M2M doping

May 27, 2013

freeimage-3771421-webMany 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.

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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.


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