Friday, 23 December 2011

Telit acquires Navman

After the earlier news this week that Gemalto (which owns Cinterion) was buying SensorLogic, another traditional M2M module vendor has expanded its capabilities as Telit acquires Navman Wireless's GPS business. Press release here.

In a market where differentiation is increasingly difficult and increasingly necessary this gives Telit another capability to weave into their modules. The combination of GPS and WWAN is critical for some applications and it will be interesting to see where they go with it.

Tuesday, 20 December 2011

M2M SDP updates: Hong Kong CSL picks Jasper, Swisscom says nothing new (although they have some big news to tell!) and Gemalto aquires SensorLogic

Lots of updates in the M2M SDP world over the last couple of days. First up were a couple of announcements about CSPs signing deals with platform providers. Hong Kong CSL has done a deal with Jasper. Perhaps it was inevitable given that parent company Telstra is already a Jasper partner, but kudos to Jasper for expanding their footprint again. It's an important one this, as CSL is in an excellent position to help companies get into China. I was chatting with CSL's Stephen Tang at Mobile Asia Congress last month and it seems like CSL can really act as a bridgehead as they understand the territory and benefit from superior roaming rates in China.

Second piece of news is about Swisscom. There has been a something-and-nothing news story around in the last couple of days about how they're planning on doing more business in M2M. There are a few mildly interesting datapoints about how they've seen 10% growth in demand for M2M SIMs in Q4 2011 and how they're expecting 100 million machines connected over their cellular network in the long term. Machina Research estimates that there will be about 10 million cellular M2M devices in Switzerland by 2020, up from about 300,000 at the end of 2010 (Source: Machina Research's Connected Intelligence Forecast Database, 2011). What's interesting is that this "news" comes at a time when there actually is something interesting for Swisscom to announce: the selection of an M2M device connection platform. I won't spoil the surprise by telling you who. I guess they weren't quite ready to make the announcement and had time booked with journos so they filled it. Anyway, the thing that wasn't reported is good news for the platform provider.

The other platform-type news was that Gemalto has agreed to acquire stricken SDP SensorLogic. This is another example of integration in the M2M value chain, in this case vertical. By acquiring SensorLogic, Gemalto will bolster its SIM, device management and modules (Cinterion) capabilities with a service delivery platform. The traditional M2M module vendors are keen to do this in order to add value and compete with the mass market manufacturers from the far east. Sierra Wireless, for instance, very much positions itself as more than simply a module manufacturer.

Machina Research has been predicting some substantial consolidation in the M2M value chain for some time. There are just too many SDPs and a bit of rationalisation is a natural development, particularly as they start to become more horizontalised. There is also the added competitive threat to the module providers such as Sierra, Telit, SimCom and Cinterion from the far east. This should create an environment where we'll see even more consolidation. It was interesting to note that Ericsson announced it was quitting the modules market. Perhaps no big surprise as the natural role for Ericsson is to move up the value chain into professional services and IT, rather than try to compete in the more commoditised devices market.

Thursday, 1 December 2011

Vodafone Germany to offer HDTV service over LTE

Vodafone Germany is (according to this article on Fierce Wireless) planning to launch HDTV over its LTE network during the first half of 2012. In the wake of MNOs wailing about pressure on their network capacity from heavy users, it seems odd that an MNO would actively seek to introduce a new tranche of customers that will be ultra-high users, putting the traditional bandwidth hogs in the shade. However, in Germany there are a particular set of circumstances which go some way to justifying it. In Germany the roll-out requirements for LTE are quite strict. So if VF has to build a network they'd better find some traffic to carry on it. I wouldn't expect HDTV to feature strongly as an offer in markets with less strict LTE deployment requirements, where the technology is generally being used to cope with high demand at usage hotspots.

Friday, 25 November 2011

Vodafone selected to provide 3G connectivity for PlayStation Vita

Vodafone has been chosen by Sony as the connectivity provider for Sony's Playstation Vita. Geographically the deal covers VF's footprint in Western Europe (plus SFR in France), Australia and New Zealand. For more details see here.

