich functionality to support diverse business models. Sophisticated billing, charging and settlement capabilities are required to handle the diverse B2B, B2C and B2B2C (business-to-business-to-consumer) requirements. Managing this complexity is part of Amdocs’ DNA.

Competitive Pressures During 2014 Cycle30 expects some of the sleeping giants of the billing world to wake up, but Cycle30 is not overly concerned, relying on its rapid time-to-market and lead-time in the M2M space. It also sees globalisation as a pressure; companies need to be global to address M2M. While MNOs account for the most interest in M2M, Cycle30 is seeing increasing interest from cable operators, interested in home automation, security, healthcare and other assorted applications.

COMPANY PROFILE

Company Summary KORE is the largest independent provider of global end-toend connectivity, with millions of connections worldwide. The company supports multiple technologies, globally, including GSM, CDMA and satellite, and covers all vertical markets, including healthcare, fleet, asset tracking, utilities, and environmental control.

Company Credentials KORE has been in operation since 2002, effectively since the birth of M2M. The company highlights five key areas where it excels. Coverage: KORE supports GSM and CDMA families of technologies, including relationships with eight MNOs, as well as satellite, where it has two partners. Pricing: through scale KORE can secure attractive prices from carriers, and it also offers an in-house flexible billing system. Connectivity management: KORE has an award-winning connectivity management platform in PRiSMPro. Scalability: The core of the KORE value proposition is that with a single connection, a single platform, and a single application program interface (API) you gain access to global connectivity, including

satellite, making it easy for customers to scale to millions of devices. Ease of doing business: KORE can get a customer up and running in just two days, compared to weeks for typical operators, and the company also provides full application customisation and 24x7 engineer support.

Key Differentiation KORE’s key differentiation is that it provides a multitechnology global solution, something that mobile network operators cannot match. It is big enough for large clients to be comfortable doing business, but nimble and flexible enough to be responsive to customer needs.

Competitive Pressures KORE identifies three key challenges in M2M over the next few years: coping with the growth in connections, handling globalisation, and dealing with the rapid increase in data volumes. The company believes that competition in the M2M market will focus on areas such as global coverage, flexible pricing, scalability and ease of doing business, as noted above.

Company Summary

Key Differentiation

Orga Systems is a leading software vendor for real-time charging and billing solutions. Worldwide 40+ telecommunications providers, energy suppliers, car manufacturers, automotive and logistics companies rely on Orga Systems and achieve reduced OpEx, real time-to-market, short-termed return on investment and beneficial access to new value chains and profitable M2M revenue streams.

Orga Systems’ single convergent platform integrates M2M services and products into its clients’ IT processes and value chains. Its industry offerings are equipped with high-end technology for maximum performance and extreme scalability and these help service providers to effectively support, sell, provision, rate, and bill for M2M services. Best-in-class capabilities for product and service tariffs and price configuration provide maximum charging flexibility. Its common rating and billing platform with real-time policy control and vertical business process support is uniquely positioned to enable CSPs to accelerate profitable and crossvertical M2M business.

Company Credentials Orga Systems provides operators with a flexible, scalable, realtime business support system (BSS) portfolio that can handle the demands of M2M services. Yesterday’s BSS platforms, which provide offline batch-oriented provisioning and rating capabilities, won’t be sufficient for the real-time transaction scenarios implicit in M2M. Operators need nimble real-time BSS platforms, offering superior operational performance allowing operators to create innovative new business models, maximise the value of network resources, gain deeper subscriber and network insights, and simplify and personalise the subscriber experience.

Competitive Pressures Operators realise they must be prepared for an increase in transaction volumes as well as innovative billing models associated with M2M, such as tiered pricing or value-based billing. Obviously, optimal BSS environments will play a key role in allowing operators to take full advantage of next generation services, especially in terms of enterprise customers and ensuring security, helping with policy and device management and dealing with integration of next gen as well as legacy systems.

M2M Now

COMPANY PROFILE

Company Summary

Key Differentiation

Telit offers an extensive portfolio of high quality cellular, shortrange, and positioning (GNSS) modules, available in over 80 countries. It also offers Software as a Service (SaaS)structured value added services from m2mAIR and comprehensive solutions for module, SIM (subscriber identity module), and subscription management. Telit provides customer support and design-in assistance from its sales and support offices, global distributor network of wireless experts and 30+ accredited Competence Centres.

Telit provides a comprehensive product portfolio, an excellent value proposition, commercial flexibility and great technical support. It also claims unrivalled continuity of business, focusing exclusively on M2M since 2002. Since then it has never been bankrupt or changed ownership and has maintained a constant offering with huge commitment on products and form factors. For example, it acquired Motorola’s M2M business three years ago and continues to offer their entire range of devices.

Company Credentials

Competitive Pressures

Telit provides a one-stop-shop for M2M. This encompasses all relevant device technologies including GSM through LTE, CDMA though EV-DO, Wireless M-Bus, ZigBee, proprietary mesh and many more. This is supported by the m2mAIR cloud platform (created from acquisitions of GlobalConnect, CrossBridge Solutions and ILS Technologies) and mobile connectivity through a strategic arrangement with Telefonica. Telit has outpaced major competitors courtesy of technology and business innovations such as the ball-grid-array (BGA) module, backward compatibility through the “Family” and “Unified-Form-Factor” concepts, and superior technical support.

Telit sees the concept of IoE/IoT (Internet of Everything / Things) becoming much more universal, although it expects steady growth rather than revolutions and ‘killer apps’. Telit clearly sees a huge opportunity in automotive: In December 2013 it signed an agreement to acquire NXP’s automotive module business, pending regulatory approvals. Telit anticipates that a few of the laggards in the module industry will fall away, leaving a small number of expert firms plus the challenge from Asian vendors.

Company Summary

devices, and installation. Some of this is achieved via partners, but Wyless aims to be an end-to-end service provider for M2M. Through this, and an increased focus on adjacent opportunities such as business continuity, Wyless is moving outside the core of M2M. The result is that it is increasingly securing larger more complex contracts.

Wyless is the global leader in end-to-end managed services for the M2M and Internet of Things marketplace. It builds products and provides professional services that enable leading enterprise partners, mobile network operators (MNOs) and distribution channels to more easily deploy embedded cellular products and services, anywhere in the world.

Company Credentials Wyless has been in the M2M business for over 10 years and has more than one million SIMs (subscriber identity modules) under management. It offers global M2M solutions through extensive relationships with a large number of MNOs. By early 2014 it expects to have 20 MNO partners, a figure that will probably pass 25 by year end.

Key Differentiation Wyless has adopted an end-to-end, semi-agnostic, multi-layer business model. “End-to-end” refers to the provision of things like multi-MNO support, equipment lifecycle management,

M2M Now

Competitive Pressures One key trend affecting the M2M market is the increasing proliferation of broadband: More M2M will require high bandwidth and generate higher network ARPUs (average revenues per user). Partially as a result, M2M customers will increasingly demand a local MNO in every market to ensure affordability and reliability, requiring service providers to support a multi-domestic strategy. Over time Wyless anticipates an evolution of the market from a multitude of different players across all aspects of the value chain to just a few end-to-end solution providers. It has recently made an acquisition (including TM Data in Brazil) to strengthen its position and it will undoubtedly keep its eyes open for additional opportunities.

M2M MARKETS

The author, Jim Dunlap, is CEO of Cycle30

INDUSTRY INSIGHT: The rising tide of M2M in 2014 I don’t care who you are. M2M is changing your business today faster than an FC Barcelona striker on goal. As we gather for Mobile World Congress in this great city, the world of wireless turns its focus to Barcelona to learn what new mobile developments, ideas and standards will be discussed that will affect much of the world’s population in the coming years. I offer you a few thoughts in 2014 for your M2M business.

We’ve all heard of the 50 billion connected devices by 2020. We’ve been warned of the day when every man, woman and child will wear multiple chipsets around the clock – devices that measure, scan, monitor, communicate and even compute – all requiring advanced machine-tomachine networks, support systems and associated business models. Many of us “in the industry” have been hurrying around in the last few years, trying to plan for the M2M eruption like islanders anticipating a

tsunami several miles off shore. In that way, many of us have been talking, thinking, planning, and some executing their M2M strategy – each with a sense of impending dread, working to ensure our solutions hit the market before the great “M2M tidal wave” crashes on our beach and we are either saved or swamped by our preparations ahead of time. Here’s the surprise. The M2M revolution is not a tsunami. It’s a sneaker tide. Growing up in Alaska, I used to walk in the long sandy bays called silt fields at the end of the Cook Inlet. We could walk for miles in boots in the soft sand. But the wise elders would always keep an eye on the tide, watching as it slowly ebbed or rose each minute. Losing track of time and the tide could leave the lone beach walker stranded on a sandy bar, with water on all sides, as the silt turned to quicksand and took an unknowing person under. ▼

1. M2M is approaching like a rising tide, not a tidal wave Do you remember when you began seriously paying attention to machine-to-machine (M2M) services in the course of your business? Perhaps it was later that you heard of the “Internet of Things” and even later made it a priority to get ahead of the curve in leading your organisation into the M2M future.

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This is the M2M reality today. M2M isn’t going to appear in our world with a catalyst product launch the way touchscreen smartphones did after the iPhone. M2M is already here in many sectors, and connected devices are growing in number, like a steady but enormous tide. Perhaps even virally like a pandemic from which there is no escape. By the time most realise it’s here, it will be far too late to react or pivot strategies. The advantage will go to companies who have built tight platforms or partnered with the right solutions. This means far more than having a vertically integrated asset tracking system with a dashboard for 60,000 devices. It goes beyond a single blood-sugar diagnosis module that wirelessly connects to the doctor’s electronic analysis tool. It means architecting solutions that help your business adapt to nearly any new market opportunity that appears. It means planning the hardware, software, firmware, use cases, dashboards, as well as the activation, usage, provisioning, billing, compliance, monitoring, and regulatory/legal controls that will be required to deliver a seamless M2M service in tomorrow’s landscape. Be ready. Not just for your solution to enter the market. Be ready also for all of the ancillary services and systems that will be needed to connect your solution to all the potential customers, partners and vendors and realise revenue for each step in that chain. 2. Mobile has the M2M lead, but not exclusivity The mobile device revolution has already happened, and is perhaps still happening in parts of Asia and Africa. Smart companies like Samsung, Apple and Nokia are still developing new markets in these parts of the world. But the next chapter of mobile evolution is ahead of us, as the smart-home-andconnected-devices market comes to play. While many of us have carried smartphones since they debuted in the mid 2000s, they are just the tip of the iceberg. Forget whether your data plan carries 3GB or 5GB of data per month, or you’re still paying as you go. Until just recently, smartphones seemed to be reserved for a premium class of mobile network operator customers – those who could pay for the devices as well as a hefty prepaid/postpaid data plan and service contract. Today, smartphones are less and less expensive, and they can be purchased for a few dollars in corner stores. And now the connected devices ecosystem has come alive – in freight, medicine, transit, security and commerce. Before you realise it, just like a rising tide, thousands of household devices from baby monitors to bathtubs will have advanced M2M functionality embedded within. Which networks will actually handle these devices? Everyone wants a piece of the action. But who will actually monitor the

