Bringing machines into the loop

Thomas K Thomas | Updated on May 27, 2011

Soon, your mobile could be chatting with your car or your umbrella so as to simplify your work day and home life.

How many times have you stood outside your home, looked up at the sky and wondered whether or not to take the umbrella to combat a possible shower? And on how many occasions have you driven around a busy shopping area desperately looking for parking space for your car?

Soon, these everyday problems will be taken care of by your umbrella and your car, respectively. Your umbrella will send a message to your phone giving you the exact moisture content in the air and whether you should pick it up or not while going out. And your car will tell you exactly where a parking slot is available in an area.

This is being made possible by what technology companies call Machine to Machine (M2M) communication. In M2M, devices and sensors communicate with each other or a central server rather than with human beings. These devices often use an embedded SIM card for communication over the mobile network.

So the umbrella will be embedded with a SIM card that will communicate with a server tracking the local weather.

Once the SIM card gets an update on the weather condition, it sends out a message to your phone which could read something like “it's going to rain so pick me up if you plan to go out”.

Globally, a number of top operators are already cranking up their investments in the M2M space with plans to launch a wide range of applications using this technology.

According to a new report by Juniper Research, M2M connections will be the catalyst for over $35 billion of service revenues across a diverse range of industry sectors by the end of 2016.

Sectors identified by the report as having particular potential include: Consumer and commercial telematics; smart metering; Point of sale; Retail; Banking; Mobile health monitoring; Smart buildings and security.

T Mobile, for example, has launched a wireless parking meter that senses when an automobile has left a parking space. The parking meter then sends out a message to a smart phone application on the consumer's handset that detects what spaces are available. There are other applications that can be embedded into things such as washing machines, refrigerators and even a dog collar. So a SIM embedded into a Coke vending machine can communicate with the soft drink company to inform exactly how many cans have been sold and how many are left in the machine. This information can be used by the company to manage its supply chain more efficiently.

New revenue streams

Swedish telecom equipment maker Ericsson reckons that there will be 50 billion connected devices by 2020.

That's ten times the number of people who are connected to mobile networks at present. “We are on the brink of the networked society where everything that benefits from a connection will be connected. This has just started,” says Douglas Giltsrap, Senior Vice-President, Chief Strategist, Ericsson.

As traditional voice and data markets gets saturated, mobile operators have to look for new revenue streams. Therefore the possibility of a networked world that connects billions of machines around us is developing into a mouth-watering proposition for mobile companies and technology firms around the globe.

US operator Sprint claims its newly launched M2M division is generating Average Revenue Per User (ARPU) of around $5-10 each month, a figure that generates a very high profit margin.

Geoff Martin, Manager of Platforms and the Collaboration Centre for Sprint's M2M Business Unit, says, “M2M is one of the most profitable customers we have. There's no customer care cost for M2M either. M2M is clean and profitable and not burdened with subsidies.”

“In five years' time, you won't be able to buy a digital camera that won't give you a way of uploading your photos to Facebook. Every single auto manufacturer will be coming out with one flavour of M2M,” he adds.

Facebook's Mobile Strategist Dhiraj Kumar says that there could be a day when machines could be part of social networking Web sites. A washing machine could leave a status message on its social networking site that it has finished washing clothes which would act as a signal to the owner to shut down the machine even from miles away through his mobile.

Cost, maintenance advantages

The best thing about M2M is that it does not require 3G or high-speed data network. A lot of applications only require a few kilobits of bandwidth, which is possible on a basic GSM network.

The other good thing is that the operators do not have to bear the cost of customer care operations like in the case of people-to-people business. In an M2M environment, there are no live customers to retain, so there is no need for elaborate customer care operations.

In very broad terms, if a retail telecom operation requires anywhere between 50 and 100 support people to operate, an M2M operation needs 10 to 20 people.

In India, operators are not yet talking about it yet but vendors say that this is inevitable.

“We do not differentiate between developed and developing economies when we talk about opportunities in the M2M space. We have a uniform platform which we will bring to anyone who wants it and then we can get into specifics of using that platform for what type of services and applications,” says Gilstrap.

According to Indian market watchers, the first adoption in M2M could happen in the rural areas for the purpose of education and healthcare.

Some technical issues

But there are still some key technical issues that need to be addressed before M2M takes off in a big way.

One major problem that everyone is trying to figure out is how to bill the service. The other problem could be interoperability issues as different technology companies are developing their own proprietary systems.

“The big issue is that there are so many domestic variants and that slows things down. There is not a single standard out there. You have different verticals and different applications. It is going to take horizontal and vertical integration for this to take off,” says Gilstrap.

(The reporter was recently in Silicon Valley. The trip was sponsored by Ericsson)


Published on May 22, 2011

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