The device will be fitted with both 3G and WiFi. No need for LTE at this stage as the networks aren't ready, the additional BOM cost of LTE (USD60-70) is substantial in the context of the price of the device and the lifespan of the device is not more than a couple of years, so plenty of time for LTE versions in future. It'll be interesting to see what happens in the US. If they're sticking with just a 3G device there they're basically committed to AT&T, who do have a good pedigree in consumer electronics M2M (e.g. Kindle).

Vodafone will act as a channel for the Playstation Vita including, we would assume, retail as well as online. No details are available on price, subscriptions etc. The interesting question is whether the connectivity will be completely opaque as it is in the case of the Kindle. If it is, then the cost of the connectivity will be bundled in with the device. If it's not, then the user will have to sign up to a monthly contract. A lot depends on the form of online gaming that Sony puts in place. Vodafone/Sony have until 22nd February next year to decide. That's the device launch date.

By 2020 Machina Research expects that there will be 30 million WWAN connected games devices. For more details see Machina Research's Machine-to-Machine (M2M) Communication in Consumer Electronics 2010-20.

Monday, 21 November 2011

All the fun from Mobile Asia Congress in HK last week

I was over at Mobile Asia Congress in Hong Kong last week for three reasons: support the GSMA in some of their Connected Life messaging, chair a conference session on automotive M2M, and pick up a few tasty morsels on the Asian market. So here's a quick precis:

The GSMA Connected Life

We've been doing a lot of work at Machina Research supporting the GSMA's initiative (see here for more details). And what better opportunity than MAC to highlight some of our key findings about the Asia-Pacific region in 2020, the most connected region in the world.

  • Asia-Pacific will dominate the global market for connected devices. In 2020 it accounts for 46% of devices, 47% of SIM-based devices and 41% of machine-to-machine connections. It represents 38% of the US$1.2 trillion global MNO addressable market opportunity (US$447 billion).

  • In 2020 China will be the biggest market in the world for connected devices: 20% in 2020 up from 16% today. The revenue opportunity for MNOs is US$180 billion, 2nd only to the US’s US$225 billion. Much of this growth comes from M2M in Consumer Electronics (due to growing disposable income), Intelligent Buildings and Utilities (the latter two particularly due to improvements in the housing stock and government mandating of smart metering).

  • Japan and South Korea will be the most connected societies on the planet. They average 11 connected devices per head of population (global average = 3). Japan has the highest MNO addressable revenue for connected devices per head of population in the world with USD660/head.

  • India is the big emerging mobile opportunity beyond 2020. It's the 5th biggest market in 2020, worth a potential USD43 billion to MNOs in 2020. With only 0.2 M2M devices per head of population (global ave. 1.73), accounting for only 3% of cellular (Japan 79%, China 58%), there's a lot of room for growth.

Automotive M2M session

I ran a very interesting session on Thursday on automotive telematics (with a bit on utilities too), with Fran Dance of BMW and Ed Pleet of Ford, talking about their companies' respective approaches to automotive M2M. This was particularly interesting as they have chosen to take very different approaches. BMW's focus is on connecting the vehicle itself, while Ford's approach is to make use of the driver's own connectivity (i.e. the smartphone). There are strengths to both approaches. For in-vehicle entertainment, for instance, I am wholeheartedly of the view that the driver (or passenger) will want to access their own content through their own device. However, for some of the applications that involve no user intervention (e.g. security/tracking, eCall etc) then I'm of the view that it's more naturally the vehicle that is connected. If you're interested in this area you could do worse than check out Machina Research's report Machine-to-Machine (M2M) Communication in the Automotive Sector 2010-20, published earlier this year.
Of course the session covered a lot more ground than I'm talking about here. Apparently the session was being recorded and should be available some time on Mobile World Live. I'll keep you posted if it does become available and you'll be able to enjoy it for yourself.

Other nuggets of information

If you were following me on twitter (@mattyhatton) then you'll have seen some of my comments on news from the keynotes. Some very interesting stuff. Here's a few things from the keynotes.

