Artilium

Thursday, October 04, 2007

Engaging The Enterprise & Enabling M2M

In the aftermath of ESPN and Disney it’s easy to assume the success of an MVNO rests on its ability to better deliver services in tune with our lives and lifestyles. But there is also a huge opportunity in offering services that have nothing to do with people or personalization. This detailed blog post in Phone+ points out some rather clever companies are taking advantage of a much larger opportunity: connecting inanimate objects in a ubiquitous “Internet of Things.”

MNVOs such as Aeris Wireless and KORE Telematics have found growth in communication between the world’s billions of machine and objects. Alex Brisbourne, president and COO of MVNO KORE Telematics was quoted in the article as saying: “…If you look at the forecasts, we’ll have 200 million deployed in a few years — we’re seeing a 50 percent compound annual growth rate. This is the perfect time to get into this.”

Mobile operators and providers [Translated: MVNOs] can also cash in, and are expected to make about $2.5 billion in revenues from transmitting M2M data this year and $10 billion by 2008, according to the US-based research firm Focal Point Group.  While there are 6 billion potential mobile phone users in the world, bullish estimates put the number of machines that could be wirelessly connected at about 50 billion, with some analysts going as far as saying 500 billion.

Although some of these estimates may be wildly off the mark, there is no doubt that there is a huge market opportunity in providing machine-to-machine (M2M) communication and enabling machines to talk to each other and the people managing them. (The article reports the average ARPU for a single M2M connection is around $7 to $9 per month, according to the Yankee Group, but its volume and low overhead that makes it lucrative niche for MVNOs.) The spread of wireless technologies combined with the availability of low-cost embedded microprocessors, sensors and so-called “smart” RFID tags – labels that contain a computer chip and a minuscule antenna that transmits this information via a mobile network – allow companies unprecedented control over their key business processes, allowing new business models that place the MNVO at the heart of the always-on enterprise and its always-aware supply chain. Put another way, telemetry and supply chain management– where M2M allows objects to communicate information including where and how it was made, how it has been handled or stored, and when it is due for repair – are where much of the action is.

M2M communications and solutions are also core to the capabilities of companies operating in vertical industries as varied as building automation, fleet and asset management, retail and vending and insurance.  But the real industry to watch for growth and revenues is telematics. As cars become computers, uploading and downloading data relevant to the vehicle and its passengers, there’s clearly a need for pre-packaged M2M services tailored to support this exchange on the fly. And let’s not forget that telematics developments have steadily increased the electronic content of the car. BMW engineers estimate software accounts for 35 percent of the value of the vehicle.

This creates problems for the carmakers because now they have the burden of updating the electronics in the car throughout the vehicle’s lifecycle.  But it also creates a huge opportunity for MVNOs who can provide automotive manufacturers and suppliers with an integrated set of communications tools and services that enable software downloads and ease the evolution from mechanical to electronic content in new vehicles. Such services are mission critical in view of recent research shows that reveals a whopping 90 percent of all future vehicle innovation is driven by software. (Unsurprisingly, the same research blames software glitches for most car failures.) The promise of M2M was always compelling, but the complexity of the solutions has made it a tough market to target.

Today the jury is no longer out on the prospective role of M2M in the enterprise. Now its up to service providers and MVNOs to answer with well thought out solutions that use their existing network assets to deliver end-customers a suite of tailored communications services and the freedom to focus on the business imperative at hand.