The wireless machine communications (M2M) market in Australia


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The wireless machine communications (M2M) market in Australia

  1. 1. Capturing a share of the M2M market – How can Australian companies participate in this growth sector? Presented by Daryl Chambers April 2004
  2. 2. Contents  What is M2M?  Who are the main players in Australia?  Australian market status  The M2M Developer market  Key markets in Australia  Business models for the M2M market  Q&A
  3. 3. What is M2M  M2M is short for “machine-to-machine”  Wireless M2M relates to the connection of machines to other machines or people wirelessly  Wireless connectivity can be by cellular, radio, satellite or any other wireless means  Here I cover cellular M2M communications
  4. 4. Who are the main players  Operators  In GSM/GPRS – Optus/Vodafone/Telstra  In CDMA / 1x / EV-DO – Telstra / Hutchison  Cellular M2M Hardware vendors  Main GSM suppliers include SonyEricsson, Wavecom, Motorola  In CDMA - Maxon and Kyocera  Developers  There are over 500 developers in Australia who develop applications to connect wirelessly to/from machines  Almost all are developers not end-customers for the applications  End customers  Typically these are the commercial users of M2M applications
  5. 5. Key Enablers  Packet data over cellular  Either GPRS or CDMA 1x  Allows “always-on” connection  Has created a direct competitor to many fixed wire services  Airtime tariffs  Packet data cost for M2M applications has fallen to levels far below fixed line  Mobile M2M - SIM card, monthly connection and 1M/byte of data for $5-10 per month  Fixed M2M - $20+ just for a fixed phone line  M2M typically is a low bandwidth user (up to 1 m/byte per month)  GPRS/1x provides low cost airtime for M2M applications  Hardware costs are falling  GPRS module cost dropped from US$100 in 2002 to US$65-70  Module is typically 25-50% of a hardware application
  6. 6. Status of Australian M2M Market  M2M market has been in existence since 1996/7  Growth rates typically at 100% per year (from low base)  Typical developers have been small “cottage industry” companies building specific applications for customers  Market is now emerging into the mainstream  In 2004 many developers are selling „000‟s of units  Export orders are starting to come in for some developers  Large end-customers are moving to commercial roll-outs  Some operators strongly support the segment to win data traffic
  7. 7. M2M Australian Growth M2M Hardware Sales Growth 700000 600000 500000 400000 300000 200000 100000 0 2000 2001 2002 2003 2004 2005 2006 GSM/GPRS CDMA/1x
  8. 8. Is this growth real?  Forecasters predict continued double or triple digit growth over the next 4-8 years  Many forecasters expect global M2M user numbers to exceed that of phone users worldwide within this decade “Nowadays there is much talk of B2B and B2C applications, but the key Internet relationship of the future will be the M2M relationship – from machine to machine.” Dr Volker Jung President BITKOM, the German Association for IT,T & New Media Previous CEO of Nokia recently stated a belief that cellular M2M connections would outweigh voice connections before the end of this decade, by a factor of 8!
  9. 9. Opportunities for Australia  M2M market is still in an emergent phase, locally and internationally  Australian developers are at forefront in some application areas  There is a growing understanding among customers of the benefits of wireless  Cost  Convenience  Often better performance/ reliability  Some of the largest global opportunities are in Asia where developers are behind Australia
  10. 10. We have talked about the M2M market status, now lets look at the Developer market
  11. 11. The M2M Developer Market  Typical module characteristics  General development guidelines  Typical development lead times  Key markets in Australia
  12. 12. Typical M2M Modules  Modules need to be fully integrated into the developers application and are useless stand- alone  Some Key Features  Small size  Multi-band  Able to send and receive data by packet data, SMS, CSD, HSCSD,  Can handle voice and fax calls  GPS interoperability  Broad operating temperature range  Some also include:  Embedded TCP/IP stack  Embedded controller for hosting applications  Additional PINs for I/O‟s
  13. 13. Typical M2M Modems  Modems are really modules with a simple application to make them into a modem that can connect externally to a hardware application to wirelessly enable it  Some Key Features  Multi- band  Instant and cost effective solution with  RS232 serial modem or USB modem or ethernet  Standard connectors for power, antenna, phone…  Integral SIM card reader  Support data, fax, SMS and voice and packet data  Easy to integrate
