Ecosystem with solutions for remote objects control and management via wirelessdevices and mobile network.Includes personal devices (e.g. PNDs, e-readers, logistics tablets, etc.) - with NO p2pcommunication or public internet accessWhat is M2M?DevicesModulesConnectivityVASService(Refined data)ConnectivitymanagementApplication SES** Service Enablement Services (IT politics management, service activation/deactivation)M2M solution (e.g. fleet management system)
M2M market is growing fastGlobal market is expected to double in the next 4 years1801481109887+20% p.a.2015F14F13F12F2011USD BillionsKey drivers - WORLD market:• Growth of transport monitoringmarket including lead automotivecompanies with new services fortheir own customers (multimediasystems in cars, technicalmonitoring, etc.)• Growth of Consumer Electronicsmarket (connected PNDs, e-readers, gaming, etc)Key drivers - RUSSIAN market:• Growth of transport monitoringmarket includingERA GLONASS program which willbe launched in Russia in 2013(with potential +2M connectedcars each year*)• Automation and modernization ofautomatic control systems (energy,municipal services , industry, etc.)SOURCE: Machina research "Mobile operator strategy for success in M2M", September, 2012; McKinsey & VIP team analysis
Effective M2M strategy for Operator is 3 key directions development:ConnectivityM2M Complex Solutions for all verticals3 strategic areas to develop in M2MM2M globalization and strategic alliances
M2M verticalsPossible solutionsVertical market Possible solutions PlayersExampleAutomationandmonitoring▪ Automated MeterReading/Management(AMR/AMM)▪ Remote measuring ofpollution/weather data▪ Remote measuring of meter/otherdevice data in order to reduce leakageand operational cost▪ Teliasonera turnkey contract withVattenfall for data reading, management,and maintenance of meters in Swedenand FinlandTranspor-tationand logistics▪ Fleet management▪ Container tracking▪ Inventory management▪ Keep track of trucks, containers, andrental cars to optimize fleet logisticsand locate stolen vehicles/ containers▪ Orange “Fleetlink” service allows to trackcompliance on rules of drivers’ workinghoursSecurity▪ Automated alarm system▪ Access control▪ Facility management▪ Active monitoring of alarm systems,facilities with guaranteedcommunication through a dual signalpath▪ Vodafone and Securitas agreement for anM2M WW network (150k connections inFrance and Sweden in Dec ’05)Automotive▪ Telematics▪ Pay-as-you drive insurancepolicies▪ In-car diagnostic and repair assistanceanywhere and any time▪ Price discrimination on insurancepremium as function of real usage ofthe vehicle▪ Norwich Union’s «pay-as-you-driveinsurance»: free installation of GPS onvehicle, assistance button for 24h accessto help in case of accident/breakdownPaymentsand POS▪ Mobile payments▪ Electronic toll collection▪ Cash registers and vendingmachines▪ Wireless payments of transactionswith remote monitoring of cashregisters’ activities (e.g., tax evasion)and vending machines▪ Development of a network directlyconnecting cash registers in Serbia withthe local tax authority to improve VATforecastHealthcare▪ Patient monitoring▪ Electronic health cards andhospital equipment▪ Proactive patient care throughwireless health devices and advancedanalysis of diagnostic▪ Accenture project for the development ofa “lifeshirt” monitoring 30 physiologicalindicators with remote transmission ofdata to analytic engine for diagnosticSOURCE: Company Web sites
Key focus – expansion of presence in value chainDevicesModulesConnectivityVASService(Refined data)ConnectivitymanagementApplication SES** Service Enablement Services (IT politics management, service activation/deactivation)M2M solution (e.g. fleet management system)Due to M2M value chain development with M2M Connectivity management we do:• Stabilize the ARPU• Achieved great success with APPMb +12% increase in 2012• Lower the impact on the network with MbOU decrease -22%
Value chain expandingValuecreationHigh Low▪ Most internationalTelCos enter thesolution space insoftware integrationand sometimes even insoftware and hardwaredevelopmentPlayerHardware Solution ConnectivityHardwaredevelopmentSolutionintegrationTraffic and datatransmissionSolutiondevelopmentSOURCE: operator website, press, Ovum, Yankee, McKinsey & VIP team analysis
8Strategy realization at VimpelComdataВ2В Customer1. М2М connectivity developmentExample: Together with Jasper Wirelss VimpelCom launched in 2010 new solution for Russianmarket – multifunctional platform for M2M connectivity management– M2M Control CenterSIM & Connectivitymanagement2. M2M complex solutions launch (end-to-end services)Example: product ‘Automonitoring’– fleet management system for online transportmonitoring and additional information on its history and other parameters.
Strategic partnerships and alliances9The M2M multioperator Alliance was founded in July 2012Goal: to provide global seamless M2M solution for multinational companies all over the worldToday it consists of 8 world operatorsThe Alliance is:8 operators>35 countries