  • Nice to hear Anne Bouverot, the GSMA's DG, name-checking Machina Research and our figure of 24 billion connected devices worldwide in 2020.

  • China Mobile is going aggressively after the M2M space with its Smart Cities initiative. 160 cities are already signed up. No wonder we're expecting China to be #1 M2M market by 2020.

  • NTT DoCoMo has found a unique way of dealing with mobile broadband demand. In congest cells it downgrades the service to any user who has been a heavy user over the previous three days. Cute. And a good way to deal with its expected 12-fold growth in mobile data between now and 2015 (which sounds a rather high estimate to me). They're also planning 98% LTE coverage by 2014. Particularly relevant for DoCoMo as they're (I think) the only MNO whose data revenue exceeds voice.

This has been a bit of a hotch-potch blogpost. Ideally I'd have told you lots more but Q4 is always the busiest time for us analysts and this year more so than any other for me. Drop me a line if you're interested in any of the above.

Wednesday, 2 November 2011

Talking M2M at 4G World

Here's a video of me, Ton Brand of the GSMA and Michael Coyne of Ericsson talking M2M with the bNET folks at 4G World last week in Chicago. An interesting discussion...

Friday, 21 October 2011

Telstra announces M2M matchmaking service

Australian MNO Telstra has established a service to allow potential customers for M2M services to find service providers who can meet their needs. Article here. This is a similar approach to that announced by Deutsche Telekom a few weeks ago. I think we always realised that the role of the MNO in the M2M world was that of enabler, allowing partners provide the application- or vertical-specific expertise. At least for the next 4-5 years. This is just another manifestation of that role of enabler. And the MNOs can make a bit of money through matchmaking the other parts of the value chain. I've been told about a few other similar schemes that will be launched soon by other major MNOs.

Thursday, 20 October 2011

M2M announcements galore: Telefonica agreement with China Unicom, MTN launches telemetry unit and Vimpelcom opens M2M management centre

Blimey. Lots of M2M-related announcements recently.

Telefonica has announced an agreement with #2 Chinese carrier China Unicom to collaborate "along the entire value chain, from the development of standards to the joint development of end to end M2M vertical products and the commercialisation of solutions". Press release here. An interesting move from Telefonica following their recent M2M tie-up with Etisalat that I blogged about back in July. Yet more evidence that MNOs are seeking to form global blocs to take advantage of the M2M opportunities which are, to a large degree, global.

African MNO MTN will be focusing a lot more attention on telemetry as a strong growth opportunity. Coverage of this on M2M World News here, including an interesting stat on Vodacom's 700,000 M2M connections. Based on the work that we at Machina Research have done this is largely around stolen vehicle tracking in South Africa, covered in our report Machine-to-Machine (M2M) Communication in the Automotive Sector 2010-20.

Not to be ignored, Russia's Vimpelcom has launched an M2M management centre. OK, so this was news from last week but I'm only just picking it up. Very brief details here.

So it seems that everyone is interested in getting in on the M2M act. Understandable given that it's a EUR714 billion opportunity globally by 2020, with 12 billion connections, as described by Machina Research only last week. Those figures are based on our recently completed Connected Intelligence forecast database which provides 10 year forecasts across 54 countries and 60 applications for connections, revenue and traffic. We think it's the most comprehensive set of data on the emerging M2M market opportunity. If you'd like to know more about how you can get access to the database, send me an email.

The announcements show that MNOs are rightly realising that M2M is not just about carrying more data traffic (of which there won't be much). It's about adding value, so all this interest in competence centres and focusing on solutions is the right approach. In November Machina Research will be publishing our M2M CSP Benchmarking Report examining the capabilities of the major M2M service providers and identifying their capabilities across different sectors and geographies. Based on this we will be able to identify for each potential end customer who the best M2M option would be. We will also be able to identify who we expect to be the most successful M2M players in the next 10 years. Get in contact if you'd be interested to know more.

Tuesday, 18 October 2011

Telefonica O2 secures EV charging deal

O2 has signed a deal to provide M2M connectivity to Chargemaster's POLAR network of UK network of electric vehicle (EV) charging points. All the details of the story are here.

