We have already gone from connectivity focus to focus on operational value: faster, cheaper, greener, safer and so on. Pain and results are easy to quantify and ROI calculations fairly straight forward. But the actual development of the solution requires a M2M Service Enabler to become affordable to develop and maintain. This is old news together with my mantra: “data is the gold of M2M“. But it is interesting to see that the service enablement space is heating up.
To start with, my Swedish M2M Service Enablement alliance just said welcome to member number 14 and all Swedish mobile operators but 3 are sponsors. The members in general report growing interest and business as customers are becoming educated and ready to move. Next week 12 Swedish M2M companies will join me going to Düsseldorf as bilateral partners to the M2M Summit where we have a common stand and speaker slots. That is more M2M service enablers then ever participating in an international M2M event arrangement I have done up until now.
Earlier this week Telit announced their acquisition of ILS Technologies for $8.5m cash and Telenor Connexion the purchase of technology and IPR from Iowa. Both ILS and Iowa are M2M Service Enablers! Increasing M&A activity in a segment is always a sign of market consolidation and a result of executives being convinced that they know where the industry is going and where they want to be. I expect many more M&A deals with M2M Service Enablers involved over the next year or two.
My key advise to M2M Service Enablers remain: focus, focus, focus. As the M2M business becomes glocal you will meet competition from a lot of places and players. But customers only see two or three players in any given industry or niche.
What more does it take to make M2M aka Internet of Things – everything or some things – happen big way? Let’s revisit the key components again. Data is the gold of M2M and the winners will be those who best utilize the data captured. Integration of data in existing business systems and processes is key to maximizing the value. Distribution of information through relevant channels and to terminals of users choice, using open api’s and gorgeous human-machine interaction is required for the applications to be used. Generic Device Control platforms on top of service providers networks together with Specialist Service Enablers are required to make it affordable to develop and maintain applications for clients of all types. The winners in Service Enablement will be the ones who understand the data they are dealing with and due to the huge amounts of industries and functions to be served Service Enablement will be a very fragmented part of our industry.
I see most of this happening now and our industry is definitely developing fast. We are in the teenage stage already with clients moving from thinking and talking to doing. From Powerpoint to pilots. There is absolutely no better way to understand what happens if one connects things than actually connecting some things to play around with. And there is no better way to go for that than to contact a Specialist Service Enabler who has most things ready. Connecting things and collecting the data in the cloud was good enough 1-2 years ago when technology was the key challenge. But today the challenges are mainly business centric why understanding the context of the data is key to succeed. This is why Specialist Service Enablers is the right choice when it is time for a pilot or proof of concept project.
But there is one major thing missing: Internet is global, ICT is a global business and Internet of Things will have to be global as well to prosper. Vendors and operators are working quite hard to make this happen which is great but it will take long time and they can’t make it themselves. Most organizations in the world are small to medium-sized and the software they use are mostly local or localized. Law, policies, culture, language, taxonomy, habits, taxation, religion, alphabet and friendship are examples of things that make people use local software. And it will continue to be like this for many many years. Since the data captured in M2M solutions should end up in business applications, maybe blended with data from public or commercial sources, we need what I call a glocal value chain. The global component is needed to drive economies of scale and enable international business etc. The local part is there to cope with the local requirements, to ensure proper integration in business systems and to engage integrators, consultants and developers locally bringing their clients with them.
Glocal value chains are always difficult to make work. But in our case, whatever we call our industry, I find it quite straight forward. The global part consists of operators (like Telenor Connexion) and their alliances (like GMA), Telecommunication vendors (like Ericsson and Telit) and international ICT vendors (like Cisco, SAP and Oracle who all have started to move now). Ever since Ericsson’s 50 Billion Devices statement this inside-out effort has been coming along quite well. The local part, i.e. developers, integrators, resellers and consultants, has in most parts not got going yet and therefore the small to medium businesses in general are in waiting mode or not even aware. Specialist Service Enablers constitute the missing link. Due to missing operator device connectivity services they have had to learn to deal with the connectivity layer directly. And the services they provide to customers in the industry they target is to a large degree useful across boarders. To me it’s clear: operator networks with device connectivity services together with Specialist Service Enablers interfacing to local developers and integrators is the way forward. The challenges are primarily commercial and practical, not technical. I am working with members of Swedish M2M Service Enablers in several projects along those lines and it looks very promising.
