By Rob Bamforth, principal analyst, Quocirca
Despite nearly a decade of hype and predictions that it would be the next major revolution, M2M (machine-to-machine) still often falls short of expectations. Why is that?
Some forecasts project enormous growth and massive market opportunities, but they aren’t always measuring the same things. Some predictions count the number of devices in the billions, others count deployments. Some refer to hundreds of millions of cellular connections, while M2M revenues are estimated to reach billions by 2020. This inconsistent use of metrics clouds the real picture.
Terminology hasn’t helped either. Early visions—like George Colony’s claim in the 1990s that light bulbs would eventually have IP addresses—evoke futuristic images from shows such as Tomorrow’s World or The Jetsons. The phrase “Internet of Things” reinforced visions of a world in which every consumer appliance is connected and technology can do anything.
Technically it might, but only if someone sees sufficient value to invest money in it. Many ambitious M2M projects fail because they require alignment across multiple agendas, shifts in business processes, and broad stakeholder acceptance. Those social and organisational challenges are often harder to solve than the technical ones—especially when the value chain is skewed toward connectivity providers operating as mere “bitpipes.”
M2M should start with a clear business need embedded in a business process, not with a choice of communications or software platform. Market sizing is also tricky: revenue is divided among hardware vendors, software developers, and network providers, and it isn’t always obvious what revenue streams will be cannibalised, from whom, or over what timeframe.
Another consideration is device lifetime. Consumers typically upgrade phones every year or two, but many M2M deployments are expected to last a decade or more. Smart meters, a flagship M2M application for utilities, often have average lifespans of twenty years or longer. That longevity spans multiple generations of cellular technology, so calculating long-term return on investment is critical.
Solutions also have to work for everyone in the chain—suppliers, regulators, and end users. Take smart meters: even relatively well-informed consumers are often unconvinced of their benefits, and many people remain unaware of them entirely. Utilities are not always helping; for example, some electricity suppliers do not provide household microgeneration sites (such as homes with solar panels) with import/export meters, making it impossible for owners to determine how much power they feed back into the grid. A smart grid requires not just technology but better consumer engagement and clearer policies.
The core issue is that much of the M2M sector has been preoccupied with the underlying plumbing—network connectivity, provisioning platforms and billing—instead of building application platforms and ecosystems that deliver coherent, deployable solutions addressing real business needs. Interoperable standards and a solid infrastructure are necessary, but they are not sufficient.
What the industry needs now is a shift toward a faster, more innovative IT application model that combines open technology with fair sharing of opportunity and rewards—moving emphasis away from pure infrastructure providers and toward developers. That model has driven success in previous eras from companies such as Microsoft, Sun and Apple.
The infrastructure remains essential, but M2M applications demand seamless, universal coverage rather than isolated silos. Wireless cellular connectivity is important in many cases, but it’s not always the most appropriate choice. A mix of technologies may be better suited to different applications.
For example, ZigBee provides a low-cost way for devices to communicate over short distances. Alternative radio technologies designed for long range and better building penetration—even at lower data rates—can be more than adequate for applications such as smart grids and smart meters. Initiatives like SmartReach (a consortium including Arqiva, Detica and BT) illustrate how different approaches can offer long-range in-building coverage suitable for many utility applications.
The industry needs to be smarter about prioritising application requirements over repackaging existing infrastructure. Only by focusing on practical business value, interoperable application platforms and stronger consumer engagement will M2M move from promise to broad, sustainable deployment.