Social Machinery

By 2020 more than 50 billion devices will be connected using broadband connections and every one of us will be surrounded by an average of 10 devices.

M2M is an acronyms for machine-to-machine technology that supports wired or wireless communication between devices. Usually, M2M is more like a set of businesses specifically involved in automating an application between remote devices and an enablement platform. M2M services could be used for automatic pull/ push of data or automatic processing of data.

Wireless M2M encompass a wide range of wireless network technologies including cellular networks, satellite networks, RFID, Wi-FI and Wimax among others.

Currently most of the wireless M2M market is related to RFID applications where Access control, Animal ID, Automobile immobilization and Electronic toll collection encompass  56% of the market according to strategy analytics.

Nevertheless this technology is under a complete revamp mainly driven by the wide spread of mobile broadband. New opportunities will arise in industries like Automotive, Home appliances and utitlies, generating opportunities for ICT stakeholders.

M2M has been there for several years, but currently wireless M2M is having a new life by the hand of mobile broadband explosion in most of the markets. As mobile broadband everywhere vision becomes a reality, any device that need an internet connection will have one.

Analysts estimate that roughly 1 Billion machines were produced globally  in 2008 for housing, transportation and industrial purposes. Approximately 30% is related to home appliances, 25% is on energy meters machinery, 20% on HVAC equipment, 15% on motor vehicles, 6% on assorted machinery and equipment and 4% on communication devices such as POS-terminals and security alarms.

Among these energy meters, automobiles and communication devices stand out as the key industries for wireless M2M in the coming 10 years.

Adoption of wireless M2M technology is still in a very embryonic stage accounting for just 1% percent of total cellular connections. Current bigger providers of M2M connectivity are Verizon, NTT DoCoMo, AT&T wireless and China Mobile with approximately 20 Million connections.

Market expectations

Automotive (private cars and fleet management) remains as  the largest industry and is expected to increase its share of the total wireless M2M market as telematics become a mass market features on cars. The most emblematic and largest project so far is this area, GM Onstar accounting for more than 10 Million connections. This service is an in-vehicle safety and security system for protecting families on the road by offering 24-hour access to expert advisors, connection to emergency assistance and Access to OnStar Hands-Free Calling.

Also smart metering and other utility industry applications will continue to grow, mainly driven by the tough challenges the energy industry is facing and regulator’s role on increasing energy consumption efficiency.

Finally in the POS Terminal and security alarm vertical, fixed to mobile substitution will drive the growth creating new opportunities for remote products and asset management solutions.

 Regional overview

Europe is seeing quite big adoption of wireless M2M technology across a wide range of vertical markets. The largest applications in terms of volume have been developed in response to local regulations to improve energy consumption per capita. In that sense, Sweden and Finland has been paving the way by implementing smart metering enabled via cellular networks. Other examples from Western Europe that worth mentioning is Germany’s national road toll system for trucks using GSM/GPS tracking and  Italian car insurance industry using telematics technology for reducing risk on their policies and tracking drivers patterns.

In the US, the main market development has occurred on the automotive industry. In that sense, GM OnStar accounts for most of the current wireless M2M market.

Asia-Pacific, Middle East and Africa are in a very early stage mainly driven by smart energy solutions.

What’s the outlook? Applications and verticals

M2M devices will account for a significant share of new mobile network connections on devloped markets in the coming years. The main reason is the high penetration of mobile subscriptions and the proliferation of devices. Today, Europeans have more than 14 devices at home waiting to be connected according to Ericsson consumer research.

Some operators will see M2M become their top category of mobile subscriptions. In that sense this could be a double-edged sword due to the fact that the M2M ARPU is very low (less than 5USD) compared to current subscribers ARPU. Therefore, this could reduce the overall blended ARPU if M2M connections become a relevant part of their business.

When it comes to applications,wireless M2M applications encompass several industry sector including car telematics, fleet management, smart metering, remote product and asset management, POS-terminals and security alarms. Some examples on key industries are:

1. Automotive industry

Telematics is quite broad term applied to a wide range of automotive IT solutions. Some of the services that can be mentioned are:

• Stolen vehicle recovery.  In the kind of service, a vehicle can automatically track position data to enable location to facilitate quick recovery.
• Automatic emergency response system.  For example, in the case of accident, the service can active a voice call or message including location of the car to the nearest emergency center.
• Car insurance telematics.  Owners can give their car insurance company access to their vehicle data for individual risk assessment, fraud prevention and other services.
• Fleet optimization. Real time monitoring of vehicle related data using GPS and in-vehicle data interfaces for reducing fuel consumption and maintenance costs.
• Fleet efficiency control. Remote monitoring of logistics transports and communication for improving the efficiency in order management, navigation, route optimization, vehicle and goods tracking, cargo monitoring and event triggered alerts.

2. Utility industry – Smart metering

Smart metering is a generic term for defining automated and intelligent metering services based on two-way data with the purpose of improving the energy consumption. Some of the M2M applications in this area are:

• Remote meter reading. Automated reading of utility consumption (electricity, gas, water) mainly for billing purposes.
• Real time consumption data. Real time meter reading help utility companies and consumer to detect frauds or other problems. Also enables more flexible pricing schemes.
• Dynamic demand allocation. Improve the overall efficiency of the energy system by reducing power consumption and redistributing loads from peak to off-peak hours.

Interesting case study – Vodafone Germany

What will happen if every motorist could see what the drivers ahead can see? In Munich, Germany, Ericsson and German automakers recently joined with Vodafone and local universities in a major research study that showed automobile crashes can be to a large part prevented, and traffic flow can be improved, if vehicles can communicate with one another over 3G/HSPA networks.

Using Vodafone’s mobile HSPA network and German vehicle manufacturer MAN Nutzfahrzeuge’s test grounds, the Cooperative Cars (CoCar) project simulated high-risk traffic situations to test applications that transmit time-critical information on traffic conditions between specially-equipped Daimler, MAN and Volkswagen vehicles.

The results of the two-and-a-half year study shows that cellular technologies such as mobile broadband can complement automobile communications systems with economically viable safety services. For example, when traffic jam lies just around the bend, the system automatically reports to the forthcoming vehicles – within less than half a second – that drivers ahead are drastically decelerating.

The CoCar project was initiated by Adaptive and Cooperative Technologies for Intelligent Traffic (Aktiv), a German government research initiative that includes Ericsson and 28 other partners from the automotive industry, as well as transportation authorities, and electronics and information and communication technologies (ICT) companies.

The study concluded that if deployed in Germany alone, automobile coordination solutions could save EUR 500 million per year in costs to society such as those resulting from medical care and property damage. Costs to consumers could be kept low using special tele-data tariff rates that could be bundled in a one-time service charge.