An M2M Industry in its teens is a reality. Decision makers are beginning to looking into threats and opportunities with M2M / IoT, and especially product owners are moving to real-life trials and action. I have still to come across a trial which didn’t bring unexpected results and insight! Therefore I keep on arguing that people should leave Excel and Powerpoint behind for a while, and make a trial. Just connect five-ten devices and see what comes out. My favorite example is Springworks who always work very thoroughly and connected their boss’ car and made it tweet to the employees.
If trials and action is the right approach at this stage of M2M, then the value of Service Enablement is even more obvious. If you can find yourself a company who already have built the basics of what you need (i.e. the connectivity part, a cloud based context-aware data service and distribution capabilities through apps, web and maybe other interfaces), who understand your application and are willing to help you getting going fast – just do it! For little money and effort you will get fantastic data in almost no time.
This is why I established Swedish M2M Service Enablers (SMSE) in March 2012. Our objectives are educating the market, promote Sweden as a good place to look for M2M Service Enablement and to promote the alliance members. As of yesterday we added two new members – Fridat and Vinnter – and now we are 12 members and 5 sponsors including TeliaSonera, Telenor Connexion, Tele2 and Net1.
Now when decision makers and product owners want to start doing things the M2M industry runs the risk of loosing them since it is very hard to know where to go to get help. Their existing IT and technology partners will not be able to help and quick small trials are not really what the operators and the consulting firms are keen on. This is where the specialized M2M Service Enablers come in. They will help the industry picking up the interest and turn it into small affordable good enough quality trials. We have presented this pitch at events, meetings and in articles internationally over the last 15 months and we sense momentum building up. Service Enablers from other countries want to join us (and we work with some informally) and we are increasingly asked to come for events and customer meetings, even bilateral efforts.
Swedish M2M Service Enablers (SMSE) is an informal small alliance of companies sharing the desire to be part of building the connected society, Internet of Things, Internet of Everything or whatever we want to call it. They all work really hard in a tough immature market and their creativity and determination to make it happen is fantastic. And there are similar fighters around the world of equal importance to the success of the industry. In my mind they are the key to a successful Internet of Things and I would welcome any initiative that would make life easier for them. Our next big effort is on Tuesday when we run M2M For Real™ 2013 in Stockholm, sharing eleven inspiring real-life M2M-cases with a large number of decision makers. Please keep your ideas, proposals and invitations coming!
Many of us are convinced that M2M, Internet of Things or whatever we want to call it, will happen big ways and will bring massive change to most industries. The part of it easiest to measure is things connected using a mobile subscription and it grows with some 30% per annum. Good growth but from small numbers. Since standard mobile subscriptions sometimes are used to connect things it’s hard to say exactly how many mobile M2M connections we have but it should be close to 150M. And an absolute majority of these are 2G – probably still around 90%.
150M subscriptions is a lot and annual growth 30% normally sends sales directors on President Club trips to Hawaii. But there are a two issues I would like bring attention to.
A big part of the subscriptions comes from connected meters. Connected meters are great and enables smart metering, smart grids, new services, etc. But most of the meters are connected due to political decisions and not business decisions. I called the combination of regulation and public stimulation packages for “M2M doping” at a speech at M2M+ in Milan earlier in May which triggered an interesting discussion. Personally I believe the political push for smart meters around the world is very good for the society and obviously for the M2M industry too. My point is that people in the M2M industry must remember that a big chunk of M2M business so far comes from artificial promotion and not genuine market demand. I believe meters would have become smart also without the doping but it would have taken much longer time. Let’s not fool ourselves!
The next wave of doping is eCall and similar public initiatives. The idea to save lives and minimize injuries due to car accidents by sending an SMS with position when the airbag explodes is over ten years old. Me and my colleagues at BrainHeart Capital invested in Wireless Car at the time together with Volvo, Telia and others, and OnStar was developed in parallel by GM and others in the US. It looked very promising until the owners of the connected cars with the airbag service had to start pay for the service themselves. Very few did and Wireless Car and OnStar, both still live and kicking, had to go after adjacent business opportunities. I’m not saying it’s wrong now when politicians are pushing this to the market, I just want to remind everyone in our industry that this is “doping” and not the result of genuine market forces. Interestingly enough the car industry is very active in Telematics again, with visions and plans often quite similar to the first wave of plans ten-fifteen years ago. But due to the technical approach chosen for eCall these plans might be separated from implementation of eCall. Transport is supposed to be the biggest segment for M2M 2013 and it will be interesting to see if the “built-in approach” will beat the “BYOD-approach” that won last time.
