Matt Hatton and Jim Morrish, directors of Machina Research, offer Telecoms IQ their top ten tips for deploying M2M. They will be hosting the pre-conference strategy workshop at this year’s M2M Forum Europe.
M2M Top 10 Tips M2M Forum Europe: Top 10 Tips Matt Hatton and Jim Morrish, directors of Machina Research, offer Telecoms IQ their top ten tips for deploying M2M. They will be hosting the pre‐conference strategy workshop at this year’s M2M Forum Europe. Machina Research is a telecoms research and consulting firm focusing principally on the emerging opportunity associated with new forms of connected wireless device. MH: Number one, really, is that, effectively, there is no such thing as M2M. What 1 we’re really talking about is many, many, different ways in which embedded connectivity can be of benefit to different vertical industries. So, for each of the different sectors that we focus on as a company – utilities, or automotive, or healthcare – there are a variety of different ways in which this embedded connectivity can be used. Now, even within those sectors there are also completely different dynamics. For instance, a solution for the ‘Worried Well’, one of the segments within the healthcare industry. So a weight monitoring or a dieting application will often involve the user buying the device themselves and there’s little to no risk. Now, that’s very different from an expensive clinical remote monitoring system with heavy integration and the requirement for five nines availability and potentially lawsuits waiting to happen if something goes wrong. So, really the first point is that the vertical industries don’t think about M2M. They think about their own connectivity needs. Now, that said, we in the telecoms industry love our little buzz words and our three letter acronyms – and we’re no different, I guess. So we’re going to keep on using it just as a way to describe what we’re talking about. But I think it’s important to remember that M2M, for a lot of the vertical sectors, doesn’t really mean anything. JM: To pick up with our second issue, and it’s very closely related to the first issue, is 2 really that there’s no common currency established in this market yet. There’s no agreed segmentation or terminology for opportunities and the forecasts that sit behind the market, and are banded around for connected devices, vary enormously, and the definitions which underline those forecasts also differ greatly, hugely. And this is essentially the reason why we founded Machina Research, to bring some consistent analysis to this marketplace, and actually take a pragmatic approach to forecasting and analysis within this space. Which brings us to another Telecoms IQ 1
M2M Top 10 Tips point, which is that just because a device is connectable, it doesn’t mean it will be connected. So you have to be quite pragmatic about the total opportunity or potential for connecting devices. That brings us, I think, to the next issue, which is quite closely related: the value chains are 3 very much influx. The business model still needs to be played out and it is unclear what role the operators will be playing within many of the applications within the verticals in the marketplace, and it’s fairly clear really that the role is going to change, or is going to be different within these verticals. The marketplace is rapidly changing. We’re in March now and just earlier this month, MAGEN launched with a venture which essentially provides a one stop shop for providing connectivity, potentially worldwide, that’s their aim. That’s quite a different proposition which has come into the market. There are very few markets which are changing quite so quickly in quite such a potentially fundamental way. MH: Point four is a bit of a corollary to the previous point that Jim made. It’s relating to 4 business models and the way that the industry’s structured. It’s very easy to think about M2M as being dominated by deals done in darkened rooms between network operators or other service providers and big business – utilities, car manufacturers and so on. But actually it’s much more bottom‐up than that. Now, there are a few examples of pure B2B plays, particularly in, for instance, the manufacturing or the transport and logistics industry. But it’s a lot more B2C and B2B2C, than perhaps might be first thought. And it’s very relevant to get user buy‐in and acceptance, even where it’s a B2B place. So, for instance, in the US Pacific Gas and Electric had some severe problems with putting in smart meters, because they failed to convince their customers of the benefit of having these smart meters. The customers assumed that there was some attempt to get them to pay more money and so they railed against it. So there is a big issue with ensuring that you get user buy‐in and user acceptance. Even if it’s not the user who’s ultimately paying for the device, or indeed paying for the service. Part of this is also related to privacy, so one of the biggest issues with getting user buy‐in is convincing them that they’re not going to have any kind of issues with privacy, and so across all sectors looking at M2M, privacy is a critical area they’re looking at. JM: I think our fifth point within our top ten is the observation that M2M initiatives 5 are part of an environment move and need to move in step with that environment and cannot be considered in isolation. You know, for instance, you know, there’s no point implementing ambulance systems when there are no hospital systems to talk to, and there are no electronic health records in place. But once you do have those hospital based systems and electronic healthcare records in place, suddenly it does make an awful lot of sense to put connector systems in ambulances. So it’s about moving forward in step with an ecosystem, rather than just focusing on some specific opportunities. One of the things behind there, one of the considerations in there, is the degree of Telecoms IQ 2
M2M Top 10 Tips fragmentation in markets which are adjacent to areas that we might wish to M2M enable. Healthcare is a particular example, where systems within healthcare and clinical environments can be enormously fragmented, where they do exist. And there’s a lot of places where they just simply don’t exist at this point. 