May 27, 2013
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.
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Posted by magnusmelander
January 23, 2012
The car industry was early adopter of M2M solutions. Wireless systems where the car called for assistance in case of an accident was introduced early on. Two major early initiatives where OnStar formed by GM together with EDS and Hughes already 1995 and Wireless Car started 1999 by Volvo, Telia and Ericsson. GM started to use an analog OnStar solution in Cadillac DeVille, Seville and Eldorado models from fall 1996 which created a lot of discussions and interest in both the car and telecom industries. The idea of connected cars was and still is a great idea and the connections would be used for a lot of great things. Initial reports talked about the rapidly increasing number of cars equipped with the service and entrepreneurs, car manufacturers and investors (including me) invested in this promising idea. But after a while, when car owners were supposed to pay for the service which typically was delivered for free at purchase, usage dropped significantly. Exciting visions surfaced and most was based on a 3G broadband connection to the car to download music and movies to the in-car entertainment systems, maps to the in-car navigation systems, etc. We do actually enjoy music, video and navigation in cars today but most often with our own devices brought to the car and the car manufacturers more focused on connectivity for these devices than in-car systems. It’s actually quite similar to the BYOD (bring your own device) development we see in enterprises today.
It has taken the industry 10-15 years to come up with cost efficient and attractive solutions for connected cars and today OnStar is a subsidiary of GM and Wireless Car is owned by the Volvo Group reporting into Volvo IT. OnStar claims more than 6M subscribers now and their primary network partners are Verizon (US), Bell Mobility (Canada) and China Telecom. They offer a range of services including emergency, vehicle diagnostics, directions and stolen vehicle tracking. Their plans are typically between 20 and 30 US$/m. Wireless Car of today describes themselves as an automotive telematics service provider (TSP) providing manufacturers of cars and commercial vehicles with customized telematics services to end customers world-wide. Among their reference customers are Volvo Cars, Volvo Trucks, Volvo Construction Equipment and BMW.
Looking at these two M2M-in-cars pioneers is interesting: they are both in business, they are integrated in GM and Volvo Group presumably for strategic reasons and they have both tried different technical solutions, business models and focus areas. But even though they started at more or less the same place, they ended up as quite different businesses. While Wireless Car is more of a generic telematics provider world-wide, OnStar remain focused on the cars with a quite rich and innovative portfolio (I love the stolen vehicle slow down feature) in targeted geographies.
Connecting vehicles to the Internet is required to address a whole range of issues including community wide ones like sustainability, safety and security as well as issues for owners and drivers of vehicles like cost of ownership, efficiency and convenience. The commercial vehicles are in most cases ahead of cars when it comes to being connected because of a combination of legislation and business benefits. The consumer fleet is not really connected yet due to a combination of difficulties to see good affordable deals and availability of good alternatives for some of the needs like music and navigation. But I think this is changing now since the solutions are becoming affordable, innovative use of the connectivity together with apps on smartphones and pads gives users very concrete advantages (i.e. turn on my heater) and last but not least government policymakers push for connected cars. The eCall project in EU for example aims at having a fully functional road assistance service in place across all EU countries by 2015 and connecting the cars is of course a requirement. The emergency data is automatically sent from the vehicle to a local emergency center and the aim is faster response to minimize death and injuries of people involved. And this is serious: according to CARE (EU road accidents database) some 35.000 people die and 1,5 million are injured in road accidents per annum in Europe (the leading cause of death in EU for people under 50 years old) to be compared with some 1.500 deaths in rail accidents and some 50 on an average in air accidents.
The transport industry is my personal favorite M2M market since it is huge and complex, the three M2M promises (efficiency, sustainability, safety/security) are all very relevant, the challenges are humongous and we have a common vision and framework in place with ITS.
1 Comment | M2M, Transportation | Tagged: B3CC, BYOD, car navigation systems, eCall, GM, Internet of Things, IoT, M2M, Machine-to-Machine, On Call, OnStar, Traffic, Transportation, Volvo, Wireless Car | Permalink
Posted by magnusmelander