With wireless connectivity becoming ever more common in vehicles, security systems and utility meters, machine-to-machine technology is on the path to transform vending machines, real estate lock boxes and mail drop-boxes.
Although the M2M space is still evolving (even the definition of which devices and applications are “M2M” is still fuzzy), the growth is undeniable. ABI senior analyst Sam Lucero pegs the growth rate at about 33-35% per year since 2003, and said that rate is expected to continue. About 18 million M2M cellular modules shipped in 2006, Lucero said, and the number is expected to jump to about 80 million by 2013.
Chris Purpura, VP of marketing for M2M provider Aeris Communications Inc., describes M2M as pushing automation outside a business’ four walls to its edges, and accessing data that was previously unavailable.
Lower costs, expanding apps
The space’s momentum is based on three factors, Lucero said: the decreasing cost of hardware and connectivity for M2M devices, and expansion of M2M application development. According to Alex Brisbourne, president and CEO of M2M provider KORE Telematics, the industry reached an inflection point in the last 18 months as a result of maturing network speed and coverage as well as cost improvements.
M2M is being driven by companies that want to use vehicle telematics, smart metering of utilities, point-of-sale terminals, security alarms and generally enable remote sensing/monitoring, Lucero said. For example, he said, DeWalt Industrial Tool Co. has an application to track equipment and prevent losses. And remote monitoring of realtors’ lockboxes addresses security concerns.
Many expect that the number of machine-to-machine connections will eventually rival the number of traditional voice subscribers. With the voice market moving toward saturation, the growth in machine connections has the potential to change what it means to be a mobile “subscriber.”
Although some European carriers have taken an active role in providers are actually mobile virtual network operator-style companies.
“The ARPU is so low, and we’re really talking about the $5-$15 range as opposed to the $60 range (for a traditional voice subscriber),” said Lucero. So carriers “have largely chosen until recently, to really access this market in more wholesale fashion.”
KORE Telematics, for instance, provides M2M services via the networks of AT&T Mobility, Verizon Wireless and Rogers in Canada. Brisbourne identifies the company as an MVNO, but quickly adds, “We’re unique as an MVNO, because we actually make money.”
Despite the large number of M2M devices expected, the network capacity requirements are seen as negligible, for the most part. Industry providers agreed that the M2M use of capacity is so low compared to a human voice or data user that there is plenty of room for growth — although some bandwidth- intensive applications do exist, such as real-time video surveillance. Tom Moore, director of mobile broadband, aircard business and M2M for Sprint Nextel Corp.–which is taking a more active role in the space than other carriers–said it’s also possible to shift operations so that, for example, some M2M reporting functions happen at night, when network traffic is low.
According to Brisbourne, other areas of interest include wireless tracking of employees such as social workers and security guards and making package drop-boxes “smart,” so that pick-up drivers only stop at boxes that contain packages–instead of checking every box along a route and wasting time and gas. Purpura said some of Aeris’ customers use M2M to control crop irrigation and measure water usage, and to monitor potential leaks in gas pipelines.
It’s a short step from being able to collect data wirelessly to wanting to implement control, Purpura said. Some utility companies are offering financial incentives for customers to sign up to allow their central air conditioning units to be cycled on and off at peak usage times, which could help avoid black-outs. One company, according to Purpura, wants to make vending machines capable of detecting when the temperature rises above, say, 95 degrees — and then raise the price of its cold sodas.
Every week, we hear from companies saying, ‘Hey, we want to do ‘X” — and ‘X’ is just totally off the wall,” said Sprint’s Moore. He added, “The space is really only limited by your imagination.”