6 That brings us to a very closely related point, but we split it out as our point six because it’s a very important one, which is that a lot of the benefit here, or within M2M, is not strictly speaking about M2M, it’s about the systems integration opportunities that M2M enables. The value that is unlocked by enabling M2M connectivity and solutions that can be built on that. MH: Point seven relates to the business logic. So, moving beyond business models and 7 before we get to technology, issues of business logic and for network operators particularly. Mobile network operators are used to working in a certain environment with a certain set of parameters that they’re used to. M2M has a very different set of parameters. They’re used to an environment which is best effort, and they’re moving into an environment which is business critical, if not indeed, life critical. They’re also moving into an environment where the end points don’t complain if the service doesn’t work. They’re moving into an environment where the device isn’t always on. It can turn off for long periods of time. They’re moving into an environment where it’s not okay to deactivate a SIM that hasn’t been used for six months as you tend to get in the handset business. So, here, availability and reliability are absolutely key. Far more so than in the existing environment in which mobile network operators work. And they’re being forced to take the role of a much more trusted partner because they have that mission critical role within this new ecosystem. The clients are literally handing over an essential part of their business to the network operators and they need to respect that and treat it with the respect it’s due. 8 JM: Thanks. Point eight is very much focused on customers and users and the domestic connectivity requirements. As consumers pick up more and more devices which they wish to be connected and potentially want to put SIMs inside, there becomes an issue about operators providing multiple SIMs. You know, should I be able to have five SIMs on my single account? How does that interwork with a single data cap and what are the grey market issues associated with that if I decide to give SIMs to various members of my family and friends on my same account? Conversely, if I have to take multiple accounts and one for each SIM, so I want to enable four devices with wireless or macro network connectivity, I need four SIMs, do I then need four accounts? That’s clearly a very cumbersome approach and not consumer friendly at all. It’s not clear how this situation is going to get resolved, although I suspect that we might see a delayering in the market where there are multiple accounts for high value or high volume devices, and a kind of a catch all account which an individual may sign up to with as many SIMs as they feel like, but charges at a Telecoms IQ 3
M2M Top 10 Tips considerably higher rate, so it doesn’t interfere in a competitive with the single tariffs for the higher volume connected devices. But there’s not a lot of movement in this space at all. That really needs to be thought through – and thought through in the context of the other option, which is of course to purchase connectivity with a device. So the consumer never actually takes the decision about mobile enabling a device because they purchase it, they take it out of the box and it’s connected, like a Kindle. MH: And Jim touched on the issue of SIM cards there, and for us issue nine also relates 9 to the SIM. The plastic removable SIM card was one of the reasons why the GSM standard flourished. Users can swap it between devices and they can take their identification with them. But for M2M it’s not really that appropriate. The clue’s in the name really, Subscriber Identification Module. Where there’s no subscriber, and it will never need to be moved, it needs to be embedded or a different approach needs to be taken. Particularly as we’re expecting the SIM to be embedded for up to 30 years, as we might get with utility meters, for instance. So, there are a couple of ways in which the industry is looking at addressing this, the various standards bodies are looking at options for how to remote provision SIMs. There are options using the IMSI range, but it’s in the interest of the customers that they have the option to swap between network operators, and in fact, it’s in the interest of those network operators that the users are allowed to switch between them, in the long term because it creates a much more conducive environment to people adopting M2M. There’s a certain amount of reticence about getting into lengthy deals with network operators, where they’ll be tied in for 15, 20 years, say. And in fact in some cases, if you’re a government body, you’re forced to renegotiate all contracts on a five year basis, or whatever it may be. In those circumstances, the customer needs the ability to swap between operators or swap between service providers. So, there’re still issues with how this is resolved, but it’s one that does need to be resolved. JM: Item ten on our list, our last item, relates to technology choices, both in the 10 macro connectivity sense and local connectivity sense. In the macro sense, GSM switch off is the big issue. What’s the timing of GSM switch off? Will it be switched off in the foreseeable future? This has a very serious impact on anyone who might be putting out a device into the market which could be expected to be functioning for 20 years, so potentially a utility meter. Utility meters are designed to… the connectivity module can be swapped out relatively easily, but there are other similar devices which have similar life cycles. And it needs to be considered whether GSM networks are going to be available to support those things for the duration of their lifespan. Conversely, what are the costs of putting in place a 3G module, the cost of supporting the traffic for 3G connectivity versus GSM connectivity and the timing of availability of 4G connections? And so there’s a whole question, or a whole series of questions, about the availability of different network technologies over time and therefore the most appropriate connectivity module to stick into a device which you want to connect over a mobile network. Telecoms IQ 4
M2M Top 10 Tips On the local area connectivity side, it’s a protocol where Wi‐Fi might seem to be an obvious choice. It works reasonably well in hospitals at the moment for triangulating the position of pieces of equipment. You basically put an active RFID tag on these devices and it’s quite easy to triangulate the location. That works in the hospital. The same approach in a domestic environment might not work quite so well. Imagine the perspective of someone like a Whirlpool or a Sony and trying to deal with calls to their customer services department when their customers are trying to connect the devices in their own homes. These are essentially unknown systems environments for Whirlpool and Sony. There are VPN issues, there are firewall issues, they can’t look at those networks and figure out why things are or aren’t working. So, SIM enabling a device like a washing machine, is going to produce – or going to result in – a significantly more simple field environment for Whirlpool to manage and support, than would Wi‐Fi enablement. MH: So that was our top ten points on M2M, which we’ll be exploring in a lot more detail on 6th June at the Machina Research workshop, ahead of the M2M Forum Europe. We hope you enjoyed them. For more information on Machina Research take a look at our website, MachinaResearch.com. You can listen to the original audio podcast of this interview here. To register your place at the event, running between June 6‐9, in London, simply call us on + 44 (0) 20 7368 9300 or email to firstname.lastname@example.org. Visit our site at www.m2mforumeurope.com. IQPC Please note that we do all we can to ensure accuracy within the translation to word of audio interviews but that errors may still understandably occur in some cases. If you believe that a serious inaccuracy has been made within the text, please contact +44 (0) 207 368 9334 or email email@example.com. Telecoms IQ 5