According to ‘Cellular Machine to Machine (M2M) Communications Solutions’, a new report from ABI Research, until recently, cellular M2M communications have been focused on leveraging mobile networks for niche data applications. But now this ‘under-the-radar’ technology is becoming more prominent as a key enabler of enterprise and industrial applications, and the M2M industry has entered a period of restructuring as vendors prepare for a new era of large-scale deployments.

“Formerly, small companies would offer limited vertical solutions using cellular M2M, whether in metering, industrial control, security or fleet management,” judges ABI’s director of RFID and M2M Research Erik Michielsen. “Now, there are opportunities for large organisations, including carriers, to commit major resources to cellular M2M, and they are taking those opportunities.”

Growth of interest in wireless M2M has been accompanied by, and may be partly the result of, a restructuring on the solutions supply side of the industry. ABI points out that in 2005 and 2006, the two M2M market leaders each consolidated to address larger M2M opportunities. Wavecom acquired the Sony Ericsson M2M group to enhance its telematics and North American business, while Siemens rolled its Wireless Modules Group into its Automation and Drives (A&D) division rather than including it in the public networks Siemens/Nokia joint venture. Now, says ABI, the A&D group carries Siemens’ market leadership with its Simatic brand, its wireless modules, and its evolving RFID group. Meanwhile, Asia has seen strong M2M uptake, and Chinese module manufacturer SIMCOM is ramping up telemetry efforts to compete with the large Western manufacturers.

“But,” adds Michielsen, “components are only part of the story. No market is complete without solutions, and for that you need operator commitment. Operators used to be skeptical about M2M opportunities and the low monthly revenues they provide. Now operators such as Cingular, Sprint, Orange, TeliaSonera, and T-Mobile are rolling M2M into their business solutions groups.”

Some of the ABI Research findings are echoed by recent M2M research carried out in Western Europe by IDC. According to the snappily titled ‘Machine-to-Machine Communications in Western Europe, 2005–2010: Crossing the Chasm to Success, but Who Takes the Pot?’ report, M2M’s light has been concealed under a bushel thanks to lack of vendor push, poor solution implementations, and general technical difficulties. Today, however, IDC believes strong demand from the enterprise segment, is set to drive the Western European M2M communications market from a value of US$3bn in 2005 to US$19.8bn in 2010.

“The Western European machine-to-machine market holds huge potential,” says Brian Troelsen, senior research analyst at IDC. “Most of the market infancy problems are being properly addressed and vendors are starting to see the first signs of the promised market potential being fulfilled. The prime growth drivers are regulation on automatic metering and declining prices on data transfers and RFID tags.”

Joined up thinking
IDC agrees with ABI about the need for end-to-end offers, and says that to take advantage of market opportunities, vendors should introduce integrated M2M solutions, as customers, particularly in the larger and more complex deals, are looking for end-to-end providers that can handle integration of data flow to back-end systems and design internal processes around the machine-to-machine solution. Due to the nature of machine-to-machine solutions - comprising software, hardware, and communications - systems integrators, hardware vendors, and communications providers all have a part to play in delivering the solution.

“The fight for this market is a battle between vendor types, namely hardware vendors, software vendors, systems integrators, and telcos,” suggests Troelsen. “These players are fighting fiercely for market dominance with their respective competitive advantages. Until now the systems providers have had a head start due to strong competencies in business process understanding, which is a key element in most machine-to-machine implementations. However, hardware vendors and telcos are starting to look at how to gain similar competencies on their own.”

Welcome to the Machine Age.
John Williamson