Utilities and M2M

December 27, 2011

Utilities normally come up first when talking M2M. Primarily electricity but also water and gas. It’s huge global businesses and infrastructures dealing with things that are closely related to the sustainability issues as well as safety and security, everyone on the planet including politicians are involved one way or another and on top it’s one of few areas where M2M solutions already have been used in large scale. Many utility companies have telecommunication business experience which makes them knowledgable buyers.

Smart Grid is the white paper or vision for how the electricity industry will cope with the new world where production, distribution and consumption of electricity is managed in real time all around the grid and where usage is optimized over time. The basic idea is to connect everything and add computing on top. If the smart grids happen we are looking at a new industry of “Internet size” in 30-50 years which has made many large corporations starting to dig there already.

Given the limitations of our globe it is obvious that we have to do something and I am convinced “connecting and computing” is a major part of it. But the scale of the project means it will take a lot of time, financing has to be sorted out, concepts and solutions have to be proven and so on, which explains why we still see primarily pilot projects and trials. And when it happens big way, most of it will be a game for large players with big projects and thin margins like most infrastructure business.

The first step towards the smart grids are connected electricity meters for automated meter reading (AMR) and we are in the middle of that huge roll out project right now. Global shipments of smart meters exceeded 100M 2011 and is estimated to be 250M by 2016 (ABI Research). EU wants 80% of the meters to be smart by 2020 and Italy and Sweden are already done. North America has already more than 50% meters connected (Berg Insight) after the American Recovery and Reinvestment Act (ARRA) which included US$ 43 Billion plus tax incentives for the energy sector. Also Asia is speeding up their efforts with Japan having the most advanced power grid monitoring systems in place, China announcing a five year AMI plan, Singapore working on their Intelligent Energy System and South Korea their Smart Grid Demonstration Project. Some 1,5B smart meters will be deployed during the next 10 years and meter manufacturers like Landis & Gyr, Sensus and Itron and communication module providers like Telit, Cinterion and Sierra Wireless are all working hard to capture this big business opportunity. But since the traffic per smart meter is tiny (probably less than half MB per year) it is not obvious that the smart meters is the salvation for network providers. A mix of different technologies is used to connect the meters to the central applications. Reportlinker estimates 38% of M2M connections in the utilities industry today to be cellular connections growing to 57% by 2020. MAN, including power line communications (PLC) and community WiFi, accounts for 53% today and is estimated to 28% by 2020.

Even though energy companies and governments are keen on rolling out smart electricity meters some consumers are not. Several US consumer groups like in Naperville, Illinois, are fighting the smart meter roll-outs in order to give the consumers the option to stay with the old meters. But more often consumer groups are pushing smart meters to put the consumers in control.

Replacing meters for electricity, water and gas with smart ones is only the beginning. Making the grids smarter will require a lot of relevant networks and IT systems to be made available. The grids are also part of the national critical infrastructure protection efforts why I believe we will see governments getting very much involved in how to build, operate and protect this infrastructure onwards.

Networks for M2M today

December 14, 2011

What networks are used for M2M applications today? We know a lot of applications use the fixed network (PSTN) but I lack data on that. I visited a friend with a quite small but modern grocery store the other day and beyond the main connection provided by headquarters for cash registers, computer systems, telephony etc, he has three separate PSTN lines to his shop: one for a video surveillance system, one for recycling machines and one for an alarm. When talking to a friend at a fixed line operator recently he mentioned that they have energy companies with water power plants with thousands of PSTN subscriptions for level gauges.

The 2G networks are by all means the most utilized mobile networks for M2M today. Beecham Research claims over 95% of M2M applications use 2G today. Good coverage, reasonable prices, limited capacity required, affordable modules and history explains this situation. And despite push for 3G from vendors and operators, not a lot is happening except for some specific applications. Vendors obviously want to sell new products and some operators want to re-use 2G spectrum or move users for other reasons. For people developing or operating an M2M solution a key question must be to understand when the time is right to change from 2G to 3G (if ever) and how to implement the change. A clear detailed roadmap could be a competitive edge for an operator. Interestingly enough some, primarily vendors and operators, already claim 4G is the way to go for M2M.

Most of Ericsson’s modules business ended up in ST-Ericsson some years ago and they re-entered in 2007 to provide cost effective broadband modules to be built into PCs. Quite silently they announced the end of their broadband modules business in December 1, 2011. The reason provided for the exit was: “our position on the market does not provide the scale we need to achieve the desired profitability”. I believe the actual size of the market for 3G modules also is part of the explanation. ABI claimed last summer: “USB configurations are outselling embedded modems by a ratio of more than three to one” and expected USB configurations to stay bigger until at least 2017.

3G has been around for some ten years now and in dense populated areas it is heavily utilized and 4G is starting to be deployed. But in rural areas most people relay on 2G (some even don’t have 2G) and in some developing countries they haven’t even started to deploy 3G yet. In the end of the day it is market requirements that decide when and to what extent networks will be built, upgraded and utilized, not operator or vendor desire. Still today most M2M applications don’t need much more than decent connectivity (I don’t include Pads, tablets and Smartphones in M2M), and for these to go 3G we need competitive coverage, prices and module prices compared to 2G.

The user is king in M2M too

December 7, 2011
Users are typically more interested in what things and services do or deliver than how they work. They want to get the work done. Still most products and services are too cumbersome to install and use and even if they help solve important problems people are reluctant to buy and use them. Coming from IBM to Apple at the time for the Mac made me see the difference between function centric and user centric development approaches.When there is a reasonable choice, users always chose the products they like. Some 3,5 billion people had a mobile phone when the iPhone was launched June 29 2007. It brought a completely new user experience to the market and despite many technical limitations and a high price it rapidly and fundamentally changed the mobile industry. Operators were chocked and Nokia lost. There has always been application developments for mobile phones but by enabling any and all developers to develop easy to install and use apps for millions of iPhone users and efficiently distribute and maintain them, enormous forces were released. All of a sudden a completely new way of solving small to big problems was at hand and a massive amount of apps were made available. Like when Internet took off many said “there is mainly useless garbage around”. Development started from the users. The users downloaded some 30B apps 2011 and the revenues are expected to be some 15B$ (Gartner). The users are kings.

The relevance of this for M2M is that whenever users will be involved, they must be able to use the device or devices of their choice to interact with the service. And the usability of the service needs to be in pair with what they are used to already. There will continue to be several terminal platforms and we have to support them all even if it is hard. Up until now most employers had standardized terminals but also that is changing rapidly. BYOD – Bring Your Own Device – is spreading like wildfire promoted by Cisco and others. In essence we can chose between developing apps for the different platforms, using HTML5 or using cross platform tools like MoSync, PhoneGap and Appcelerator. These choices are critical since the success of an M2M service depends on how they interact with their users.

Volvo cars released an iPhone and Android app in June 2011 which use their On Call cellular service to allow users to lock the car, find their car, look at the dashboard, start the parking heater and other useful things. I’m told the app is a roaring success and if so I believe the reason is that Volvo car owners immediately understand which problems it solves for them, how it works, they can use their device of choice and it works like anything else on that device. The entire On Call technology, system and networks are invisible to them. It just works. That is a good example of how I believe M2M solutions should interact with their users.

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