M2M Now

usage, the controls, the customer communications? Advancing the capability and integration of mobile is vital to maintaining the early lead in M2M over fixed facilities communications operators. Even cable operators worldwide are realising the potential of the bandwidth required for those 50,000,000,000 devices all connecting at the same time. At the moment, cable operators are seeming to add M2M functions to their offering – not just security and home automation as they did traditionally, but medical devices as well. Anywhere fixed telco operators can increase their value with new devices in their service portfolio, they will. 3. Integration is the key to scalable M2M platforms Talk to many people privately on the floor at Mobile World Congress and you’ll learn integration is harder than it looks. So many companies have built great devices, great networks, perhaps fantastic dashboards and monitoring platforms to add value to customers. But at scale, how will these perform? How can we ensure each of these operates seamlessly around the world without setting up roaming agreements with each and every wireless partner? Or with complex logistics systems underpinning each one? How will we ensure fast, reliable inventory management, device diagnostics, provisioning, usage rating, and business intelligence? The answer is partnerships. Not casual partnerships. Tightly integrated and trusted partners that deeply understand your business, who work to ensure your success before their own. The approach must be simple. Each player in the partnership must be focused on a goal of creating the best customer experience possible and work back from this. This will often mean doing the legwork to drive value in each solution, manage back office complexity and create brilliant simplicity for the end customer. Companies that understand and plan for each of these principles in 2014 will surge ahead of competition in their quest for business value, especially in the M2M space. Don’t be surprised this year to see key players pivot their strategy and focus on new markets and partnerships. Be aware of the steady growth of M2M in all markets and industries. Recognise the inherent advantages of mobile networks in the M2M movement and capitalise on them, but do not take them for granted. Fixed network operators are quickly adapting and building networks for the internet of things. And finally, remember to include your partners in your strategy for M2M dominance. The rising tide of M2M will carry us all together, if we each leverage our strengths and learn to rely on trusted partnerships. Just as in that beautiful game, the striker may score the goal, but it is the team that wins the match.

SECURE M2M

Managing the machines: Why the eUICC is the right choice for M2M security M2M deployments in a variety of vertical markets around the world are already giving rise to a fragmented ecosystem, says Bruno Basquin, chair of the eUICC Working Group, SIMalliance. Standardisation must come into sharp focus in 2014 to ensure that security and interoperability challenges are overcome and the industryâ&#x20AC;&#x2122;s continued growth is safeguarded.

Bruno Basquin, SIMalliance

That said, there are many new factors that distinguish M2M applications from conventional mobile consumer services. The distributed nature of M2M terminals, many of which are in hard to reach locations, make them vulnerable to external threats and attacks. Volume is another key consideration. Many M2M applications use millions of unattended terminals, indeed most M2M markets are characterised by large scale deployments. As a result, the lifecycles of both M2M equipment and their installed applications have to be much longer than those associated with other consumer applications. Ongoing management and maintenance of both hardware and software is, therefore, essential to preserve their longevity, yet it remains challenging for M2M service providers to maintain and upgrade both the terminal and the applications they are running. Many M2M services also require the very highest levels of security in order to perform their desired functions.

M2M Now Jargon Buster eUICC = embedded Universal Integrated Circuit Card SE = Secure Element

The M2M ecosystem is far more complex than that needed to deliver consumer services. M2M deployments are characterised by new business models and tend to involve a greater number of stakeholders. In many cases reliability of service has to be guaranteed contractually between ecosystem actors and the service provider. As such, all actors in the supply chain have to agree on and adhere to the highest levels of security, service quality and reliability. Considering that M2M technology holds such promise for automotive, smart metering, vending,

eHealth/mHealth, vehicle sharing schemes and more, the biggest question facing the ecosystem is this: How can an open and reliable ecosystem, which supports remote programmability and automated device and application security management, be developed?

Standardised ecosystem The answer lies in the development of a standardised ecosystem capable of remotely and automatically managing device and application security. The processes and management capabilities implemented by the ecosystem must offer the appropriate levels of security and reliability. This can be readily achieved through the use of the secure element (SE) and its associated remote management infrastructure. Put simply, an SE is a dedicated hardware component with specialised software, and is capable of delivering both remote programmability and the highest levels of application security. A secure element is essential when delivering highly secure applications via mobile networks. For this reason, SIMalliance supports the idea that SEs which are permanently embedded within M2M equipment, together with their associated remote management infrastructure, are key enablers of M2M market growth. All SEs provide a safe execution environment whatever their form factor, but the embedded Universal Integrated Circuit Card (eUICC) is particularly appropriate for an M2M environment. The eUICC is by far the most widely utilised M2M SE form factor globally. It is based on UICC technology and is globally established as a tamper-resistant security platform that enables secure and reliable access to cellular networks. The eUICC is also a proven application platform that provides interactivity and connectivity to the applications it carries.

Proven security The billions of UICCs which have been deployed

â&#x2013;ź

The potential for new machine-to-machine communications (M2M) applications is almost limitless. Better still, given that the market is not restricted by human population, it also has no obvious saturation point. The numbers are staggering: Technavio analysts forecast the global M2M market to grow by approximately 26% from 2012 to 2016, while the GSMA predicts that mobile connected devices will reach the 12 billion mark in 2020.

March 2014

“A tried and tested secure application platform which is universally supported, remotely programmable and deployable on a mass scale, today.” Bruno Basquin, SIMalliance globally by mobile networks operators (MNOs) over the years testify to the technology’s interoperability and security levels. As a secure application platform, the eUICC addresses a host of requirements specific to the M2M environment. It is a permanently integrated version of the UICC, meaning it cannot be stolen or removed without destroying its host device. It offers a supremely secure application environment and also supports tried and tested remote programmability. From a functionality perspective, the eUICC extends the features of the most advanced UICCs and applies them specifically to the M2M environment. An eUICC can offer: • Capability to store several Network Access Applications (NAAs) to allow a seamless adaptation to GSM, UMTS, CDMA and even LTE networks • Secure storage of network access credentials, authentication algorithms and customer specific data and configuration details • Multi-application capability to store value added applications, in addition to those that are commonly used in the GSM world, and • Standardised, highly secure over-the-air (OTA) updates of credentials, applications and data. Crucially, the eUICC offers a significant operational benefit when applied to the M2M sector: subscription operations can be undertaken remotely. ‘Subscription operations’ refer to the management and maintenance of the details of individual subscriptions to a mobile network. The UICC identifies a subscriber to a digital mobile service and details the special services the subscriber has elected to use. Since the eUICC has a dual role, as a subscription manager and as an application platform, it offers service providers, MNOs and their partners secure remote management capability for their eUICC-based value added services. As the lifecycle of an application is usually far shorter than that of its host terminal – many of which can last for up to 20 years in the M2M sector – service management capabilities, enabled by remote management, are essential to support new, or many iterations

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of, applications that may evolve over the terminal’s lifecycle.

Remote management Thanks to its remote subscription management capabilities, the eUICC can also offer advantages related to industrial product lifecycles in M2M. Equipment may sit in warehouses for long periods of time before being shipped to their final location and connected to an MNO; this enables devices and terminals to be mass produced even though they may be destined for deployment in different countries. The geographical destination of an M2M device (and subsequently the connecting MNO) is not always known at the time of manufacture. The need for remote provisioning has been heightened by this growing requirement for the late configuration of M2M terminals (when the UICC/eUICC is personalised after it is shipped). There is also an increasing requirement for more sophisticated modules containing eUICCs, which have the ability to comply with multiple and changing regulatory environments, connectivity and service providers. Recognising the benefits of the eUICC SE form factor in M2M applications, the GSMA has recently published its ‘Remote Provisioning Architecture for Embedded UICC’ technical specification, which will greatly help to drive consistent industry-wide utilisation of the eUICC in 2014 and beyond. While there are instances where an alternative form of SE may be viable, when a secure application does not require a cellular subscription, for example, these instances are few and far between relative to the extent and diversity of the market for M2M. Indeed, so fast is the pace of global M2M uptake that industry stakeholders must take a pragmatic approach to security and interoperability if they are to capitalise on the opportunities in hand. This means opting for a tried and tested secure application platform which is universally supported, remotely programmable and deployable on a mass scale, today. With these considerations in mind, the eUICC stands head and shoulders above alternative form factors. For the foreseeable future, there is simply no viable substitute.

OPINION: SECURE M2M

Right-sizing M2M security: The best protection is security tailored to your application As the volume of M2M devices and data increases, so do the associated security risks. The question is, says Olivier Beaujard, what should enterprises using M2M and OEMs developing M2M solutions be doing right now to protect their applications and secure the data centre?

The author is Olivier Beaujard vice-president of Market Development at Sierra Wireless.

“Ultimately, too much security can be just as problematic as too little.” Olivier Beaujard, Sierra Wireless

The obvious answer may seem to be ‘everything they can’, but in practice the goal for an M2M application should not be to provide the ‘most’ security. It should be to provide the right level of security for that specific device and application. This is because the above question is more complicated than it may seem. The phrase ‘M2M application’ encompasses a full ecosystem that extends beyond the device itself, including the cellular network, M2M cloud management platform and back-end enterprise application, all of which have unique security considerations. Even on the M2M device itself, security is not straightforward. Most M2M devices don’t have a full operating system or enough processing power to support or run advanced security software. Is the answer then to build every M2M device with a full operating system? No, the smartest M2M security is that which is tailored for the specific application. To do this, one needs to understand three essential truths about security: • Ensuring the right level of security is always necessary: No enterprise would deploy a system that afforded free reign for attackers and no legitimate M2M vendor in the marketplace today would build one • No system can ever be 100% secure: Security must align with the expected lifetime of the solution. It should be secure enough for the threats faced today, but upgradable to defend against future threats • Security always means constraints: The more security a system employs, the higher the

costs to build and operate it, the more usability will suffer and the more restricted it will be in the features it can support. Ultimately, too much security can be just as problematic as too little. A secure M2M application must protect the transmission of private and confidential data. This involves data encryption and secure transmission technologies across multiple segments of the M2M application – between deployed devices, the M2M cloud management platform and the enterprise application. Moreover, securing M2M apps requires robust authentication and fault tolerance mechanisms that provide effective protection against malware and ensure resilience of the M2M ecosystem. Finally, to maintain security in a constantly evolving environment, enterprises and OEMs must be able to update M2M devices and applications quickly and remotely, across thousands or millions of deployed devices. Today the risk is relatively low, as M2M has not reached the kind of critical mass that attracts significant attention from hackers. That being said, M2M is very quickly growing, and given the widening scope of information being collected through M2M systems, ensuring it is properly secured is a key consideration in any implementation project. Any enterprise or OEM can achieve the ‘right’ level of security for its M2M application, both today and for the future. The key is to work with vendors that understand not just security, but have deep expertise and extensive field experience in M2M itself.

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M2M MARKET

The changing face of Wyless

INDUSTRY INSIGHT: Two major announcements pave the way for a new-look Wyless, with much enhanced capabilities in terms of people, geography and capabilities. This year promises to be a big one for Wyless. Two major developments – an acquisition and a new hire – promise a substantial makeover for the company as we kick off 2014. The first piece of news is that Wyless has announced the acquisition of 100% of Netherlands-based ASPIDER M2M. Headquartered near Amsterdam, ASPIDER M2M is active across the rest of the Benelux region, has established offices in Germany and is increasingly expanding its presence there. Wyless CEO, Dan McDuffie is understandably delighted with the deal. He quotes three main reasons why this makes sense for Wyless: “This deal strengthens the company’s position in continental Europe, it provides core network expertise into Wyless and brings a group of great people into the business, spearheaded by ASPIDER M2M managing director, Michel Zwijnenberg, who built the M2M business within parent company ASPIDER Holdings. ASPIDER’s Intelligent Network solutions also enables Wyless to serve worldwide SMEs in a prepaid Google style model.” As part of the acquisition, Jan Willem van Doorn, chairman of ASPIDER Holdings, who negotiated the deal with Wyless founder and chairman Chris Lowery, will be joining the Wyless Board of Directors.

