Editor’s Note: Welcome to our weekly feature, Analyst Angle. We’ve collected a group of the industry’s leading analysts to give their outlook on the hot topics in the wireless industry.
The machine-to-machine sector started making waves in 2012, and is set to boom through 2013. The notion of 50 billion connected devices originally sounded optimistic, but anyone who walked the floor at this year’s Consumer Electronics Show could start to see the vision coming to fruition in any number of shipping connected products. These products joining the “Internet of things” ranged from simple sensors, cameras, smarthomes, wrist and wearable watches, smart city infrastructure, toys, cars, tablets, phones, computers and water sensors for the potted plant in your house.
But what most people don’t yet understand is the high-level view of M2M. M2M is a sector that can be cut vertically or horizontally. A vertical cut would look at, for example, M2M in the oil industry, where sensors monitor: pumps, wellheads, pipelines, refineries; and where actuators trigger control gates and switches. Here’s an industry that is already using extensive M2M installations, but the visibility is quite low from a Silicon Valley perspective. These solutions are generally provided by an oil industry vertical solutions provider. In contrast, a horizontal cut of M2M would focus on the technology, such as embedded 3G modems – and this is the kind of M2M that is most visible in Silicon Valley.
There’s a great interactive visual of the M2M sector provided by Beecham Research, which illustrates the varied verticals and horizontals, and shows the impressive size of the overall M2M opportunity.
My take-away from the Beecham chart is: If you think M2M is big, but you haven’t even considered all the vertical projects that are already underway, you’re only seeing the part of the iceberg that’s out of the water. And you’ll miss the biggest opportunities. Historically, when a technology emerges, it starts first in verticals that can use positive return on investment to justify the expensive “early adopter” investment. But when prices drop and technology matures, it hits the inflexion point, produces scale economies and mass market solutions are born. (Think mobile phones, GPS, computers, mobile e-mail, broadband, etc.) When the sector goes mass market, new winners emerge to provide baseline solutions that work horizontally across verticals. These new solutions attract new users, and also displace entrenched providers in the verticals. This inflexion point is where M2M is today.
M2M is at the inflexion point for a number of reasons. In effect, it capitalizes on some of the other biggest trends in technology:
–Mobile data networks, as provided by the cellular carriers, and their new pricing plans that acknowledge that not every device is a phone. Carriers today have entire divisions and VPs heading up M2M efforts. And these divisions are creating new, flexible connection business models that fit this new class of devices.
–Wi-Fi has advanced steadily over the past decade, and is now in over 61% of households. Other device makers can now assume that there will be Wi-Fi in homes that buy tech products, and thus can build products that connect. Also, Wi-Fi has improved in range and speed from “b” versions to the latest “ac.”
–Other connectivity interfaces have emerged which provide a reliable, standards-based connection medium for M2M. Z-Wave, Bluetooth, Zigbee, MoCa, HomePlug, Phoneline and HomePNA. While verticals solutions could always use proprietary connectivity technologies, for M2M to go mass market, we needed highly reliable, standard solutions.
–Cloud computing has changed the playing field for M2M. It offers connected devices … well, something to connect to. The cloud is always on, always ready to interact, can scale to store the data from the “Internet of things.” And the cloud can also provide the analytics, dashboards and user interfaces that make M2M useful. Cloud computing isn’t essential for M2M, but it certainly adds fuel to the fire.
–Smartphone as interface. Lots of devices would cost too much if they had to be built with a screen and lots of buttons, a GPS, a microprocessor. But once connected by Bluetooth or otherwise, now these devices can leverage the user’s smartphone. By using the smartphone’s GPS, processor, memory, cellular radio and touch screen, other devices can be made much cheaper. Think of Parrot’s AR Drone, which flies using the phone as a remote, or Contour’s helmet camera, that uses the phone as a viewfinder. The smartphone-as-a-bridge means many more devices in the “Internet of things.”
–Moore’s Law claims roughly that the power of processors will double every two years. This steady progression of technology has enabled more power in smaller devices, or cheaper devices at similar power. This means we have options for M2M to be built cheaper, more powerful and importantly to consume less juice in battery-powered devices.
Each one of the above trends is a phenomenon in itself, and put together they underpin an irresistible force pushing M2M into remote places, our cities, our homes, and even onto our bodies. Get ready. The future is connected.
Liz Kerton, analyst for The Kerton Group managing the Telecom Council of Silicon Valley and Autotech Council, follows innovation across all wireless telecom sectors. On twitter @telecomcouncil.