Mobile operators have taken the lead in promoting M2M. All operators want to exploit the expected growth of subscriptions but most if not all of them are uncertain of exactly which role to play. The fact that the M2M business still is a tiny fraction of the operator’s business together with the widespread uncertainty of which role to play could make operators become less aggressive and take on a more cautious “wait-and-see” approach. I definitely don’t vote in favor for such approach and suggest more concrete collaboration with selected partners to conquer industry by industry. Specialist service enablers are key to such efforts and in a perfect world operator device connectivity platforms should be delivered with an á la carte menu of specialist service enablers for different industries. But until that happens I have to continue introducing the members of Swedish M2M Service Enablers to mobile operators one by one.
Today’s initiatives are signs of a developing industry. Building blocks are put together into candidate platforms and architectures. As always most of them will fail over time but still it is an important part of growing up. Let’s look at a couple of recent M2M “teenager activities”:
- Telefónica and Telit cooperate in M2M Air, providing managed M2M services globally
- Etisalat group just joined KPN, NTT DOCOMO, Rogers Communications, SingTel, Telefonica, Telstra and VimpelCom in the M2M Multi-Operator Alliance
- Ericsson and SAP announced a partnership at MWC and talk about the M2M Eco-system
- Satellite operator Orbcomm acquired MobileNet who provides custom mobile data solutions for the heavy equipment and railroad industries
- Wipro and Axeda announced a strategic alliance to provide services and end-to-end solutions to help organizations connect with any asset, leverage machine data to enhance business processes and develop new innovative enterprise applications.
- TeliaSonera, France Telecom-Orange and Deutsche Telekom collaborate to increase the quality of service and interoperability for machine-to-machine (M2M) communications
- Claro Brazil joins a growing list of Jasper Wireless operator partners including AT&T, América Móvil, NTT DOCOMO, Telefónica, VimpelCom, KPN, SingTel, Etisalat, Telstra, Rogers, CSL and more
- Several operators including TeliaSonera, Swisscom, XL and have signed up with Ericsson to use DCP for improved M2M service delivery
- AT&T has several M2M initiatives including AT&T Control Center together with partners like Jasper Wireless, Axeda, Sierra Wireless and SensorLogic.
- Airbiquity and China Unicom are teaming up to provide telematics services for the Chinese automotive market
- Vodafone Vehicle Connect and Towers Watson’s ‘DriveAbility’ programme will accelerate the pace at which insurers can get new services to market, and at a competitive cost
So operator’s M2M business is growing quite rapidly but from small numbers. In a fairly well-developed M2M market like Sweden, M2M subscriptions are roughly 20% of all mobile subscriptions today. But still most of the market potential is untouched. Policy-driven markets like smart meters, big global markets like connected cars and consumer oriented stand-alone solutions are all fairly well addressed. But small business is big business also when it comes to M2M, and these companies are only addressed by independent Service Enablers, developers, integrators and turn-key solution providers. The alliances, partnerships and M&A activities aren’t reaching that far. A company connecting 100 of their “things” per year in maybe 25 countries across the globe is simply of no interest to any of the large players. The same goes for ,a company who want to develop a specific application to connect 25 of their “things” in a country, unless they are filthy rich.
Success in SME will come from successful platform support for specialist service enablers, developers, integrators and turn-key solution providers. That has little to do with technical issues and a lot to do with trust and business models. This has to be resolved before M2M will grow up.
M2M is not a solution. It is a way to segment the market: are we connecting a business, person or a thing to the Internet? The actual connection is of less importance to users – it is what it enables that makes sense. And the data created makes even more sense. We have seen the movie before – when people and business were connected to the Internet we started focusing on the connection. Then we discovered enormous benefits when processes became much more efficient. And finally innovative solutions and business models started change industries upside down. We entered the “as-a-service” era.
Over the last 18 months we have seen a clear change from the 50 billion devices approach to M2M towards a more user oriented approach where a range of M2M solutions are part of the ICT toolbox. If we compare to when Internet arrived we are leaving the connectivity period and enter the enabling user value era. We solve customer problems, we save money, we increase efficiency, we bring cost down or save energy. We create operational value. Previously everyone talked about smart meters and connected vehicles due to the large numbers involved. Now the addressed markets discussed are increasingly granular. The further we go down this road the more critical specialist service enablers become.
