I get asked about M2M and the IoT (Internet of Things) all the time. Sometimes off the record in casual conversation, other times on the record as a Council Member with the Gerson Lehrman Group, an expert network that connects subject-matter experts with people who want to tap into their expertise. Executives ranging from product-design teams to private equity managers want the low-down on how to best capitalize on this burgeoning market.
Here are my top five most frequently asked M2M/IoT questions.
Q: What are the leading verticals for M2M and the IoT?
A: Which verticals comprise the largest market opportunity for M2M and the IoT is the #1 question asked by GLG clients, and it’s a crucial strategy decision when contemplating investing in an M2M/IoT solution. The enterprise verticals that lead in M2M/IoT adoption today have largely been the same since the early 2000s. Consumer products, fitness trackers, and mobile healthcare devices are significant expansion segments for M2M/IoT during this decade.
Here’s the top 10 verticals my GLG clients asked about:
- Healthcare and Fitness
- Automotive, Fleet, and Telematics
- Asset Tracking, Logistics, Supply Chain
- Manufacturing and Industrial
- Consumer Products
- Emergency and Disaster Response
- Home and Building Automation
- IT and Networking
- Policing and Security
Q: What are the advantages/disadvantages of purchasing M2M connectivity from a MNO (mobile network operator) vs. a MVNO (mobile virtual network operator)?
A: M2M cellular connectivity can be purchased directly from a MNO, such as Verizon, or through a reseller (aka MVNO) such as KORE Telematics. MVNOs offer flexible pricing through wholesale purchase agreements for network airtime which they repackage into pay-as-you-go or pooled rating, multi-national billing, cost threshold monitoring, automatic shut-down on overage, and more.
MVNOs typically provide larger geographic coverage than any MNO can offer by themselves through service agreements with multiple mobile operators in the same country and around the globe. They have also begun to offer coverage across multiple countries using devices equipped with a multi-country or global SIM (subscriber identity module), further easing access to a global coverage footprint.
This last development, plus AT&T’s announced 2016 2G network “sunset,” could disrupt the existing business model for M2M MVNOs. Global SIMs allow MNOs to more effectively compete with MVNOs for multinational M2M projects. AT&T’s 2G sunset will send MVNOs scrambling to contract with MNOs committed to GSM, such as T-Mobile, or risk losing a significant portion of their customer base. AT&T’s 2G sunset may have contributed to KORE’s decision to acquire smaller MNVO Jazz Wireless, since KORE exclusively sold AT&T’s GSM services pre-acquisition while Jazz exclusively sold T-Mobile’s. More on the 2G sunset below.
GLG clients also sometimes ask for a deep-dive regarding specific MVNOs, including Aeris Communications, KORE Telematics, M2M DataSmart, Numerex, RacoWireless, Stream Technologies, and Wyless Communications.
Q: How big is M2M and how fast is it growing?
A: How big the M2M/IoT market is, and how fast it’s growing, are among my favorite questions as reflected in my June/July 2013 CWM column “M2M, How Do I Love Thee?” This answer is always “it depends,” because the experts making M2M market forecasts don’t agree on what types of connections should be included, what customer segments matter, how big the market is, or how fast it will grow.
For example, in August 2013, Analysys Mason predicted M2M connections would swell from 200 million at the end of 2013 to 2.2 billion by 2023. Ovum released a comparably miniscule M2M forecast in September 2014 that calls for only 530 million M2M connections at December 2019, a quarter of Analysys Mason’s four-years-later prediction.
Regardless of the absolute size of their forecast, every analyst watching the M2M/IoT market predicts very high growth rates. Companies building business plans to enter or expand in this market would be well-advised to retain a research firm to develop a personalized market forecast specific to their objectives, technologies, coverage area, and target customers.
Q: Can you explain the difference between a “device management platform” and an “application-enablement platform?”
A: M2M/IoT devices must be activated, configured, kept current, and connect to backend services in order to provide their expected value. Support for these device functions is typically divided into two big blocks. “Device-Management Platforms” such as Jasper Wireless’s Connected Devices Cloud automate connected device deployment. These platforms support device provisioning, diagnostics, billing/rating, and activity monitoring. Some Device Management Platforms manage the remote device, such as remotely configuring or reconfiguring the device, tracking data error rates, and updating onboard software and firmware.
“Application-enablement platforms” allow rapid development of M2M/IoT applications by providing tools that abstract common device functions such as collecting and reporting data, connecting to a network, and responding to commands into code libraries, API (automated program interfaces), and even cloud-based application calls for infrequently-used functions. Some application development platforms simply collect device data for further processing, while other platforms give developers tools to build complete M2M/IoT applications without having to become familiar with RF (radio frequency) engineering or remote-device control.
Q: What is the the 2G/GSM Network Sunset?
A: AT&T’s announcement that it will shut down its 2G GSM network on Jan. 1, 2017 sent shock waves through the U.S. M2M community. AT&T’s GSM M2M units need to migrate onto another network within the next 24 months. Industry experts expect that as many as half of those units will migrate to T-Mobile, since they will be able to operate exactly as they do now after their SIM card is swapped out.
Another big chunk of AT&T GSM units will upgrade to 2G or 3G CDMA from Sprint or Verizon and their MVNOs. Migrating to CDMA from GSM requires more than a SIM card swap: these devices need to have their GSM modem replaced with a CDMA modem. Depending on how the device was designed, this could be as easy as swapping the GSM M2M module for a CDMA module, or may mean the complete replacement of the device.
Migrating to 4G LTE is the third option for AT&T GSM units, but in many cases it’s overkill. LTE networks’ speed and bandwidth far exceed what many of today’s M2M/IoT applications require. Retrofit outboard boxes may also translate GSM output signals onto other networks, such as the EN-2000 from Encore Networks that can be cabled to a 2G device to make it communicate on Verizon’s 4G LTE network. Most experts expect less than 10% of AT&T GSM units to wind up on LTE.
The last option for GSM devices migrating off of AT&T is to eschew cellular connectivity altogether and migrate to another form of wireless networking such as 802.11ac Wi-Fi, satellite, and various types of mesh networking.
Laurie Lamberth led M2M business development for Nextel and Sprint Nextel for many years, in addition to other strategic partnering and marketing positions. She currently leads the M2M/IoT consulting practice for 151 Advisors. Learn more about Laurie and 151 Advisors at 151advisors.com[button link="https://connectedworld.com/subscribe-connected-world/" color="default" size="small" target="_self" title="" gradient_colors="," gradient_hover_colors="," border_width="1px" border_color="" text_color="" shadow="yes" animation_type="0" animation_direction="down" animation_speed="0.1"]Subscribe Now[/button] Gain access to Connected World magazine departments, features, and this month’s cover story!