Three key markets On the issue of geographical coverage, McDuffie quotes a triumvirate of markets upon which they will focus: North America, South America and Europe. Students of the M2M industry will know that Wyless started in Europe, specifically the UK, and has always maintained a presence there even though the US became the main growth driver for the organisation. The ASPIDER M2M acquisition re-establishes more of a balance between Europe and North America. As McDuffie comments, “Wyless was born in England, but we found our legs and our acceleration in the USA. We always felt that we should do Europe better. This puts us in the position of being the only player with a significant presence on both sides of the Atlantic.” This announcement comes on the heels of the October 2013 acquisition of Brazil’s TM Data, run by Sergio Souza, which provides the South American element. “If you look at just the

markets that Wyless will be present in through these deals,” added McDuffie, “the USA, Canada, the UK, Netherlands, Germany and Brazil together represent nearly 30% of the entire world’s GDP. If Wyless wins these markets we win the world.” Though the geographical complementarity is evident, what is perhaps not so obvious at first glance is the additional capabilities that ASPIDER M2M brings to the combined group. Specifically, this relates to core network elements: ASPIDER M2M runs its own Cisco and Oracle-based core network of GGSNs, HLRs and Intelligent Networks, allowing it to act as an MVNE for IoT. Most importantly, according to McDuffie, this core network capability has implications for how the group might support large multinationals: “For some customers, operator independence is important, particularly the larger Enterprises and Utilities. Wyless will complement its portfolio with an operator-independent solution that ASPIDER M2M has already deployed to customers like Philips and Stedin. It is also noticeable that the Wyless approach of providing end-to-end services, including the likes of multi-operator support and device lifecycle management will dovetail nicely with ASPIDER M2M’s approach of providing Core network based IoT Solutions. The final benefit for Wyless of the ASPIDER M2M acquisition is that it significantly increases the human capital at the company’s disposal.” This neatly brings us on to Wyless’s second major announcement, which is also related to people. This coming week they are announcing the addition of a new chief strategy officer in the form of Gilli Coston. This is certainly an eyecatching piece of news. Gilli brings a wealth of experience to Wyless. With 20 years at O2 and Telefonica, and more recently at CGI, she has an unrivalled high-level experience of the M2M business from both an operator and a solution provider perspective. Gilli will work closely alongside CEO McDuffie and the rest of the new and existing executive team in driving the global strategy, especially in Europe. The most immediate challenge for Wyless, and top of Gilli’s to-do list, is to ensure that the European operations come together kick-started by the ASPIDER acquisition. The strategies of the different organisations will need to be aligned. All this will need to be achieved while maintaining ▼

“The most immediate challenge for Wyless, and top of Gilli’s to-do list, is to ensure that the European operations come together kick-started by the ASPIDER acquisition.”

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“I am delighted to be joining Wyless. Our company significantly increases our partners’ capabilities to address the worlds of real and digital machines, connected and unconnected objects, in dynamic and exciting ways. Wyless is breaking free of comfort zones, and we understand the importance for our customers, our people and our partners in providing the global infrastructure for today's information society.” Gilli Coston

“I believe strongly in the emerging Internet of Things market. There will be a premium for the company being the first to claim leadership in this market and I want to be a part of that company. ASPIDER has a focus on offering core network-based solutions in the areas of operator independence, security and outsourced billing via its prepaid IN. Wyless has lately been focused on building more complete and complex end-to-end solutions around IoT deployments. Product-wise this is a perfect fit and together I believe that we can win the market with our Think Global Act Local approach.” Michel Zwijnenberg

"It's exciting to have become part of a company like Wyless that has already become a market leader, despite still being in relatively early stages. As the market continues to accelerate, Wyless will clearly continue to grab a major share of the addressable business and we will emerge as the global leader in IoT solutions.” Charles Kriete

“Wyless technology and experience along with TM Data’s market penetration in Latin America creates a solid and dynamic partner to quickly develop M2M or IoT projects during conception, roll-out and operation phases. The market for connected devices in Brazil and our surrounding countries is set to explode and we are gearing up to address it with scale and vision, and build value for our customers looking to expand here.” Sergio Souza

the significant momentum that both companies have, with growth rates exceeding 50% per annum. In this environment there is an increasing requirement for a highly motivated tactical senior manager to pull together these diverse elements while still maintaining that growth. Bringing Gilli on board clearly allows her to focus on managing the change within the organisation while allowing the existing senior management of both Wyless and ASPIDER to maintain focus on growing the business. On the back of these two announcements, 2014 promises a new look Wyless, with the addition of some familiar faces from the M2M industry, and a radical change in the way it does business. This

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started with the announcement of the addition of Charles Kriete from Tech Data/TD Mobility as senior VP of Sales, quickly followed by the acquisition of TM Data in Brazil and now with the announcement of ASPIDER M2M and the addition of Gilli Coston as chief strategy officer, Wyless has many reasons to be excited about the new direction of the company. The ASPIDER acquisition certainly lifts Wyless in terms of its scale of operation. McDuffie expects that by the end of 2014 Wyless will have overtaken its last remaining rivals to become the largest player in the world among its group of former data MVNOs. He says it also marks it out that the first leader in the new existing world of Internet of Things has emerged.

M2M Now Jargon Buster GGSN = Gateway General Support Node HLR = Home Location Register IoT = Internet of Things MVNE = Mobile Virtual Network Enabler SME = Small & Mediumsized Enterprises

AUTOMOTIVE

The Connected Car: How market research must flex to meet millennial demands I started a career as a tech writer 15 years ago, says Paul Hartley, which included predicting how the new era of ubiquitous, always-on connectivity would ultimately change our business and personal lives. As the technology bubble rose, we all predicted ever more incredible things and many were nothing more than hype. My favourite is the Internet Refrigerator, possibly the most oft-quoted example of an always-on digital life.

The author is Paul Hartley, a vice-president in the Communications Division of Market Strategies International. paul.hartley@ marketstrategies.com Manufacturers have tried to interest us in “smart fridges” since the 1990s

Market Strategies International is a research consultancy with expertise in communications, consumer/retail, energy, financial services, healthcare and technology.

The Smart Fridge bomb of the 1990s leads me to ponder: what are the hype examples of today that are destined to become ironic footnotes of tomorrow? A straw poll among colleagues quickly offered up a likely candidate in the form of the Connected Car. Imagine a car (so the story goes) that has

always-on wireless broadband, monitors its own health as well as that of its driver, communicates with key information sources (traffic, weather, even other cars), and is a hub of streaming entertainment for its passengers. Sounds great, but experience tells us that the mere availability of technology is no harbinger of success. The real question is this: will Connected Cars satisfy a genuine need and thereby stimulate ongoing consumer demand?

A new generation with new demands I’ve realised that I am the wrong person to predict the future of the Connected Car. That’s

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Imagine a refrigerator (so the story went) that monitors the food inside it, notifies you when you’re low on milk, and even orders your weekly groceries online. I first wrote about this concept back when “’dot com’ was still a fashionable term, and yet a decade and a half later, my refrigerator sits dumbly with a near-empty carton of sour milk inside.

March 2014

“Connected vehicle technology is rapidly becoming a key car-purchasing criterion.”

because I am part of Generation X. I recall clearly a time when there was no internet, a time when music resided on LPs, and a phone call outside of home required a quarter. Gen X snubbed Internet Refrigerators and is just as skeptical now about Connected Cars. But that doesn’t matter one bit because Millennials are the future of the auto industry, and their expectations are profoundly different. Consider these distinctly Millennial attributes: Internet Natives: This generation has grown up with the internet, believes wireless communication to be a ‘hygiene factor’, and sees interactive, data-driven experiences as a business and social necessity. Smartphone Junkies: Smartphones outnumber automobiles five to one for this group. Millennials’ smartphones already interact seamlessly with multiple other sources that they own or encounter each day. Content Cravers: Millennials have shown themselves to be rabid consumers of new content through new channels, given the right business model and delivery mechanism (witness the explosion of apps, streaming music, social media, etc.). Connected Commuters: The typical Millennial commute is highly interactive. The idea of “digital downtime” during commuting hours is inconceivable, making them far more open to Connected Car innovations such as personalised streaming music or voice-activated social media. Millennials will undoubtedly demand a Connected Car, but can Detroit deliver? By itself, it can’t. We can expect Connected Cars to create massive upheaval within the auto industry, leading to the entry of multiple new tech and telecom players forming

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unlikely partnerships with OEMs. We’ll see partnerships with wireless operators, software developers, content providers, etc. Once formed, these partnerships will set about developing entirely new business models and create completely new digital experiences for users. Imagine, for example, connectivity and content forming part of an auto lease.

Insight will drive connected car innovation Right now though, the potential players have many more questions than answers. Consequently, it’s a time in which consumer insight will play a critical role. Market research will need to flex along with the industry, going beyond just explaining ‘what’ the demand is, and providing substantive detail on ‘why’ and ‘how’. Automotive and tech companies alike are very good at answering the first question and stopping there. It’s no use knowing that (say) 80% of Millennials say they need a Connected Car, but not knowing why they do, or how they intend to use it. These deeper layers of insight are critical for the development of non-traditional players within their new business models. True insight will therefore be a blend of behavioural big data with vital qualitative and quantitative detail, ideally within a framework that facilitates ongoing refinement and a cycle of continuous improvement. Success will come to brands that can look beyond the tech hype to gain a detailed understanding of the way Millennials live — not just what they want, but why they want it, and how they will use it. Then rather than peddling mythical Internet Refrigerators, automakers and their new partners can respond creatively with products and services that stretch the boundaries of their existing business models to meet the demand.

M2M STRATEGIES

INDUSTRY INSIGHT: How to accelerate M2M success Unrealised potential for CSPs Hundreds of billions of dollars will flood the machine-tomachine (M2M) or Internet of Things (IoT) market in the coming years, according to leading analyst firms. The good news for communications service providers is that a meaningful percentage of those dollars will originate from the cellular sphere.

The author is Kfir Dan-Ari, M2M marketing director, Amdocs

Amdocs, the leading provider of customer experience systems and services, drew upon our M2M solutions, which are focused on providing a win-win outcome for service providers and the entire M2M ecosystem.

Connecting M2M puzzle pieces The M2M ecosystem is a complex and intricate puzzle. So it’s not surprising that leading communication service providers, who are striving to capitalise on the M2M opportunity, often adopt several strategies in parallel. They are constantly looking for the best approach to establish their proper place and secure their revenues. In many cases, service providers still limit themselves to the role of M2M connectivity providers. And some application service providers prefer to purchase only connectivity from communications service providers (CSPs), not recognising service providers’ capabilities in other areas. This is a problem from the CSP perspective, because studies show that connectivity leaves them with only a small fraction of the revenues that the M2M business generates.

