Mobile ISP Role in M2M Will Largely be the Same Role as in Mobile Phone Business, Despite All Efforts

If the "machine to machine" (M2M) or "Internet of Things" market consists of “hundreds of micro-markets,” not a single industry, as a new Vodafone report suggests, then the logical conclusion also is that the role of mobile service providers in M2M or IoT markets will substantially replicate the industry's role in the mobile phone business.

In other words, the mobile service provider role largely will involve communications connectivity, not application-layer functions. Those who worry about "dumb pipe" roles can start worrying now.

If applications are highly fragmented and discrete markets are individually small, then it will make sense for mobile service providers to focus on the general purpose communications role, not a possible role as application suppliers.

That means mobile service providers--like it or not--will be "pipe suppliers," earning nearly all their M2M or IoT revenue from access services.

There are 4.4 billion machines or devices now connected to each other or to servers, growing  10.3 billion by 2018, a study sponsored by Vodafone predicts. 

Still, since definitions of “machine-to-machine” or “Internet of Things” vary, it is hard to separate connected appliances such as televisions or game consoles from industrial sensors and monitors.

Within three years, most firms will be embedding M2M into the actual products and services sold to customers.

That likely has implications for the role of the mobile service provider in the ecosystem. If the application settings are highly fragmented, the easiest role for an access provider to adopt is “horizontal,” not “vertical.”

In other words, mobile service providers supply the communications function, not primarily vertical applications, much as the primarily value provided to business or consumer customers is mobile access (for phones, other personal devices and sensors), with a couple of general purpose applications (text messaging and voice).

About 22 percent of 600 executives involved in machine-to-machine strategy say they already have at least one active M2M deployment in operation, up about 80 percent in 2014, compared to 2013, according to a new study sponsored by Vodafone and conducted by Circle Research.

The three leading industries, in terms of deployment, are the consumer electronics, energy and utilities, and automotive industries, each with a minimum of 30 percent adoption by respondent firms.

By 2016, the percentage of respondents with at least one M2M deployment will be 74 percent, the study predicts, based at least part on the embedding of M2M features into products such as thermostats and kitchen appliances.

Energy and utility respondents will have boosted M2M deployment to about 62 percent by 2016, based on smart meters and grid monitoring programs.

Use of M2M in the transportation and logistics verticals will be 57 percent in 2016, based largely on fleet logistics applications, and adoption in the healthcare and life sciences industry will be identical, the Vodafone survey found.

Automotive segment adoption will reach 53 percent, while retail deployment reaches 51 percent. M2M deployment in manufacturing will be at least 43 percent, though self reporting might be underestimating the actual state of deployment, given the widespread use of automation in manufacturing. Some respondents might not call what they already are doing an instance of M2M deployment.

Safety and security applications are the leading uses of M2M in automotive settings, partly because in many regions they are being driven by regulation, such as the eCall programme in the European Union.

Consumer electronics is at present the leading adopter of M2M, with the highest adoption
of external-facing strategies, at 71 percent.

Those applications primarily include tracking mobile assets including shipping containers.  But
20 percent of all company executives  surveyed in the consumer electronics segment already are selling connected devices directly to consumers.

Asset tracking is expected to be important in the energy and utility segment, monitoring in health care, connected car services in the auto industry, monitoring in manufacturing and connected cabinets or asset tracking being lead apps.

Early adopters tend to say productivity and cost savings are the deployment drivers, with projects tending to be in the internal processes areas, rather than external operations visible to customers.

At the moment, adoption of at least one active deployment is highest in the “Africa, Asia, Middle East” region, a rather broad category of limited analytical usefulness, one might argue. But 27 percent of executives surveyed in that region had projects underway.

The study included respondents from Australia, Brazil, China, Germany, India, Italy, Japan, the Netherlands, South Africa, South Korea, Spain, Turkey, the United Kingdom, and the United States.

In Europe, 21 percent of respondents reported they had at least one M2M project in action. In the Americas, 17 percent of executives said they had at least one project in progress.

But Vodafone expects that, by 2016, deployment profiles will be quite similar, with more than half of all  respondents supervising actual deployments.

As predicted in last year’s Vodafone M2M Adoption Barometer report, the US has been overtaken by the Asia Pacific region as the geography with the widest adoption of M2M. This year’s report suggests that by 2016 the gap will be negligible with all regions close to a 55% average for adoption.

The survey, carried out by Circle Research, captured the views of more than 600 executives involved in setting M2M strategy in seven key industries across 14 countries.

Three sectors have emerged as front runners in M2M with nearly 30 percent adoption rates: automotive, consumer electronics, and energy and utilities.

Automotive is the most mature of the sectors where M2M is now seen as an enabler for additional services such as remote maintenance and infotainment. M2M adoption in energy and utilities is also growing rapidly as ‘smart’ home and office services such as intelligent heating and connected security gain popularity.

This uptake is being fuelled by the use of M2M in connected devices such as smart televisions and games consoles. The research shows that nearly three quarters of consumer electronics companies will have adopted some form of M2M by 2016, whether for new products, logistics or production.

Similarly, the report anticipates that 57 percent of healthcare and life sciences companies will have adopted M2M technologies by 2016.
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