  14. 14. Some General Development Guidelines  Which M2M product should a developer work with?  Several factors to consider before selecting the M2M product to develop with including:  Time to market  Installed base of applications to be converted to GPRS/1x  Volume  TCP/IP  Price  Temperature Range
  15. 15. Development Guidelines – what to use?  Time to market  Where time to market is critical to the developer consider developing with an external modems  Pick a modem/module with in-built TCP/IP  Installed Base  If developer has installed application base to be converted to GPRS/1x (e.g. today uses wire-line or private radio) consider external modem connected to existing hardware  Volume  Where application sales volume exceeds 500 per year then consider developing integrated product with embedded module  Cheaper hardware cost  Higher development costs  Longer lead times
  16. 16. Development environment  AT commands  Cellular M2M modules and modems are just another type of modem  Use standard AT commands  Manufacturers have created unique sub-sets of vendor specific commands to access various functions  Developers run their applications in almost all popular programming languages including  .NET  Windows CE  Linux  ANSI C  Manufacturers have developed software coding tools to simplify application development for devices with on-board embedded memory  Examples include M2mpower, MUSE
  17. 17. Typical development cycle Company with an M2M business idea  Entering market for the first time  Estimated Development Time to Commercial Sales  8 – 12 months Development Activity Timeline Develop prototype with developers kit 1 month Test prototype 1 month Build and test early samples 1 month Build and install pilot products (typically 5-50) 2+ month Monitor performance and make hardware/software upgrades 2+ months Find commercial trial customer and install commercial trial Parallel time Commercial Launch 1-2 months
  18. 18. Typical development cycle Company with existing M2M business using fixed or other wireless systems  Already develop fixed line M2M applications  Estimated Development Time to Commercial Sales  5-8 months Development Activity Timeline Develop prototype with developers kit ½ month Test prototype ½ month Build and test early samples 1 month Build and install pilot products (typically 5-50) 1+ month Monitor performance and make hardware/software upgrades 1+ month Find commercial trial customer & install commercial trial Parallel time Commercial Launch 1 months
  19. 19. Key markets  Security  POS  Telematics/tracking  Utilities  Remote telemetry
  20. 20. Security Monitoring  5-6 companies provide hardware and central monitoring station equipment/software for GSM based wireless monitoring  Often used as a back-up to fixed line monitoring  Also used where fixed lines are not convenient such as ATM machines, remote locations  Push in 2004 by several suppliers to roll-out a GPRS based “always on” monitored service to compete with fixed line monitoring  Could open the entire market to wireless suppliers  Current volumes (Aust/NZ) estimated at 1000/month  Expected to grow to 5000/month with GPRS launch  New opportunity with CDMA for video monitoring
  21. 21.  SCSI launches its DirectWireless network and Guardcell at the Security Show on 28 April, 2004.  The DirectWireless network is a Virtual Private Network operating within the Optus GSM/GPRS network, dedicated to high security alarm monitoring  DirectWireless Guardcell will facilitate wireless alarm monitoring to AS2201.5-1992 Class 4 and 5 for alarm transmission services  Benefits  Cost  Coverage versus Securitel  Harder to “corrupt” and better redundancy options  May be first in world to deliver true GPRS security monitoring
  22. 22. Five POS opportunities  Cellular EFTPOS models  E.g. Keycorp and Akyman  Fixed but wireless EFTPOS terminals connected to banks  E.g. Keycorp, Akyman  Opportunities to connect older fixed EFTPOS units from ISDN/PSTN to wireless  E.g. Keycorp, Hypercom, Braintree, Fox Technology,  Connect existing fixed line ATM transaction terminals to a GPRS network  E.g. Braintree, Akyman  Increase in provision of information through POS information and loyalty programs  E.g. S4, Fox Technology  Current volumes (Aust/NZ) estimated at 500/month but expected to grow to 2-4000 /month in 2004
  23. 23.  Braintree Communications has trialed its wireless EFTPOS gateway with the Commonwealth Bank and retail customers using GPRS connection  Uses Braintree's GPRS terminal adaptor to send EFTPOS transactions from existing EFTPOS terminals over GPRS network into the CBA's host  Converts EFTPOS transaction from fixed wire to mobile networks giving the combined benefits of:  Much cheaper tariffing without the monthly line rental  Greater mobility  Easier terminal fleet management  Expected roll-out to be in the „000‟s per quarter
