The 10 Million dollar M2M question is how to support thousands of business processes in tens of thousands of businesses in an efficient and scalable way. Beecham Research’s M2M Sector Map (see Interesting reading) makes the point of the fragmented and complex market very well. Mobile operators typically have few services with very many users while most potential users of M2M will have industry specific or even company specific needs in relatively small numbers. This is why most connected devices in cellular networks today are terminals in large volumes (typically electricity meters or eReaders) with small ARPU but also little work required by the operator per terminal deployed. The issue with this is that the electricity meters are rolled out primarily due to political decisions and one can argue that eReaders, iPads, etc are just big mobile phones and not really M2M solutions.
The other type of deployments today are primarily those where the value gained is big enough to pay for integration, software development, customization, etc. And these are “real” M2M solutions leveraging the value of connecting things and putting computing on top.
I come to think of the “bankruptcy gap” in between the only two viable business models over time: low price/low cost/high volumes and high price/great perceived value/customization. In the bankruptcy gap you will find average products with average prices. There is an obvious risk today to address the bulk of the very fragmented M2M market: quite an effort to provide what the customer want and price sensitiveness due to not big or clear enough benefits is a scary combination.
This looks similar to the bankruptcy gap but with one big difference: the driver putting businesses across industries into the bankruptcy gap is commoditization of products and services. But in the case of M2M we are in the early days! How can this be?
I think the situation is dangerous since it threatens to once again leave us with a great idea, a lot of energy and efforts, poor results and many investments and opportunities wasted. To me the key reasons why we face an artificial bankruptcy gap in M2M now are:
– Today it is too much effort to develop, integrate and support the M2M applications. Robust, efficient, large scale service delivery platforms are needed supporting standardized complete development stacks, different networks and numerous APIs.
Good news is that there is progress in these areas. Most mobile operators have or will deploy Service Enablement Services (SES) taking care of horizontal requirements on top of the connectivity. Module and equipment vendors, independent start-ups and others are working on similar often cloud based offerings and some of them support combinations of different connectivity technologies. Many standards development organizations have recognized the need for a common cost-efficient M2M service layer that can be embedded in different hardware and software to provide robust connectivity between terminals and the application servers. The ITU Focus Group on Machine-to-Machine Service Layer, initially focused on e-health, announced January 16 is a good example.
The best way to avoid another M2M flop is to ensure strong collaboration in establishing a rock solid common M2M service layer with standardized protocols and APIs and to always start working on real customer problems to avoid brilliant answers to questions we don’t know.