Location Based M2M OpportunitiesLocation Based M2M Opportunities Michael Grossi, Director , Altman Vilandrie & Co.
M2M and “The Internet of Things” describe the connection of machines and sensorsthrough any means to the Internet Fixed (Wireline) Technologies Wireless Technologies Industrial Ethernet Cellular Powerline GSM/GPRS/EDGE Broadband CDMA/1xEV-DO 3G Satellite Wireless LAN Bluetooth ZigBee Other 802.15.4 and related technologies M2M offers opportunities in many service sectors Buildings/Facilities Energy Medical/Healthcare Transportation Office Equipment Meters Medical Devices Vehicles HVAC/Environmental Distributed Generators Retail Airplanes Systems Electricity Grid Scanners & Registers Transport Systems Access Controls Pipelines Lighting & Refrigeration IT & Networks Consumer/Professional Industrial Systems Enterprise: IT/Data White Goods/Appliances Automation & Control Security/Public Safety Center, Office Game Systems Equipment Homeland Security Public: Services Services, Consumer Electronics Capital Equipment E-Commerce, etc.
The M2M market is highly fragmented in each component of the value chain – no single highl al emarket leader has been established Managed Hardware Enablement Network Services Services Aggregators/ Value-Added M2M Modules/ End Chip Vendors Platform Comm Services Services / Devices Users Software Applications
Machine to Machine Market Opportunity pp yM2M devices are poised for rapid growth, exceeding 600 million devices by 2015 andaccounting for $24B in service revenues Worldwide M2M Devices (Millions) CAGR% Middle East & Africa M2M – devices that 615 40% communicate data Asia-Pacific 25 40% wirelessly to other devices Latin America for the purpose of 92 42% North America automating data collection and monitoring of large Central Europe p 473 38 38% complex systems/networks Western Europe 17 69 365 134 40% 28 12 53 102 267 21 66 40% 38 78 47 Utility 15 Meters 182 56 34 27 119 11 23 260 34% 39 81 19 209 59 16 167 13 27 11 124 19 83 14 32 50 24 2008 2009 2010 2011 2012 2013 2014 2015 Revenue ($B) 7.6 8.5 10.1 12.9 15.9 18.5 20.9 24.2Source: Strategy Analytics, AV&Co analysis
Mobile Internet Devices (MIDs)Emerging MIDs and especially netbooks are gaining popularity worldwide, and will be akey driver of traffic growth within 3 to 5 years Worldwide M bil I t W ld id Mobile Internet Devices tD i Worldwide N t b k/N tb k Shi W ld id Notebook/Netbook Shipments t (Millions) (Millions) Netbooks/UMPCs 633.2 Notebooks Netbooks/UMPCs Share % 18.6% 18.3% 17.6% 18.0% CAGR% MIDs cover a wide range of CAGR% devices: Smartphones 282.3 18.1% 36% 416 UMPCs 14.2% Netbooks 248.7 51.7 25.8% Portable P t bl navigation d i i ti devices 216.9 46.3 E-book readers Portable media/MP3 181.6 39.0 players Handheld gaming devices 32.0 145.3 20.6 MIDs have Internet access 230.6 16.6% via WLAN (WiFi) or WWAN 202.4 (3G or better) 177.9 149.6 54 124.7 2007 2012 2015 2008 2009 2010 2011 2012
All four U.S. carriers have made significant investments in strategic relationships ornetwork improvements to capitalize on this emerging market AT&T signed an exclusive deal with T-Mobile and Sierra Wireless agreed to Jasper Wireless to facilitate work together on product development, kt th d td l t connection of consumer and M2M marketing, sales, and deployment of devices to their network (May 2009) M2M solutions, starting in Germany KPN became Jasper’s preferred (September 2009) European network operator and exclusive operator in Belgium, Germany, and th N th l d KPN G d the Netherlands. Cadec Global, provider of fleet has also made an equity investment management solutions, began an M2M in Jasper (Q1 2010) partnership initiative with Aeris in February AT&T announced a developer 2010 connection kit to facilitate deployment of new M2M devices on their network (March 2010) GE developed Wi-MAX-based smart meters that were available as of 2009 GE Healthcare signed an agreement with Sprint for wireless networks, services, and software at six Texas hospitals (April Vodafone, Verizon, and nPhase , , 2009) announced a strategic alliance to accelerate adoption of M2M technologies (February 2010) Verizon reported in Q1 2010 that 7.3% Sprint and M2M DataSmart have a of 101 million wireless connections are multi-year agreement to facilitate the M2M deployment of M2M devices on Sprint’s network (September 2009)
Supply Side Challenges Demand Side Challenges Diverse rate plan needs of different M2M devices and Operation/running cost was by far the highest services means increased complexity on the part of concern of adopters surveyed wireless carriers Data integration/ interoperability, initial/ installation g p y, Evolving network technologies (GSM vs. CDMA, LTE cost, and development of new support structure vs. WiMAX) create complex choices for device followed in importance, but were still considered manufacturers critical challenges Educating th market Ed ti the k t 41% Operation Cost/Running O i C /R i Improving device certification process 26% Data Integration/Interoperability Reducing M2M industry value 25% chain complexity Supporting open access network Initial Cost/ Installation 24% policies Forming partnerships between 23% Development of Support Structure operators and HDW vendors Identifying business models 21% Complexity/ Risk Assessment Reducing sales cycle time 19% Gaining Successful Adoption Overcoming market fragmentation 17% Establishing cooperation between Regulation &/or Liability 17% carriers Forming partnerships with 14% Choosing Right Partner/ Supplier "machine" manufacturers (OEMs) Creating app. Developer awareness and interest 10% Reliability of Technology Eliminating channel conflict 8% Privacy & Security Issues Changing the M2M acronym 4% 0% 10% 20% 30% 40% 50% 0 20 40 60 80 100 120Sources: Wireless Week Magazine “A Web of Challenges, Connections: M2M,” 2/1/2010; Beecham 2008 M2M Adopter Survey