Doing more with M2M In their traditional role as connectivity providers, CSPs sell wholesale connectivity to application service providers (ASPs). The ASPs then chase all the other players to obtain the right devices, apps, hosting, consulting, and system integration (SI) services they need. After all, every M2M service needs these components in one way or another. Why can’t communications service providers offer these common requirements to application service providers in order to save them future headaches?

They can – when we take a closer look, we find significant commonalities. Service providers are poised to take advantage of their strengths in delivering sophisticated services, while creating a great customer experience.

Six layers of sweet success Amdocs has developed its M2M Enablement Suite to help CSPs fully take advantage of the lucrative M2M/IoT market. The suite enables them to provide application service providers with all the necessary capabilities, to quickly and efficiently launch any M2M service. Amdocs’ world-leading subscription management solution resides at the core of the M2M Enablement Suite. It is able to support the most sophisticated and complex business models. These models include revenue sharing and bifurcated billing, to provide support for B2B and B2B2C (business-to-business-to-consumer). This means additional revenues for the CSP. This also means the application service provider cuts costs and is freed up to concentrate on its core business, while the service provider improves the network’s monetisation capabilities. The suite consists of six functional layers: 1. Subscription management – Amdocs’ M2Mfocused, real-time BSS/OSS platform, including business processes and best practices, supports various business models: B2B, B2C and B2B2C. It enables the partner to selfmanage their M2M operations to improve service provider profitability and onboard new M2M partners across any M2M vertical, in a matter of days 2. Device management – provides real-time device monitoring; support for device queries and configuration; device certification; and manages device firmware, through integration to Firmware Over The Air (FOTA) systems 3. Application enablement – provides M2M partners with a software development kit to support and enrich their M2M applications and provide open integration for partners’ IT stacks

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But huge numbers aren’t going to translate into huge profits for communications service providers, unless they can leverage their experience to bring real value to the M2M ecosystem. They are going to have to find a way to make M2M/IoT a significant growth engine and work closely with application service providers (ASPs) and other ecosystem enablers.

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Fig 1. Amdocs M2M Enablement Suite

4. Professional services – consulting and system integration services to support partner onboarding and integration, cross-vertical ecosystem operations and development 5. Big data and analytics – operationalisation of business intelligence and predictive insights from big data 6. Network connectivity – connectivity and policy enforcement capabilities that are tightly connected to the subscription management system

ASP

Bringing the pieces together

CSP

It’s not just communications service providers who will benefit from Amdocs’ suite. A solid M2M enablement platform will also allow M2M enablers, ASPs and vertical partners to benefit from: • Smoother operations • Predictable costs • Faster time to market, and • Better scalability and monetisation capabilities. A variety of M2M vertical vendors pre-integrated to the service provider’s enablement platform enriches the ecosystem and makes it even more exciting. This is why Amdocs has invested in partnering, and certifying, the leading vendors in the different verticals.

Better M2M monetisation Service providers can transform into a one-stop shop for their M2M partners, with the flexibility to provide each partner with exactly what they need, from simple IP connectivity to more complex partner and device management. Service providers will be able to: • Strengthen their core retail business – a combined M2M/retail offering and operation will enable support for complex engagement models, providing added value to subscribers (B2B2C) • Provide easy access to their other partners, creating a richer partner ecosystem and reducing ASPs’ efforts to find the right partners, which will result in a superior customer experience for end users • Offer analytics and value-added services on top of M2M services, generating new revenues and providing their customers with more value. Value is generated by enabling optimisation, cost reduction and process improvements.

Accelerating M2M success With the M2M industry landscape undergoing rapid change, service providers need an open and flexible approach to M2M, as new services are constantly being introduced that need to be supported through highly complex engagement and payment models. They also need to shift their mindset and internalise the notion that they are not selling an M2M service, but rather an M2M experience. To help accelerate M2M success, Amdocs developed a next generation wholesale offering.

Next generation (NG) of wholesale As the IoT market becomes more mature, and the need for enablement becomes more critical, CSPs would be wise to further leverage their existing assets even beyond enablement, which will benefit them and the entire M2M ecosystem. The Amdocs NG Wholesale platform integrates service providers’ M2M services with their partner management systems and MVNO platforms. This integration creates an opportunity to develop rich service bundles by combining M2M and communication services, while offering greater continuity of care for the end user through models that share responsibilities between the service provider and its M2M partners. An integrated NG Wholesale approach is cost-effective from an IT point of view, and it provides end users with a unified, realtime and enhanced customer experience. It also benefits ASPs, who will enjoy significant cost reduction, and improved customer experience and flexible and complex engagement models.

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{

Connected Health

Connected Home

Connected Car

Connected Fleet

Connected ???

Device Management Subscription Management Application Enablement Professional Services Big Data & Analytics Network Connectivity & Global Agreements

A dual-platform strategy As we meet CSPs worldwide we identified a growing trend: Customers with a dual-platform strategy. Many communications service providers are adopting an onpremise platform solution for their domestic M2M/IoT business that exists alongside a cloud-based, dedicated solution for their global M2M business. The rationale behind this trend is that in domestic M2M verticals, the CSPs need to adopt sophisticated business models that require high flexibility from the platforms. This flexibility is not available on cloud platforms. Moreover, as M2M volumes grow, service providers want to keep the cards closer to their chest, and manage the systems on their own. At the same time, international M2M verticals, that require global agreements, seem to be well served on cloud-based platforms, where flexibility is less of an issue, compared to the need to connect to other providers around the world. This is why many larger service providers have decided to go with an in-house or on-premise platform: to control the development path. They are looking for a vendor with guaranteed resources to undertake carrier-specific developments. Such an approach could offer the best of both cloud and on-premise, and enables service providers to enjoy a stable, scalable, cost-efficient and flexible system for the majority of their M2M activities. They can use the common cloud-based (more limited) solutions only where needed.

Amdocs to support AT&T’s connected car business As announced* at CES, AT&T has selected Amdocs as one of its M2M partners for the AT&T Drive Studio, a new centre to drive connected car innovation, and for its AT&T Drive platform. Amdocs was happy to expand its longstanding AT&T relationship into the emerging M2M market, with a focus on the connected vehicle market. Amdocs will enable AT&T to enhance its offering and customer experience by supporting sophisticated billing models, and thus enable richer customer experience to the drivers. The solution will leverage Amdocs’ strength in billing, in this innovative ecosystem led by AT&T. Connected cars is the biggest revenue generator of all cellular M2M verticals. Successful communication service providers can address the connected cars with far more than connectivity play, and the Amdocs suite can help CSPs take this step. Amdocs’ flexible billing and data monetisation solutions can support the new connected car billing models that we are likely to see, in which new in-car applications may need to allocate billing charges between the automaker, service provider, various third party partners, and the consumer — a great opportunity for service differentiation. CSPs can and should go beyond the role of connectivity reselling, by providing significant value to the ASP and to the end customer. This is the way to victory for service providers, as well as a win-win for the entire M2M ecosystem. * http://about.att.com/newsroom/connected_car.html

FLEET MANAGEMENT

The fleet management solution market for commercial vehicles consolidates Berg Insight is of the opinion that the fleet management solution market has entered a growth period that will last for several years to come. Individual markets may however suffer temporary setbacks, depending on the local economic developments.

Figure 1. Installed base of active fleet management units (EU27+2 countries and North America, 2012–2017) (in million units)

7.0 6.0 5.0 4.0 3.0 2.0

EU27+2

1.0

The author is Johan Fagerberg, CEO, Berg Insight

0 2012

“The industry remains overcrowded and further mergers and acquisitions are expected.” Johan Fagerberg, Berg Insight

2013

2014

2015

The number of fleet management systems in active use on the European market is forecast to grow at a compound annual growth rate of 16.0% from 3.05 million units at the end of 2012 to 6.40 million by 2017. The penetration rate in the total population of non-privately owned commercial vehicles is estimated to increase from 10.6% in 2012 to 21.1% in 2017. In North America, the number of fleet management systems in active use is expected to grow at a compound annual growth rate (CAGR) of 15.6% from 3.3 million units in 2012 to 6.8 million units by 2017. The penetration rate in the total population of non-privately owned commercial vehicles is estimated to increase from 11.7% in 2012 to 21.9% in 2017. The fleet management solution market constitutes surprisingly many local players – more than 400 companies in the two regions. A group of aftermarket solution providers has emerged as the leaders on the European fleet management market. Masternaut is ranked as the largest player overall in terms of installed base with close to 287,000 units deployed in September 2013,

2016

2017

mainly in France and the UK. TomTom Business Solutions was the fastest growing vendor also in 2012 and has now surpassed 300,000 subscribers. Digicore and Trimble have also joined the exclusive group of fleet management providers in Europe having more than 100,000 active devices in the field. Transics is number one in the heavy trucks segment with an estimated 80,000 active units installed. Other significant players include European companies such as Vehco, Navman Wireless, TRACKER and Trafficmaster and international players like Trimble from the US, Omnitracs from Asia and the South African telematics providers DigiCore and MiX Telematics. Trimble and Omnitracs are the two largest players in North America, with estimated installed bases of more than 300,000 active units in the region. Omnitracs’ solutions are targeted at heavy trucks, where the main competitors in North America include XRS and PeopleNet. Trimble, which previously mainly focused on service fleets,

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North America

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now also has a strong offering for the heavy truck segment following the acquisition of PeopleNet. Other actors focusing on service fleets include Fleetmatics, Verizon Networkfleet and NexTraq. Several actors also have a broader market scope, covering both light and heavy vehicles. Examples include Telogis, Teletrac, Geotab, Zonar Systems and Webtech Wireless.

OEM telematics All major truck manufacturers on the European market offer original equipment manufacturer (OEM) telematics solutions as a part of their product portfolio. Mercedes-Benz, Volvo and Scania launched their first products in the 1990s and were followed by MAN in 2000, Renault Trucks in 2004, DAF Trucks in 2006 and Iveco in 2008. The products are all supporting the FMS standard and can generally be deployed in mixed fleets, even if some functionality can be brand-specific. A major trend in the past two years has been the announcements of standard line fitment of fleet management solutions. Since the end of 2011, Scania has been rolling out the Scania Communicator as standard on all European markets and this includes a four-year basic service subscription. The new generation of the Actros trucks from Mercedes-Benz contains the FleetBoard vehicle computer as standard in all EU27 countries since October 2011. Volvo is going in the same direction, offering Dynafleet as standard in Europe. MAN TeleMatics is, since July 2012, standard on the new truck model TGX EfficientLine including a 4-month trial for the service. Most commercial vehicle manufacturers active in North America also offer OEM telematics solutions – either independently or in partnership with established FM providers – with examples such as Volvo Link and Ford Crew Chief on the US market. Hino Insight was announced in 2011, as was Virtual Technician for Daimler’s Freightliner and Western Star trucks. Paccar’s TruckerLink service was also introduced during the year. Navistar was one of the first manufacturers in the region to offer fleet telematics, but the solution was later discontinued. FM solutions from OEMs have not yet been particularly successful in North America, but are expected to increase in importance in the coming years.