  24. 24. Telematics and vehicle/asset tracking  Many developers work with cellular M2M to track vehicles/assets  Over 20 developers in Australia/NZ  Some are replacing old proprietary radio systems as CDMA and GPRS have better coverage and cheaper and better featured  Expected to grow to 2000/month in 2004  One specific area is embedded systems in vehicles (telematics)  Services provided include report of accidents, support to drivers (e.g. to unlock car) and to offer value-added services  Current volumes (Aust/NZ) estimated at 600/month  Market is expected to grow to 2000/month with GPRS and increased uptake by insurers  Several major car brands are providing this as a feature in high end vehicles
  25. 25.  Holden sells a telematics solution as a standard add-on accessory when ordering a new car, providing  Emergency service support  Providing content to assist the driver  On-board assistance 24 hours, 365 days of the year  System uses GPS and GPRS to provide advanced satellite car monitoring  Uses include:  If you lock your keys in your car Holden Assist can unlock your car remotely  If your battery is low the car notifies Holden Assist who will contact you  In an emergency, press the red SOS button to contact the National Emergency Response Centre (NERC).  In the event of a crash, if an airbag has been deployed, the system will automatically contact the NERC.  If you need roadside assistance, press the "Holden Assist" button  If your car is stolen Holden Assist can locate and track your stolen car
  26. 26. Utility monitoring  This was the first M2M segment to take off in Australia  Uses GSM wireless to monitor electricity, gas, water  Use for control/billing to larger industrial customers  Gives real time usage and billing  Use for monitoring of utility networks to ensure smooth operation  E.g. sewerage stations, power sub-stations, power lines  Installed base estimated at around 50 000 + users  Sales volumes (Aust/NZ) estimated at 500-1000/mnth  Expect to grow to 2-4000/month in 2004  GPRS services are rolled out  Lower cost  Better reporting
  27. 27.  Energy Intellect (Ei) have developed a two-way communications platform linking energy suppliers with customer sites  Their advanced utility and commercial/industrial AMR devices add immediate value to any smart meter application.  The platform provides real-time, two-way communications enabling energy suppliers to maintain connectivity with customers, offer new services and work collaboratively to manage customer load  Ei has a range of GPRS wireless remote communications devices, which provide for any commercial/industrial AMR or load control requirements
  28. 28. Remote telemetry  Covers a cross section of applications including :  Vending Machine monitoring  Weather stations  Small unmanned airports  Farms and irrigation  Rail lines and roads (including road signage/messages)  Gas tank monitoring  Children's rides in shopping malls  Newspaper sales stands  Current volumes (Aust/NZ) estimated at 500- 1000/month  Expected to grow to 2000/month in 2004/5  Already 100+ developers working in this area on targeted applications
  29. 29. Coca - Cola Vending Machines  Coca-Cola have over 60,000 vending machines wirelessly connected primarily in New Zealand, Australia, U.S.  Based on technology from a small NZ company, Harvest, which has now been acquired by CCA  Provides intelligent vending technology and data management support to The Coca-Cola Company  Monitoring of vending machines (vandalism, power, problems)  Sales monitoring  Support for distribution (route planning)
  30. 30. Business models for the M2M market  ASP opportunities  Enabling technologies  Export opportunities
  31. 31. ASP Model  Developer bundles in hardware, services, airtime in one fixed charge per period  Brands the service, not the components  Takes responsibility for end-to-end process  Can add margin without price visibility (e.g. airtime tariff becomes meaningless)  Areas where this has started:  Security monitoring companies offering wireless security bundles  Vehicle tracking companies offering the response centre servcie bundled with the hardware  Vending machine operator offering support services to machine “owners”
  32. 32. Enabling Technologies  The cellular operators have a number of tools to support for wireless services  Premium SMS is a micro-payment mechanism  E.g. $1.50 for a soft drink, $0.50 for a local surf report  Location Based Services can be generated from cell ID (and from GPS) and provided to users  Wholesale and Aggregation tariffs  Blockers  Operators take too large a slice of pie  Not worth using premium SMS as they take 25-50% of revenue  Too expensive for fleets to contemplate using operator based LBS when access costs are in line with SMS  Aggregation and wholesale is still in infancy in M2M market
  33. 33. Thank - you
  34. 34. Q&A
  35. 35. Glossary of Terms  GSM – Global System for Mobiles  GPRS - General Packet Radio Service  CDMA – Code Division Multiple Access  1x – Packet data over CDMA  M2M – Machine-to-machine