Overview

The machine-to-machine (M2M) market opportunity is expected to ultimately be counted in billions, or even trillions, of M2M devices and connections. Today, the number of connections may still be small, but is substantive enough to be reported by a number of wireless operators, and is growing quickly. As the market develops, operators must recognize that the opportunity is unique, and establish specialized M2M infrastructure. Those that act quickly to do this, give themselves the best chance of significant market share and maximal profits.

Market Challenges

The attraction of the M2M market to wireless operators is clear: leverage existing spectrum and network assets; drive revenue growth by wireless-enabling new devices and business processes; and maximize profits by avoiding customer acquisition and support costs. But success in the market is not assured. There are significant challenges in serving it, starting with its fragmentation into a variety of industries, business models, devices and connectivity requirements.

Almost every M2M device will have a different value chain compared to the mobile phone and devices sold by network operators today. From the production and testing, through distribution and provisioning, to support and lifecycle management, the participants and processes are different. Many devices have a longer supply chain and “shelf life” which, together with a lack of insight into the retailing or installation process, poses real challenges to operators. Equally, device manufacturers, and even regulatory bodies, can demand longer continuity of service for M2M devices, challenging how operators manage technology transitions.

Further challenges are the threats that M2M devices could pose to the public network. In disaster or emergency situations, operators must be able to prevent the network being overwhelmed by millions of M2M devices spontaneously attempting to attach to the network. More prosaically, low-cost wireless modules that happen to have poor protocol implementations must not overload the network. These, and other, challenges can be summarized into three main, interrelated categories: commercial flexibility, technological adaptability, and process efficiency.

Commercial Flexibility
The potential of the M2M market is not lost on any wireless operator and, hence, even at this nascent stage, price pressure already exists. More importantly, the development of the market depends on you being able to stimulate innovation and support new business models where the price per device per month may be measured in cents and not dollars. In addition, you need to support “comes with data” pricing models where the cost of the device includes an amount of mobile data – whether time-limited (“first years’ service included”), transactional (“includes the synchronization of the first 1,000 digital photos”), or volume-based (“first 10 GB of data included”).

Technological Adaptability
Due to the fragmentation of the market, operators need to offer a M2M platform that supports a variety of use cases and applications. In particular, the connectivity requirements of M2M devices and applications can be completely different to those of traditional mobile phones and mobile data devices.

Many M2M devices are infrequent transmitters – this means they need to connect to the wireless network a few times a day, week or month, will often connect for a short time, and may only send small amounts of data. Treating these devices the same way as mobile phones – which are mostly always-on, sending and receiving data frequently and spontaneously – is inefficient and ineffective. Instead, you need to deploy a M2M platform that adapts to varying requirements for managing and communicating with M2M devices.

Process Efficiency
The drive for efficiency is a direct consequence of the need for commercial flexibility and technological adaptability. Operators need to strip out costs and improve their agility. Specialized M2M infrastructure can help, bringing new approaches to managing and provisioning M2M devices. Without it, you run the risk of adversely impacting the economics of M2M business models (both for the cost of connectivity and the impact on the device itself – e.g. power drain).

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