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M&A activity As the fleet management solution market matures the consolidation trend to create larger global operations is obvious. A second wave of merger and acquisition (M&A) activities in Europe started in 2013. Danaher Corporation acquired Navman Wireless and Trafficmaster from Prairie Capital and Vector Capital respectively. TomTom made its second acquisition in the fleet management space when picking up Coordina headquartered in Spain. Qualcomm also announced the divestment of the Omnitracs operations in the US, Canada and South America to Vista Equity Partners in August 2013. Lyceum Capital acquired Isotrak from Saints Chamonix Private Equity in the same month. Later in September 2013, Oskando and Autolog merged and at the same time launched the new brand EcoFleet. The latest transaction in Europe was done when Qualcomm at the beginning of 2014 finally also divested the European arm of its fleet business to Astrata Group, a fleet management company headquartered in Singapore. In North America, the operator Verizon Communications acquired Hughes Telematics in 2012 which owns Networkfleet, thereby further extending its role in the telematics industry as an end-to-end solution provider. Trimble’s acquisition of PeopleNet in 2011 moreover created a major player in terms of active subscribers focusing on both service fleets and heavy trucking. Since then the company has acquired GEOTrac Systems, Logicway and TMW Systems in 2012 and ALK Technologies in 2013. Telogis has been a highly active player in terms of M&As, most recently acquiring the leading connected navigation provider Maptuit and the mobile resource and fleet management solution provider Navtrak in 2012. Other significant deals in recent times include CalAmp’s acquisition of Wireless Matrix and FleetCor’s acquisition of both NexTraq from Francisco Partners and Telenav’s Enterprise division. The industry, however, remains overcrowded and further mergers and acquisitions are expected in the coming years. Berg Insight anticipates a future scenario where the global fleet management market is dominated by a handful of providers with installed bases measured in millions.

M2M BUSINESS MODELS

INDUSTRY INSIGHT:

The author is Telit’s Yossi Moscovitz

The creation and deployment of robust, scalable business models AEP = Application Enablement Platform CDMA = Code Division Multiple Access EMC = Electromagnetic Compatibility GNSS = Global Navigation Satellite System GSM = Global System for Mobile communications LTE = Long-Term Evolution PCB = Printed Circuit Board RF = Radio Frequency SIM = Subscriber Identity Module TCO = Total Cost of Ownership WCDMA = Wideband CDMA

The five vertical sectors covered in this report indicate the proven ability of M2M technology to deliver tangible benefits to individuals, key sectors of the economy and society. It represents a very large footprint that encompasses diverse applications, but the great majority relies on robust, cost-effective connectivity. This article considers Telit’s product portfolio as well as the company’s value-added connectivity services. Modules were and will continue to be the foundation on which we built our reputation. They are the 24/7 beating heart of every solution and our unmatched portfolio. We cover all the bases: GSM, WCDMA and CDMA cellular, GNSS, LTE and short-range RF as well as combo modules. Moreover, Telit has pioneered a number

of leading-edge developments; for example, enabling modules to function as programmable operational environments. In addition, we have implemented a ‘family concept’ providing backwards compatibility and unified form factors. Modules underpin our operations. They are the

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most fundamental component for connecting devices in vertical markets like automotive & telematics, fleet & remote asset monitoring, smart utilities, mHealth & wellness, and smart cities. However, modules are only a means to an end, which is the creation and deployment of innovative, cost-effective solutions. Telit has focused 100% on the development and marketing of M2M communication solutions for more than 12 years. That is our core competence and during that time we have accumulated a massive knowledge base that is encapsulated in a comprehensive set of support services that operate both globally and regionally.

The advantage for solution providers is clear; one design can address different geographic markets because modules are interchangeable. When an application has been created the customer can realise a global solution simply by selecting the relevant cellular technology as well as frequency bands and data rate. This concept, which replicates the design for deployment on other networks, reduces the effort, time and costs associated with development and deployment. In total, the xE910 family has nine global and regional variants. Pin-topin compatibility is also provided for the GNSS modules and similar functionality is provided for the RF modules.

Value added services

M2M applications are technically demanding as well as being numerous and varied. Therefore, in order to ensure the timely delivery of robust solutions we work closely with customers at the design stage on selecting the optimum module, configuring and helping to design the hardware.

The traditional M2M value chain is based on verticals but the industry is moving towards horizontal, large-scale rollouts. However, when scaling up companies will often encounter inherent challenges that are not directly related to the application’s core functionality.

Support continues with advice on the application software. In addition, we can and usually do perform RF/EMC precertification tests at the application level. And, of course, support continues during the deployment phase and throughout the subscription lifecycle.

Telit’s m2mAIR offer addresses this intrinsic issue. It comprises an innovative value added services portfolio that includes outof-the-box connectivity, a unique suite of embedded module firmware clients and compatible cloud and backend services.

It’s a complete, rigorous review that’s carried out at the application level in order to detect possible errors before deployment starts. For example, we can verify the performances of the RF portion when the antenna is integrated on the board. This is normally followed by a routetracking test of the multi-layer PCB in order to avoid interference issues before manufacturing starts. The result is robust, optimal performance of the customer's solution plus a reduction in overall time-to-market.

Certification Obtaining certification is a time-consuming, expensive process requiring careful planning in the deployment of new solutions. And since it can represent a connectivity challenge, anything that can be done to speed up the process is important. That is why we offer a comprehensive set of RF/EMC pre-certification tests that are compliant with European and US norms. In the Trieste facility we perform RF/EMC pre-certification tests at the application level. This service provides a complete overview of the application's radio performance and speeds up the entire certification process. Tests are conducted in the anechoic chamber and they include: radiated spurious emissions; conducted spurious emissions; 2D antenna performance (radiated power and sensitivity); and an extensive set of EMC tests. Add it all up and the result is an unrivalled set of support services that leaves nothing to chance.

m2mAIR effectively fuses the first few links in the value chain. This enables bi-directional seamless access starting at the module and going all the way through to the back end servers and enterprise systems. The resulting solution enjoys a reduced TCO, enhanced cost control, plus streamlined troubleshooting and operations. On the mobile side the functionality includes life cycle management tools that address all aspects of SIM card deployment and a cloudbased module management system to remotely and proactively diagnose and troubleshoot network performance and other service metrics. With the module mobile connectivity addressed, Cloud - the m2mAIR application enablement platform (AEP) continues the reach into the cloud and from there into the enterprises’ systems that need to see and interact with it. These services enable applications and eliminate unnecessary layers in the information chain, linking any device to any application, enabling real-time information transfer, transaction logging, and bi-directional control. The combination of these two service areas allows application developers and solution providers to focus on their core competence, that is the design, development, and deployment of their business applications. m2mAIR takes care of complex logistic issues like global connectivity procurement, scalable subscription lifecycle management, efficient troubleshooting, transparent data acquisition, distributed real-time analytics, limitless scalability, back-end connectivity and rapid prototyping which are not part of their core skillset. That was a quick take on the key functionality of our m2mAIR offer.

Scalable solutions Solutions can scale in two ways: the first and most obvious way is numerical, that is to say, expand the initial device deployment; the second is to change the air interface in order to enter new geographic markets. This latter way is facilitated by the creation of module families such as the xE910, which employ a Unified Form Factor family, in other words the individual products are pin-to-pin compatible with each other. This particular family provides Telit's broadest range of cellular air interfaces and band combinations, making it a pillar of the concept that the company pioneered: we call it "design once and deploy globally".

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Conclusions Telit believes that when connectivity is seamless, when it is tightly integrated and easy to use, then M2M will be embedded, used and integrated everywhere. It will evolve into a powerful, managed services ecosystem that is truly pervasive. And like other leading edge developments, the benefits will become something that we take for granted. We are realising that objective via a comprehensive product portfolio, a unique set of support services, and game-changing developments such as m2mAIR.

SMART UTILITIES

Smart utility meters still have a long way to grow Utilities are currently considered to make up a large share of the global M2M market. Indeed, writes Jacob Pereira of IHS, the pace of communications integration into utility assets shows no sign of stopping, and actually appears to be accelerating in many regions of the world.

The author, Jacob Pereira, is Smart Utilities Infrastructure Analyst at IHS, specialising in utility meters, grid infrastructure, distribution automation and smart communications. He is a member of the IHS Smart Utilities Infrastructure team.

“Two state-owned electricity utilities in China … are installing tens of millions of meters with communications capabilities per year.” Jacob Pereira, IHS

Capacitor banks, voltage regulators, load-tap changers, grid sensors, and many other utility devices are more and more commonly fitted with sensors and communications capabilities in order to automate and improve data-gathering and analytics in view of this goal. However, the biggest market for M2M technologies in the utility sector has been, and will remain to be for the foreseeable future, in metering.

Embedded communications M2M Now Jargon Buster APAC = Asia-Pacific EMEA = Europe, Middle East, Africa EU = European Union

In fact, according to The World Market for Utility Meters – Industry Insights – 2013, a recently published research report from IHS (NYSE: IHS), a leading global data and market intelligence company, by 2017 more than one-third of all utility meters shipped annually around the world, including those used for electricity, water, and gas measurement, will have embedded communications capabilities. This represents an estimated growth in shipments from just over 100

million devices in 2013, to well over 130 million devices in 2017, more than a 30% total growth rate over the period. Of these meters, a large majority in 2013 were electricity meters, although this proportion is expected to shift significantly by the end of the decade as communications modules will increasingly be embedded into new gas and water meters or retrofitted onto existing meters in the field. This growth comes despite a marked slowdown in communicating meter sales in North American markets which until recently was considered the strongest global market for smart grid devices, including communicating meters. This shift is largely attributed to a market correction following the smart meter boom caused by the American Recovery and Reinvestment Act of 2009. The meter market is expected to recover in the coming years, although IHS predicts that it is unlikely to see that level of exponential growth again. Of the four major global regions (APAC, EMEA, Latin America, and North America) described in the study, North America was estimated to still have a majority of the global installed communicating meters in 2013, although its market’s downturn, paired with an upturn in other regions’ markets has caused IHS to forecast that it will be overtaken by other regions in the near future. ▼

Utilities are moving towards the goal of the ‘smart’ grid, a grid equipped with millions of sensors and communication endpoints which is capable of real-time monitoring and control of assets in order to increase efficiency and respond to outages and demand surges in near real-time. In the many regions where government leaders have become actively involved in the process, the change is developing even more rapidly.

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Global Installed Base of Utility Meters 90%

12.00%

70%

10.00%

60%

8.00%

50% 40%

6.00%

30%

4.00%

20% 2.00% 2017

2016

2015

2013

2014

10% 2012

% of Total Installed Base

80%

Years

Source: IHS

Basic Meters

Communicating Meters

0.00%

Growth Line

Growth drivers In a complex global market, there are two outstanding drivers for the high level of growth projected. First is the expansive rollout of communicating meters by the two state-owned electricity utilities in China, the State Grid Corporation of China (SGCC) and China Southern Power Grid, which are installing tens of millions of meters with communications capabilities per year to help upgrade and expand their electricity infrastructure. Although relatively simple and inexpensive when compared to most communicating meters installed by Western utilities, these devices are still expected to vastly increase the communications capability of the Chinese grid. Since the APAC region is by far the largest region for metering, and since a majority of APAC’s meters are being installed in China, this overhaul is set to significantly change the overall global installed metering landscape. The second important driver for the growth in communicating meters is the pending smart meter installation deadline set forth by the EU. This is part of the EU’s 20/20/20 targets,

which will attempt to achieve a 20% reduction in greenhouse gas emissions, a 20% increase in the use of renewables for generation, and a 20% improvement in the EU’s energy efficiency by the year 2020. Although the programme has experienced a number of delays and setbacks, recent events have increased confidence in the timeline of their metering rollouts. The important markets of the UK and France have clarified the steps they will be taking in implementing the process, for example. Another important market, Germany, has announced that it will not be actively participating in full meter rollouts which has put a damper on some projections, but has at least added more certainty for the future. Perhaps even more interestingly, gas meters are also included in these directives, potentially making the EMEA region the strongest market for advanced gas meter technologies in the coming years. In fact, IHS predicts that gas meters with embedded communications expected to grow exponentially there, the EMEA region will see a six-fold increase in annual shipments within the next five years. Admittedly, this increase comes from a relatively small starting point, but it is indicative of the overall trend.