GPS tracking and security are the most likely uses of M2M communication for SMBsbased upon our survey What are the most likely uses for M2M communications at your location? (select all that apply) Do you have any ideas concerning M2M that you would like to see developed? Most likely uses for M2M communications Selected Comments from the interviewees • “The current M2M applications would Tracking and p provide the resources that we are looking g 34% navigation into at this time such as tracking fleet vehicles” • “Implantable chip to allow tracking access Safety and to sales reps. Make sure they work a full 32% security y day” • “Read tanks remotely” • “Not familiar with the applications. Am taking a seminar on this right now” Asset management 17% • “Able to incorporate with in store computer systems. Such as Open Table or Hot Schedules” • “Up - to - the minute information regarding Machine control 17% wine barrel system pressure after harvest transmitted from remote location (i.e. form California to France or vise versa) versa)” 0% 10% 20% 30% 40% • “Automation of commercial food production equipment, room temperature control” Source: AV&CO primary research survey, n=500
Location-basedLocation based messaging and monitoring has many potential applications• Key features across all applications include two-way, location-specific communication and monitoring• Opt-in and Opt-out models are available and have significant impacts on specific applications Customer Select Applications • Natural disaster/crime/safety alerts • Crowd monitoring/management • Terrorist tracking and monitoringGovernment • Amber Alerts (improved response with tracking abducted child) • Monitoring of Check Points (e g borders battleground check points) (e.g., borders, • Communication for military personnel family (e.g., birth announcements) • Mobile device management • Monitoring foot traffic at major events • Customer notifications and communicationCommercialC i l • Healthcare applications (monitoring, emergency response locating, messaging) • Order completion • Weather/safety alerts • Weather Response: school closures • Student/ f St d t/ faculty notification of school class cancellation, room/ b ildi changes lt tifi ti f h l l ll ti / building h Education • Communication of registrar and student finance deadline requirements(select vertical) • Tracking school buses/traveling teams • Crime/ safety alert • Family member location y Parents • Controls on Illicit text messages, emails, instant messages or voicemails received by children
Mobile Resource Management (MRM)MRM is a category of business solutions that enables companies to more effectivelymanage mobile workers, mobile tasks and mobile assets Types of MRM Solutions Industry Drivers Key Purchase Criteria Field Force Management Attractive, hard dollar ROI Features and Functionality • Business need: to manage the field • Benefits include reduced overtime, fuel • GPS location, tracking, monitoring workforce in order to reduce business and labor costs due to increased • GPS navigation and optimized costs and maximize ROI dispatch and scheduling efficiencies, routing Field Service Management improved job completion rates, tighter • Ti Timecard recording and reporting d di d ti • Business need: to manage the control over spare parts inventory, and • Work order management delivery of products and services to higher insurance policy discounts • Alerts and geo-fencing customers in order to maintain strong Affordable entry points • Data collection and reports customer service while keeping • The ability to monitor and track Integration and Customization business costs to a minimum employees and assets from IP- p y Options p Field Asset Management connected devices and the growth of • Simple configurations: back-office • Business need: to manage fixed and low-cost GPS-enabled mobile devices integration not required mobile assets in order to ensure has increased affordability and flexibility • Configurations and integration: utilization is maximized and therefore Competitive advantage with MRM software is configured with minimize costs customers back-end systems • MRM can positively impact a company’s iti l i t ’ • Complete customization: open customer satisfaction and customer developer tools and APIs for retention metrics through more timely customized development and prepared technicians and increased Cost Components first call resolution rates • Mobile devices • Monthly carrier data subscription • MRM application software li ti ft • Systems integration work
Strategic Implications in the M2M Ecosystem • Given the industry fragmentation – how will industry evolve? • Reliance on carriers and other third parties to provide network access – how can carriers play a larger role? • Who is positioned to win in the space?
Contact Details Contact Details Michael Grossi Direct 617.753.7209 Altman Vilandrie & Co. 53 State Street Mobile 617.480.9389 37th Floor firstname.lastname@example.org Boston, MA 02109 Telephone 617 753 7200 Fax 617 439 4290 www.altvil.com Michael Grossi, Director Michael is a Director with Altman Vilandrie and Company and focuses on wireless and digitalmedia sectors. Prior to AV&Co, Michael was an SVP & GM with Helio, a highly innovative MVNO in the U.S. While at Helio, Michael led all Strategy, Business/Corporate Development and was GM of the Mobile Data Services team responsible for both the data P&L and product development.Prior to AV&Co, Michael was a Vice President with Adventis, a strategy consultancy, and a leaderin the wireless practice and has 10 years consulting experience. Michael has led many strategy engagements for his clients spanning all facets of the wireless value chain including equipment manufacturers, service providers and content providers.