EV charging is one of the categories of M2M communications covered in our report Machine-to-Machine (M2M) Communication in the Utilities Sector 2010-20. Globally we predict that there will be over one million EV charging M2M connections by 2020, up from just a few thousand today. Since they'll often be clustered we're not expecting one connection per charging point though. So the total number of charging points will be much higher than that.

In terms of technology, we are expecting cellular technologies to dominate EV charging points globally. It is easier to deploy and more secure. This differs from Smart Metering (the other major utilities segment) where we mostly expect powerline and community WiFi to dominate, although not in the UK.

The growth of electric vehicles will be a major stimulus to M2M for reasons that I've laid out in a previous blogpost. Not least the need to know where the nearest charging point is. Electric vehicles are necessarily much more integrated into a centralised system than petrol cars due to the dependence on recharging. This is exactly where M2M comes into its own: where a network of distributed items need to communicate in real time with each other and with a centralised system.

Tuesday, 11 October 2011

Machina Research identifies EUR1.3 trillion opportunity for connected devices and uses forecasts to support GSMA's Connected Life launch

So it's been a very busy couple of weeks. We've been focused on two main things. First of all completing our Connected Intelligence database, which we now believe is the most comprehensive forecast database for M2M connections, traffic, revenue splits, technology etc.

Secondly we've been doing a lot of work to use our data to support the GSMA's new Connected Life programme. Jim is over in San Diego at the CTIA Enterprise & Applications show and yesterday shared a platform with AT&T, Qualcomm and the GSMA to announce the launch. If you want to know more about Connected Life, click here.

Clearly to support an initiative that is as far-reaching as that envisaged by the GSMA requires a partner that understands how connectivity will affect every aspect of work and home life. We have that understanding and we have the forecasts to back it up.

Over the next week or so I'll be highlighting some of the figures that are coming out of our newly completed forecast database. Some have already been released as Machina Research press releases. In the meantime, I will flag up the following:

  • Overall connected devices will treble over the next ten years, from 9 billion in 2011 to 24 billion in 2020.

  • The lion’s share of the growth will come from machine-to-machine connections , which will grow from two billion at the end of 2011 to 12 billion at the end of 2020. The majority are expected to be connected via short-range technologies such as WiFi. Machina Research expects 2.3 billion will be cellular connections in 2020, accounting for 19% of all cellular connections. Overall M2M revenue will grow to EUR714 billion in 2020.

  • PC/laptop mobile broadband will grow dramatically, from 215 million connections at the end of 2011 to 1.5 billion in 2020 as device costs come down and network coverage and capacity improves. By 2020 most PC/laptop broadband connections globally will be mobile. Wireless wide-area connected tablets and eReaders will grow from 66 million in 2011 to 230 million in 2020.

  • Growth in handset data users will also be significant, with 3G+ (i.e. 3G, 4G and potentially beyond) devices set to grow from 2 billion at the end of 2011 to 9 billion by 2020.

  • The growth in PC/laptop, tablet and handset data usage will result in a massive increase in data. Machina Research forecasts that globally mobile data traffic will increase from 4 exabytes in 2011 to 42 exabytes in 2020, with 60% coming from PC/laptop connections and 37% from handsets.

  • Total revenue from connected devices will grow from EUR420 billion in 2010 to EUR1.3trillion in 2020. Machina Research expects mobile network operator data revenue to grow from EUR130 billion in 2011 to almost EUR500 billion in 2020.

For more details on everything to do with Machina Research, see our website.

Tuesday, 4 October 2011

Living PlanIT: Now that's what I call M2M

As I mentioned in my blogpost yesterday, I was over in Rotterdam last week speaking at DTAG's M2M partner event. As well as presenting some of Machina Research's M2M forecasts I also got to see some interesting presentations.

First up on Wednesday morning was Steve Lewis of Living PlanIT. Steve's a true visionary in M2M and some of the things they're doing are truly astounding. Take a look at their website for more details. If even half of the things that they're planning for future urban developments in places like PlanIT Valley in Portugal or North Greenwich come to fruition then we really are heading for a phenomenally connected world.