‘Mature’ market All-in-all, although many in the M2M community might consider the utility meter market one of the more ‘mature’ and ‘saturated’ M2M markets out there, it still has a very strong potential for growth. Not including the myriad of other assets on the grid which can be (and are being) automated, there are still billions of metering endpoints which have not yet been replaced or retrofitted with communications capabilities. In fact, IHS estimates that in 2017, more than 2.2 billion of the world’s installed utility meters will still rely on some form of manual reading and/or billing. This should be enough to keep manufacturers and communications providers for utility companies busy for the foreseeable future.

IHS (NYSE: IHS) is a leading source of information, insight and analytics in critical areas that shape today’s business landscape. Headquartered in Englewood, Colorado, USA, IHS employs more than 6,000 people in 31 countries around the world. IMS Research, recently acquired by IHS, is a leading supplier of market research and consultancy to over 2,500 clients worldwide. Established in the UK in 1989, IMS Research now has dedicated analyst teams focused on the factory automation, automotive, communications, computer, consumer, display, financial & ID, LED & lighting, medical, power & energy, solar PV, smart grid and security markets.

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SMART METERING

“Leveraging the experiences of other verticals is a must to prepare for growing and changing business needs.” Olaf Vieselmann, Orga Systems

INDUSTRY INSIGHT:

The utility industry is on the verge of technological change with new technologies, new domains and new business models being introduced around smart metering and smart grid roll-outs. In addition regulatory, environmental and commercial factors have created a significant shift in focus in a once-monopolistic utility industry. Market deregulation and growing competition are among the challenging factors for utilities that drive the adoption of a more transparent and customer-centric approach to improve customer intimacy.

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The author is Olaf Vieselmann of Orga Systems

Creating true business value from smart grid roll-outs

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Learning from other industries Scalability is imperative in a growing ecosystem that is strongly influenced by today’s digital economy. Telecom is a perfect example of how an industry can grow from a few thousands of early adopting customers to multi millions of end customers demanding everything to be at their fingertips when they need it. So, leveraging the experiences of other verticals is a must to prepare for growing and changing business needs. This is even more important as customers today expect ways to manage things similarly across different areas of their digital life. It is a tremendous shift in paradigm for utilities to grow into a more IT-driven architecture that consolidates and virtualises systems and infrastructure but also a ‘must’ to find fast, flexible, and efficient ways of addressing continuously changing business challenges.

Adding billing capabilities to new business models The utility industry is traditionally a hardware-driven business characterised by long investment cycles for generation sites and network infrastructure. Well proven technology decisions have to limit the risk that comes with huge investments in these areas. Future-proof architectures and systems are imperative to this. In a centralised system design for smart metering using a thin meter infrastructure, the business model is no longer a question of hardware and meters. A new level of flexibility can be achieved when keeping tariffs, configurations and pricing centralised and close to the IT back office. Customers expect changes to their products and services to be applied instantly, and maybe with the option to go back after a trial period. Being able to offer this kind of customer orientation fuels acceptance of new offers and cross-promotions of add-on services. Next to the customer experience side of flexible tariffs, this opens up new options for utilities to introduce an enhanced revenue collection and to reduce bad debt. All tariffs available for postpaid customers can be continued in a prepaid service. This is an additional and essential element in changing the market perception of prepaid energy. Prepaid becomes a true payment option with budget control instead of a penalty for bad debt customers. All this is based on a lean thin meter infrastructure that limits investment and improves the return on investment.

Engaging with customers in time

Lean smart metering with centralised pricing and billing Upgrading or replacing existing customer information systems are long-term investments and business-critical projects incorporating technological and financial risks. Implementing a smart rating and flexible pricing engine, closely integrated with customer communication channels, helps to boost the business agility without renewing the whole billing and CIS landscape. There is no need to decide on hardware technology today that will sit on customer side for decades. Managing all intelligence centrally means keeping one system up to date instead of thousands or millions of meters installed on site and being delivered by various vendors. Following an IT-based, centralised architecture will prepare utility companies for the efficient use of this technology in pilots and start-up phases as well as in a full scale system operation. Adding a flexible vending and payment infrastructure closes the loop at the important sales touch points. Especially for prepaid scenarios, add-on solutions require only a limited number of interfaces and interaction points to the existing infrastructure and keep event-driven processing separated from the established billing and back end environment. A deeper integration of systems remains an optional future step.

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Utilities are urgently looking for a valid business case when rolling out the smart grid and AMI (Advanced Metering Infrastructure). The true potential an intelligent smart grid can deliver is closing the loop to customers as the basis for budget control, more dynamic tariffs, and new services, bundles and promotions. Showing customers actual and timely data is a must to get connected. To create a positive energy experience consumption data and cost transparency must be linked to customer behaviour. Being instantly informed via mobile devices, a web portal or a home display is what attracts people’s attention. It is about talking the customers’ language! The question is how utility companies can transform their current technologydriven organisation into a customer-centric business that is able to meet customers’ expectations. Customers need to see the benefits. But is a small statistic on my bill which has been sent to me weeks after the usage took place a real benefit? Customers need relevant and understandable information instantly delivered that gives them the opportunity to react. Energy is not as appealing as Facebook or Twitter. In order to target customers, instant information enhanced by recommendations and predictions are essential. On top of this, engagement with customers is not a one-way street. A two-way communication with customers is giving them the possibility to interact and react to changing tariffs, special promotions or low balance warnings in case they are in a prepaid model. It is about the possibility of opting in, choosing a tariff or refilling a prepaid account. Full support of vending via several channels is a must for closing the loop of billing, engagement and the ability to interact successfully.

SMART CITIES

More detailed information is available at: www.smartsantander.eu

Alun Lewis, is a freelance telecoms writer

Santander takes the first steps to being a truly integrated Smart City With any new and fast-developing technology area, definitions and future growth paths often get blurred as everyone sees things from their own often narrowly-focused perspectives. As Alun Lewis reports from Santander, Spain, this is critical in our space where concepts like the ‘Internet of Things’ or ‘Smart Cities’ often mean different things to different people.

EU = European Union KPI = Key Performance Indicator

The first stages of a three-year, EU-funded project in the northern Spanish city of Santander have recently been completed with the support of University of Santander, Telefonica Digital, NEC, IBM and other companies and urban service providers. What is more, the project looks like providing an invaluable blueprint for the future of the diverse players working together in this new environment. Starting in September 2010, the €6 million project has involved 25 organisations across eight EU counties – and Australia – bringing together technologists, academics, government experts and others as part of the EU’s Future Internet initiative to turn Santander into a living experimental laboratory. The strategic backdrop to this project for the EU concerns the continent’s long-term future in strategic innovation.

EU backs next wave of digital growth Having ‘won the game’ as far as the success of the European-originated GSM technology was concerned – but lost out to the US where the later wave of internet innovation and applications came from – the EU is keen to focus the continent’s resources on what it sees as the next wave of growth, the Smart City. What’s interesting about this vision, currently being turned into reality for the 180,000 or so citizens of Santander, is its sheer breadth and depth. While sensor, networking and IT issues are obviously being addressed, so too are all the relationship governance issues necessarily involved in providing services to citizens, often via third parties and public/private initiatives. ▼

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Santander, Spain

How exactly do you create an open, but secure, architectural framework and infrastructure that’s able to share ‘Big Data’ with all the different entities involved, support commercial relationships and contracts with the necessary service KPIs, and simultaneously try to encourage good hacker-type creativity amongst the newer generation of app and smartphone developers? On top of this, there are obvious issues to do with the inhabitants themselves, so there has also been a parallel emphasis in the project on demonstrating to citizens how Smart City concepts can improve their qualities of life, reduce energy consumption and pollution, and allow them to use their smartphones to participate in a two-way exchange of useful and time-critical data and information.

Wireless network in Santander So, where to start in describing Santander’s project? On the ground – or in some cases just below it – and deployed on and in buildings, buses and a range of infrastructure is a network of 12,000 sensors of different types. These cover approximately 35 square kilometres, reporting in through a variety of different short and long range wireless technologies. It’s planned to increase this sensor population in the city and to expand geographic coverage using sensors on buses to eventually cover around 5,300 square kilometres in the region. Six main application areas are being addressed: traffic management and parking; street lighting; waste disposal management; pollution monitoring; and parks and garden management.

Transport In traffic management and parking, a number of different approaches are being tried. Parking bays in side streets in the downtown area have been fitted with sub-surface geomagnetic sensors that can tell when a car or even a motorbike is occupying a space. This information, collated with other data from car parks, is then shared live with the population through a smartphone app and through dynamic street displays and direction signs at appropriate junctions to direct the driver or rider. Similarly, data from buses, streetside sensors and other sources is also used to track traffic jams and accidents in real time, supporting both rapid intervention and helping longer term urban planning.

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Citizens can also report potholes or other problems through their smartphones – and monitor the subsequent repair response. Work is also well advanced in integrating multiple transport options for travellers, taking real-time information feeds from trains, buses and ‘smart’ bicycles. This will enable them to suggest mixes of transport modes to suit the traveller’s preferences as well as avoid cancellations or breakdowns by switching to alternative transport.

Energy To help reduce energy consumption, lighting in streets and parks has also been connected, with lamps capable of being dimmed remotely in the absence of traffic or people or when there is a full moon and natural light is good enough. The lamps themselves are also able to automatically alert the appropriate authorities when a bulb fails and needs replacing. A similar approach to optimising urban assets is also being taken in the city’s parks and boulevards, where moisture sensors in the ground ensure that water and power aren’t wasted in irrigating unnecessarily.

Waste management Also about to start is a ‘smart’ approach to waste management, with litter bins and skips being equipped with sensors to alert the contractors when these need emptying. The plan here is to reduce unnecessary traffic on the city’s streets, and cut fuel and manpower costs.

Environment Finally, air quality, ozone and noise levels are being monitored across a number of parts of the city, through a network of fixed and mobile sensors. The intention here is to show how smart city concepts can be applied cost-effectively to meet EU guidelines and legal limits for these urban annoyances. While interesting and innovative, these must only be seen as functional smart city building blocks that then have to be integrated into the wider picture – and that’s certainly where the real challenges are going to come. Smart Santander seems to be well aware of these issues and is adopting a highly inclusive strategy to bring all these different skill sets, commercial interests and communities together into a harmonious whole. It’s well worth keeping an eye on – and a beautiful part of the world to visit for anyone planning a ‘research’ trip to see these things in action. PS. Smart tourism’s also in the master plan!

M2M STRATEGY

“Perhaps the most intriguing opportunity for global telemedicine is in supporting the growing trend towards ‘Medical Tourism’.”

