Machine-to-machine (M2M) communication – the interaction between devices and centralized data sources through automated service platforms – is a very lucrative opportunity for communication service providers. According to Ericsson and Forrester respectively, there will be more than 50 billion connected devices by 2020 with revenues through M2M connectivity reaching $17 billion by 2016. Providing connectivity for M2M services is a promising revenue stream, but the real value for communication service providers is differentiating themselves via enabling end-to-end M2M solutions.
Communication service providers can provide connectivity for transportation providers and then extrapolate their revenue by offering analytics-as-a-service to help their customer enjoy operational benefits by gleaning the data available through connectivity. They have a definite advantage based on their expertise with the network, service delivery, billing, and analytics. Existing relationships with target customers and communication service providers’ ability to partner with third-parties to offer comprehensive solutions to the targeted markets adds to their advantage. Enterprise customers would prefer having a single point of contact for their end-to-end M2M solution rather than have individual players fulfilling different requirements to complete the end-to-end chain.
While communication service providers have a head start, they need to approach it strategically with a clear action plan in mind. The solutions across various industry verticals are diverse must meet industry specific requirements and industry specific standards. Therefore, communication service providers need to have a clear road map for the industries they want to target so that they can earn ROI on investments they make in the M2M market. In the near future automotive, healthcare, utilities and transportation and logistics industries have the highest revenue-generating potential, making them the best targets.
Although M2M solutions tend to be industry-specific, communication service providers can be more efficient by reusing functions that are common across all industry verticals. These functions include data analytics to process the data collected from connected devices and provide necessary insight, device management to secure devices and the data on them and to keep them up-to-date with the latest applications and upgrades, application support for creating and enabling applications that run on connected devices, and a flexible billing system for new and evolving business models, together forming an M2M Enablement Framework.
This framework provides communication service providers a launch-pad to win in the M2M communication space as they can leverage it every time they approach a new customer or develop a solution for a new industry. Communication service providers that have ventured into the M2M market are moving closer to the M2M enablement framework either by forming partnerships with best-in-class providers and weaving together the framework, or by developing the framework themselves.
- Verizon’s contribution and eventual acquisition of nPhase
- AT&T’s numerous partnerships with Jasper Wireless, KORE telematics, Axreda DCX and Trimble
- Deutsche Telecom’s collaboration with Intel for providing tool-kit to developers and application providers.
Thus, to succeed in the M2M market, communication service providers need to acquire these capabilities and integrate them seamlessly.
Amit Atre is part of IBU Telecommunications, Industry Solutions, SAP Labs.