Last year the Connected Home pavilion at MWC in Barcelona was an important frequently visited showcase for M2M solutions and M2M was mentioned in most key notes. This year, the Connected City pavilion at MWC was a quite boring and less crowded but in every corner of the show and at every party people discussed what could be done with M2M solutions.
Mobile operators all try to figure out which role to play. Subscriptions alone seem less interesting. Adding device connectivity on top of the network helps deliver a better service. Going after large applications like smart meters, ebooks and connected cars is a no brainer. But how to win and deliver the second and third-tier of opportunities is the thousand dollar question of today. Small business is big business. I am convinced that those who can find a way to collaborate with the specialist service enablers will win. And such collaboration is not a matter of technical integration – it’s all about trust, business models and how to go to market. Our Swedish M2M Service Enablers alliance is always interested in efforts to answer the thousand dollar question of today.
M2M Service Enablement is the “magic” turning generic communication services into specific applications in an affordable and scalable way. Users need applications addressing their needs and the role of M2M Service Enablers is to make it easier, faster and cheaper to develop, implement and maintain such applications. But M2M Service Enablement is complex and requires communication and IT skills together with serious understanding of the industry or function to serve. Service Enablers need to be specialized since only the companies understanding the context of the data can deliver to the customers according to their expectations. “Connecting things and gather data in the cloud” is already too generic.
The Service Enablement market will be specialized and industry focused. But still it has to become international for M2M to really take off. Today the M2M Device Connectivity part of it is quite international but most Specialist Service Enablers are domestic. And while Device Connectivity solutions enable operators to deliver better and more granular services, Specialist Service Enablers are needed to bring new customers.
In order to try push Service Enablement to become international I started a small alliance called Swedish M2M Service Enablers a year ago. Today two new members joined and we are now ten companies. But we also announced four new sponsors of our initiative, are mobile operators. This gives us more weight and power which is needed to move the internationalization forward.
The purpose of the alliance is to educate the market, promote Sweden as a great place to go to for Service Enablement solutions and to promote the individual members abroad. We welcome invites to collaborate, discuss, speak and most importantly make business together. A number of such relationships are already in place but we can manage many more. Just keep them coming! Next opportunity is to ask for me in the Swedish Pavilion at Mobile World Congress, hall 7 (stand 7E80).
The key to rapid progress and growth in the M2M market is Service Enablement. It is the middle-ware, the magic, between generic connectivity and the specific applications the customers are asking for. The Service Enablement has to be robust, secure and efficient in order to make the solutions affordable to develop and maintain. It is also important for the communication provider’s M2M business to scale nicely. Beyond technical matters Service Enablement also has to cover practical issues like deployment and support.
There are three ways to deploy service enablement: in-house, by mobile operator or by independent service enablers. The in-house option is most often used when the data from the connected devices are business-critical which is typically the case when companies provide their product as services. The independent Service Enablers typically place their services on top of the connectivity and provide the entire customized solution for the customer and the devices connected. And mobile operators are increasingly adding a quite generic piece of Service Enablement on top of their connectivity services, dealing with things like alarms, device management, self-service portals and more granular invoicing. This is often referred to as Device Connectivity services which is a natural way for mobile operators to make their M2M offering richer and more competitive.
The Service Enablement part of the market has developed rapidly over the last year with several operators announcing agreements with primarily Jasper Wireless and Ericsson. But we also have a lot of independent Service Enablers active in the M2M market. These independents are most often small national players with scarce resources and difficulties to reach out. We started Swedish M2M Service Enablers (swedishm2m.se) last spring to join forces educating the market and promoting the members. Today we are eight members in the alliance with more in line. But still the operator offerings are too generic for most customers and the indies don’t have muscles enough why customer uptake remain quite slow.
I believe we have to be more granular when talking about Service Enablement in order to get to a solution which is good enough to develop and maintain specific customer applications on. In Beecham’s most recent SES study they identified 22 different service groups and 112 individual service elements within those so M2M Service Enablement is clearly a complex issue. It is already clear that independent Service Enablers must be at least industry focused. It is simply too easy today to just connect terminals and gather the data in the cloud. A competitive service need to understand the data and what to do with it. In other words, Service Enablers have to become Specialist Service Enablers to survive and that is rapidly happening now. With generic Device Connectivity solutions providing standardized APIs for the Specialist Service Enablers to use, the indies can focus all their resources on their speciality. And the operators with such solution in place would be far more attractive to customers and their software developers and integrators to work with. Provided I am right and the market will develop in this direction it might be a dead-end for operators to develop Device Connectivity in-house.