The author is Alex Brisbourne, president and COO, KORE

INDUSTRY INSIGHT:

Global strategy for the growing M2M network It is necessary for companies to have a comprehensive global strategy for all aspects of their business in order to harness efficiencies, reduce costs and grow revenue – from supply chain to technology to business services.

In a world where remote connectivity is essential, the emergence and globalisation of the machineto-machine (M2M) network is a requirement. It is a necessity for business-driven M2M services to cross national boundaries in a seamless, costconscious manner. The demand is particularly

strong for any business that is built upon ensuring continuous tracking and management of mobile assets, anywhere on the globe. Through innovative technology developments, including satellite network services, M2M wireless connectivity is delivered across international borders, over land and sea. These networks, consisting of cellular, GPS, WiFi and RFID technologies, enable organisations to track products and even the status of their transport mode as they travel across the globe. ▼

Today’s globalisation trend is driving businesses and their initiatives forward. Companies that don’t have an international presence will not be able to stand up to their competitors who achieve economies of scale by expanding their global operations.

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However, as the need for more detailed insight into the status of these global devices increases, the connectivity required to deliver this knowledge must also evolve. Organisations must know the exact location and current status of a connected device or asset and they must also ensure that the device or asset that’s being monitored has not been tampered with. Depending on the type of cargo, there could be specific regulatory aspects to the tracking and reporting as well. The M2M applications and connected devices used to track these devices require a unique network of services and expertise.

While the emergence of these cellular networks has created a super-highway of M2M connectivity, that super-highway can come to a sudden halt when connected devices cross borders or network coverage areas. Factors such as roaming agreements, tariffs and other regulatory requirements can impact the performance, management and costs related to a connected device. For instance, no M2M application provider or end user wants to manage multiple carrier relationships or pay exorbitant roaming penalties each time their device crosses a line on a map.

The globalisation of M2M is applicable beyond the supply chain and logistics market. Medical devices for telehealth applications require constant communication with patients, regardless of the patient’s location. This makes network connection ubiquity a top requirement among telehealth and mHealth application solution providers.

Before going global with M2M, organisations should determine how much time and resources they are willing to invest in managing multiple carrier relationships, multinational tariffs and device troubleshooting. Partnering with a single, global M2M network provider can often alleviate a number of these tasks, freeing an organisation’s staff to focus on growing the business and not on calling a carrier in another country and time zone about a billing discrepancy.

Global connectivity options From near-field connectivity to cellular to satellite, the global M2M network can look different from one organisation or even one application to the next. When investigating global M2M connectivity options, organisations must determine their needs in relation to the application’s requirements and cost. The amount of data generated and passed by the application needs to be throttled up and down depending on the connectivity options that are available and economically feasible. It’s simply not cost-effective to mandate satellite connectivity and pass large data payloads when cellular or other more inexpensive methods are available. When looking at global connectivity options, organisations and application providers must look at where the device will be located throughout its lifecycle, the frequency in which it will need to communicate and the amount of data it is expected to transmit. If a device, such as those on an airplane, will be located 30-plus thousand feet above sea level, then an investment in satellite connectivity is likely required, along with cellular technologies for when the device is on the ground.

Looking at market applications Supply Chain Consistent and reliable M2M services are critical in the global supply chain, where a company needs to track a cargo shipment, or an item in a cargo bay, as it makes its way across continents and oceans, from the factory floor to the ultimate destination. This type of visibility into the global supply chain was not possible before M2M, as disparate systems tried to communicate with one another as products left one warehouse or port and entered another. It was often what happened between those supply chain stops that was the most critical to asset and goods tracking. By relying on a global M2M network to track the progress and status of goods in transit, organisations now have unprecedented control and security of the supply chain. Telemedicine In places like the US and continental Europe, telemedicine is largely about controlling costs, improving patient quality-oflife and, as a natural corollary, improving treatment outcomes.

In some use cases, a combination of cellular network connectivity and near-field communications (WiFi, RFID, etc.) may be operationally efficient and cost-effective. For instance, a wireless heart monitor that transmits patient data directly to a physician can connect to a home WiFi network and then seamlessly transition to cellular networks (either GSM and CDMA) when the patient leaves his or her home. Yet for some M2M devices, such as sensors in your refrigerator that tell you when you’re out of milk, a dedicated WiFi connection may be all you’ll ever need.

In developing regions, where cellular connectivity has become largely ubiquitous, telemedicine shines as a potent means simply to expand the reach of top flight healthcare, bringing skilled medical diagnosis, treatment and prevention capabilities to remote locations. Examples range from AIDS or hepatitis testing, to water management and direct physician interactions. These connections can even provide a bridge across communication barriers such as language and cultural differences.

By combining the power of cellular, satellite, RFID and WiFi connections, organisations can achieve global M2M visibility to reduce costs, improve productivity and run a more intelligent business. Once the device’s connectivity requirements based on its expected location have been determined, the choice of wireless options becomes a game of matching desired coverage and performance with price. This is just the beginning of going global with M2M communications.

Perhaps the most intriguing opportunity for global telemedicine is in supporting the growing trend towards “Medical Tourism”. Many First World patients are finding success going abroad for surgical procedures, whether elective or critical in nature. While counter-intuitive, certain pockets of the Third World offer extremely high quality, low cost surgical specialities. Telemedicine can help make this process more of a managed experience for patients and provide them with a psychological comfort level by connecting with these doctors both pre- and post-procedure. Leveraging global connection through M2M networks

Carrier relationships and billing One of the largest enablers of global M2M applications is the ubiquity and reliability of today’s cost-effective cellular networks. Both major cellular technologies, GSM and CDMA, provide reliable coverage at most points across the globe. M2M application providers and their customers can pick from a plethora of connectivity options, from 2G to 3G to LTE connectivity (although this will change a bit starting in 2017 with AT&T’s recent announcement that it will sunset its 2G network).

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When companies strategically consider connectivity requirements for their global M2M needs, organisations and application providers can guarantee that their M2M solutions will function as required anywhere in the world, delivering the desired bottom line business results. In order to do so, global connectivity with M2M needs to be simple, seamless and easily consumable for budget-minded organisations that are looking to improve operational efficiencies, drive incremental revenue streams and improve customer services.

MOBILE HEALTH

mHealth: Long-term outlook stable There are two things that are generally underestimated. The first is the length of time required for a technology to really take hold, and the second is the magnitude of the impact of technology when it does. As Anthony Cox writes, mHealth suits this maxim down to the ground.

“Healthcare is perhaps the most slowmoving M2M vertical, but one with enormous long-term potential.” Anthony Cox, Juniper Research

The author, Anthony Cox is an associate analyst with Juniper Research. He has over 10 years’ experience covering fixed, broadband and mobile telecommunications and has written extensively in the field. He was editorial director for Informa Telecom. Anthony holds a Masters in Business from the University of Greenwich and a BA Joint Honours in French and Hispanic Studies from University of Nottingham.

www.juniperresearch.com Only in the last few years has mobile-connected healthcare (mHealth) emerged as an ‘industry’ which generates real (though modest) revenues, although pervasive connectivity in healthcare hardware is still far from the norm.

Monitoring devices are central to all complex health services and the use of M2M in this sector involves linking devices which monitor patients’ vital signs to healthcare professionals, usually by portals and software platforms.

However, lower chipset and computing costs mean that the widespread use of mobile networks and devices in the healthcare sector is now around the corner. And eventually analysis of the ‘Big Data’ coming from connected healthcare devices will influence healthcare practices and everyday lives in ways that we cannot now foresee.

At its simplest, a monitoring device can be used to track weight or blood pressure, in a system which links to a smartphone or PC, using the smartphone as a hub. At its most complex, heart arrhythmias can be managed through a bespoke monitoring device which links through to a specialist medical establishment. It is only in this context where the system can be considered to

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Qualcomm has offered a $10m prize to create a Star Trek-style Tricorder (below) that scans for disease

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Fig 1. mHealth Hardware - Degrees of Complexity

Simple smartphone Attachment (Blood Pressure Cuff)

Smartphone Attachment / Mobile Medical Device

Chronic Disease Management Monitoring Device

Cardiac Outpatient Monitoring Device

Source: Juniper Research

be M2M. There are two principle M2M applications in the healthcare sector: Chronic Disease Management and Cardiac Outpatient Monitoring.

Big potential and big risks M2M’s use in the healthcare sector remains constrained by the time required for applications to be certified and long development cycles in the healthcare sector. Above all, the complexity and sensitivity of the healthcare use-case has constrained activity to date. Healthcare, therefore, is perhaps the most slow-moving M2M vertical, but one with enormous long-term potential. However, it has already had its casualties. Recently the mHealth pioneer, Healthrageous, ceased trading as an independent company (it was acquired by the insurance outfit Humana – financial details were not disclosed). The fact that its skilled management team could not deliver speaks volumes about the health, or otherwise, of the mHealth industry. Milestones in the company’s development include the launch of a smartphone app called h!Go in 2011, and trial projects with Blue Cross, Ford and the German pharmaceutical company, Boehringer Ingelheim. With backing by Boston-based Partners HealthCare, and US$12.5 million in funding over two rounds since 2010, Healthrageous looked as if it might make it. Unusually, the company’s founder and CEO, Rick Lee was frank in a piece written for the web-based editorial service on mHealth, MobiHealthNews. First, he said that the mHealth monitoring goal “was possibly as ambitious as boiling the ocean,” noting that there needs to be a multi-faceted approach that is so broad it is very difficult to execute. Secondly, he noted the challenges that come with early stage funding: “As soon as you take institutional money, the clock starts ticking,” he said, also noting that the search for a strategic partner in the form of an exit strategy should have taken place earlier. Lee also talked about regulatory naiveté and the importance of achieving software release deadlines, both of which had an impact on arriving at “the endgame situation that ensued”. Most importantly though, Lee remarked on the importance of entrepreneurial insight: Solving a problem that you have may not address a market need,” he said, adding that there have been more than 100 solutions created for those interested in the quantified self which make up 2- 8% of the population. Conversely, the chronic disease population, targeted by Healthrageous, consists of an addressable market of “more than 100 million adults [and it] has had very few solutions prepared specifically for them,” he said. “To succeed in today’s environment, you must be thinking about the unwell, where the money is.”

The app in combination with monitoring hardware has created the possibility to deliver services which range in complexity from simple (connected weight-scales) to complex (Connected diabetes management services). App-enabled fitness healthcare monitoring devices represent the majority of devices in the mHealth market. Selfadministered healthcare accessories may be used to keep a close eye on a medical situation by the purchaser of the device, but will usually do so outside the medical establishment. A typical use case would be to track weight changes over time through the use of a connected weight scale or to monitor fitness progress. Most of these devices are used by enthusiasts to monitor their fitness levels. App-enabled medical devices are usually more complex, advanced and medically sophisticated devices than fitness devices. Typically, such devices will have been created by companies that are developing specific mHealth ecosystems such as a remote patient monitoring system for chronic diseases or cardiac reasons, or concentrating on a specific medical use case, such as mobile ultrasound. These systems and devices will often require approval from medical bodies such as the US FDA. The most complex mHealth devices are bespoke devices created by companies such as Cardionet, eCardio, and LifeWatch to monitor cardiac outpatients. Other areas of healthcare are also benefiting. French company Mobisante, for example, has developed an FDA-approved mobile ultrasound device for the iPhone. ECG (Electrocardiogram) readers have also been developed.

Where is the mHealth heading? Anyone who has seen the film and TV series Star Trek will know about the Tricorder, a piece of equipment that looks a little like an early mobile phone which can diagnose and heal just about anything by using sophisticated remote diagnostic techniques. We may be nearer to the development of the Tricorder than we imagine. Qualcomm, has put up a $10 million prize for those wishing to emulate the functionality of the Tricorder with the Tricorder Xprize. Qualcomm has long been a key supporter of mHealth and is behind several mHealth innovations through its Qualcomm Life Fund. So the race is on to create a portable wireless device that monitors and diagnoses health conditions. And several teams are taking it extremely seriously. San Diego State University, for example, announced that in a year or so it will have a prototype tricorder device capable of scanning the body and detecting certain health issues.

Players and business models

Developments like Mobisante’s existing mobile ultrasound device should herald a new era of telemedicine where handheld devices can be used either in the field or in a hospital environment to avoid, for example, the need for patients to be wheeled around hospitals and plugged into expensive machines.

But it is not all gloom and doom. In recent years mHealth and mobile fitness have been embraced by network operators, M2M specialists and app developers in equal measure, particularly with the emergence of an ecosystem where smart wireless accessories link to an app on the smartphone.

It looks as if smart mHealth devices can have a role in cutting costs in the healthcare sector. And we all know how important that is in an era of ageing populations, higher incidence of chronic diseases and pressure on healthcare budgets.

M2M Now

C-LEVEL VIEW

Our children are going to come up with (M2M) things that we didn't even think of, and we're going to look back and say 'How did we live without that!' Kurt Busch, Lantronix

M2M Now

How to catch the ‘second wave’ of the internet How are companies benefiting from machine-to-machine communications (M2M) today? The editor, Jeremy Cowan, talks to Kurt Busch (pictured left), CEO of Lantronix, about return on investment (RoI), business improvements and roadblocks in the way of future growth.

Kurt Busch, Lantronix: The M2M market is much like how the networking market or even the internet market was in the early to mid ’90s. We had LAN solutions, and a few WAN solutions, but not every computer was connected. The Internet of Things (IoT) and M2M spaces are in the same place now. We’re at the infancy of the second wave of the internet; the first wave being people, and the next wave being machines. Companies in many different markets from industrial automation to healthcare are looking to benefit from M2M, and this has led, as you said, to a largely fragmented market. It’s only going to get more fragmented in the short term as more companies look to gain these benefits. The ecosystem is building out alliances and kind of a network of collaborators. But they haven't attained the scale needed to drive a consolidation or a reduction in fragmentation. There have been some standardised efforts but again, those are very early. M2M encompasses so many different machines and various network communication technologies, different protocols for different application needs, that all these combinations make it hard to reconcile into one standards effort. M2M Now: So, where does Lantronix fit in this picture?

M2M Now

KB: We’re looking at supplying smart edge M2M solutions, putting intelligence at the edge, very close to the device, and have these orchestrated by a specialised patrolling system. So you can add value to your M2M solution at the edge and not require all of the intelligence to be in a central solution. This becomes important as M2M gets bigger. Everyone’s talking about 50 billion connected machines, and if you want to make a smart decision and do something useful in your M2M network, it makes sense to have intelligence at the edge so you can make those decisions. We really focus on ease of use, manageability and the adoption of forward-looking technology. Many companies wanting to take advantage of M2M are not networking companies. You see security, industrial automation and healthcare companies whose expertise is not in networking. By working with Lantronix, we enable them to take advantage of an IoT product line. M2M Now: How are companies leveraging M2M technologies today? Are we really seeing the return on investment or business improvements that have been touted, or is this still years away for B2B customers? KB: The biggest benefit is on the business side for M2M. There's definitely some applications that are being deployed today that we see good, positive RoI. The first is avoidance of the truck roll. You have a machine connected to the network, and previously you would send a technician out to ▼

M2M Now: Kurt, given that the machine-tomachine communications market is enormous and varied, are M2M ecosystems in the market still as fragmented as they were two to three years ago?

C-LEVEL VIEW

"M2M today allows you to track what your customers actually do, as opposed to what they say they do." Kurt Busch, Lantronix

If you’ve integrated that machine into an M2M network, then you can monitor that machine remotely. It’s easy to show a positive RoI by spending a few hundred dollars on connecting that machine into an M2M network to avoid a truck roll which is, at minimum, probably US$500 – depending on how remote that machine is. The second area is fault avoidance, or predictive maintenance. If a machine can report back its usage, and this can be how many times the machine cycled through its use, whether measuring voltage, current, temperature or humidity. We can make predictive models of failure for that machine. Once you have that, you can start doing predictive maintenance. This is important for any critical machine because if you have something that is used in a rescue or a critical application they only fail at the most inopportune times.

M2M Now Jargon Buster B2B = Business-toBusiness EoL = End of Life ERP = Enterprise Resource Planning LAN = Local Area Networks RoI = Return on Investment

By building a predictive maintenance schedule into those machines, by tracking how they're being used, you can justify the expense of the M2M network by avoiding a catastrophic failure in the field. If you move into healthcare you can see the same kind of benefit by monitoring patient habits, in tracking vital signs or medical usage. By doing that, you may avoid a catastrophic event in healthcare. The third point is that M2M can bring about better customer service and support. Here it’s about tracking your consumers’ usage patterns, and you can gain valuable marketing data. That can lead to either customising products to better

fit their needs or supplying better support. M2M technology today allows you to track what the customers actually do as opposed to what they say they do, so this can be very powerful for marketers. The third area that we see good RoI on M2M is in automated data recording or regulatory needs. We see parameters and they're made available for auditor capability purposes. Collecting data manually across the decentralised devices is a tedious effort, and not necessarily a truck roll, it could all be done in a single campus, but distributed enough that such automation makes this a very helpful process. Instead of sending someone to collect data every couple of hours you can have continuous data recording, and it’s very important for audit and traceability. We see a lot of this in healthcare. But just as we didn't imagine that social media, or the Internet of People, would become a musthave application when we were building out the internet, we don’t know now what the must-have application will be for the Internet of Things. As we build towards that 50 billion connected machines everyone’s talking about, someone’s going to come up with an application or a use case that we’ll all say to ourselves, “How did we live without that?” M2M Now: What advice do you give to companies beginning to scope out an M2M initiative? KB: We ask our customers, “What really is your goal? You’re looking for lower cost and perhaps it’s avoiding truck rolls. Or you’re trying to prevent some catastrophic failures. Are you trying to gain some market data, or are you ▼

check that machine. It could be anything from tank monitoring where it’s liquid or gas, to an oil rig, where it’s relatively expensive to send a technician to check.

M2M Now

trying to offer some new service that was previously impossible without some kind of connected devices?” Then we lead them through how their intended deployment integrates with their business processes today. It’s very important for companies that are doing M2M deployments to say, “Okay, this is what my deployment is and this is how it will integrate to my business processes today.” Then they need to look at what kind of deployment they're going to do. Do they want a boxed solution, that is very focused but maybe not so flexible for what they're looking for? Or are they looking for a customised solution, a collection of best-of-breed technologies? More often than not we see companies looking for customised solutions today, and there's a number of things that they should be considering. One of the most important is: what is going to be the lifetime of their M2M deployment? There is a price premium on industrial quality equipment, both hardware and software, that is made to last say five to 10 years, versus consumer quality equipment that may EoL relatively quickly. The company needs to decide how long their M2M deployment is going to be in place, and what kind of product lifecycles they can stomach. The next is really: how are they going to connect to their network? Is it going to be cellular, WiFi, Ethernet? That’s often determined by the location of the machine. Remote and mobile systems often go in with cellular. Fixed systems, you’re looking for Ethernet or WiFi applications. The last question is really: what’s the scope of their system? Are they looking for a small number of machines that they need to manage? One machine is relatively easy, hundreds or thousands of deployments is a much more complicated environment. Once you have hundreds of thousands of deployments, how do you upgrade them? Can you do upgrades in a safe manner? One of the big issues with M2M is: if I update a machine in the field, how can I be sure that I do not cause the firmware to break the system or make it unusable? These maturity and safety measures are key items that we advise companies to address. The other application that was really interesting was an industrial one with a machine that cycles many times every day. The original application was controlling that machine through WiFi, and that was supposed to be a novel way of controlling the machine. But the more we dug into it, it really got into predictive maintenance. The machine is used in rescue situations. So if I can track the voltage, the current, how many times this machine has cycled through its operation, then I can say, “Okay, it’s time to replace this guy as opposed to waiting for a catastrophic failure in the field.” That made me realise what the real power of M2M is, is that this intelligent predictive maintenance can bring about a change in how we do things. Often we talk about, “Oh, my car broke and I’m stranded.” But what if we could monitor all of the items inside a car and say, “Okay, well, this is going to fail in 20 hours, I’d better take it in and get it replaced”? M2M Now: What type of companies are paving the way for M2M adoption? KB: We’re seeing the most interest in M2M deployments in

M2M Now

resource monitoring, whether measuring gas or energy or keeping track of a machine such as an oil well or an energy distribution system. The other area is resource tracking in, say, trucking. It ranges the whole gambit of security and industrial automation, then finally healthcare. We see more and more machines in healthcare wanting to take advantage of M2M technologies, for telemedicine to predict a catastrophic event but also for auditing and traceability so we know what was going on with a patient or doctor. There are a number of regulations that are mandating off the implementation of M2M technology. M2M Now: Is that just in the States? KB: The most advanced mobile healthcare today is actually in Japan. We’re starting to see more of that in North America. There are more regulations rolling out that make it interesting to be able to track usage, especially as we move towards a wellness management system here in the US. Japan has an ageing population, and they're very technologically savvy. So there's a high amount of interest in telemedicine for the Japanese population. It is a main topic of discussion for most of my visits to Japan. M2M Now: Can smaller organisations successfully carve out a niche in M2M and the Internet of Things, or is this space likely to be dominated by the big gorillas? KB: Big companies obviously are going to have a strong place in M2M but, given the fragmentation and diversity of M2M applications, most today require some degree of customisation and are relatively small. That gives a good opportunity for small companies that specialise in specific niches to build out applications that are tailored towards smaller niches, while the larger companies can focus on large, enterprise level systems that perhaps can integrate to these smaller systems. So I see an ecosystem building out where large companies build enterprise solutions that would be the equivalent of, say, an ERP system today for intended deployment, and the small companies build the gateways into those larger M2M enterprise systems. There could be a very nice ecosystem in the M2M space. I use the same analogy of the ERP works today where you have large companies such as Oracle to build these ERP systems, and they have an ecosystem of smaller companies that integrate into it. Something also came up with a good friend of mine who’s a CTO for a large equipment manufacturer. What we concluded was if we build out this Internet of Things, the 50 billion+ machines that we keep talking about by 2020, we really should be looking forward to applications and use cases that we haven't even thought of today. I talked earlier about how things like social media have become the must-have application for the internet. But that’s not something we thought about a long time ago, and we’re going to be coming up with new and interesting applications as those 50 billion machines are connected not only to the network, but to each other. It’s likely our children that are going to come up with things that we didn't even think of, and we’re going to look back and say, “Gosh, how did we live without that?”