Their perspective is that as urban development occurs it should go hand-in-hand with deploying M2M. One eye-catching reference was to the presence of sensors every square meter. Not application-specific sensors, but ones that could be used for multiple applications be it child tracking, public transport, logistics or whatever. The city of the future indeed.

I would wax more lyrical about what they're up to, but instead I'd just advocate you take a look at their site or check out some of Steve's presentations on YouTube.

Monday, 3 October 2011

DTAG puts M2M partners front and centre

I spent a big portion of last week over in Rotterdam at the Deutsche Telekom M2M Partner Event. It was great to see so many of the parts of the M2M value chain all in once place. The big announcement from the event was the launch of DTAG's new partner portal. Press release here.

It was evident from the event that DTAG is taking its partnership arrangements very seriously. As I mentioned in my presentation at the event, the M2M value chain is complex and fragmented because it needs to be. It's a very diverse market and it needs specialist skills to properly address the specific requirements of each vertical sector. DTAG recognises that and understands that to be effective it needs the best partners.

Even more than that it has recognised that it can help bring together the various parts of the market from vendors to service providers worldwide to help drive the success of M2M (and maybe make a bit of money as an intermediary in the process).

One of the key elements of the new portal is to allow (and I quote) "partners, regardless of their company size and country of origin, an opportunity to present their M2M applications to providers of hardware, software and service, systems-integration and end-to-end solutions worldwide and to market these applications globally". Since devices and solutions are today quite national, it will help numerous companies to be able to promote their products and services.

Sunday, 2 October 2011

Everything Everywhere M2M announcement is puzzling

UK mobile network operators (and T-Mobile/Orange joint venture) Everything Everywhere made a fairly big splash announcement last week about how it hoped to realise its M2M ambitions.

Press release here.

What puzzles me about this is not that EE would have pretensions in the M2M market, it's that it's decided to do so via a proprietary platform developed in conjunction with European MVNE Transatel. It seems increasingly evident to me that only the biggest of MNOs can survive with their own proprietary platform. It's just not a sensible option for a single country operator to build their own. They just don't have the scale to keep up with the big boys. Therefore the only assumption is that Transatel has some kind of pretensions at being a regional or global platform provider in the M2M space. However, I just can't see them being able to keep up with the more established non-proprietary platforms, such as from Jasper or Ericsson. These folks either have pedigree (in terms of existing customers) or scale.

As for the announcement that EE has signed a deal with telematics provider Redtail Telematics, I guess we'll just have to wait and see what the exact details are. Not least because neither Redtail, nor its partner company Plextek, has seen fit to put out a press release on their website setting out their perspective on the deal. It looks to me like Plextek is a mid-sized UK telematics company (and there's nothing wrong with that!) that happens to have a partnership with Redtail, who have 5 million telematics SIMs. I can't help feeling EE might be overblowing this deal. I suspect it's not a deal for EE to manage 5 million global telematics SIMs. I'm waiting to hear from EE though.

In November Machina Research will be publishing its M2M benchmarking report, comparing major CSPs in terms of their capabilities in M2M. In that we'll be focusing a lot of attention on platforms both proprietary and non-proprietary.

Monday, 26 September 2011

Vodafone and DTAG tied on 5 million M2M connections each in Europe?

The M2M Alliance's fourth meeting in Bergheim was, by all accounts, a great success. There were a few announcements that I've covered elsewhere but of interest was the fact that DTAG and Vodafone reportedly indicated that they have about 5 million M2M SIMs each in Europe. Always good to get a few figures every now and then, so I thought I'd flag it up.

Saturday, 24 September 2011

Women: an untapped mobile opportunity and engine for economic growth

I was watching World Bank President Robert Zoellick give his annual assessment of the global economic situation the other day. I'll skate over the gloomy economic picture that he was painting for now, although it is relevant. One thing he mentioned was that there was effectively a massive emerging market in the world that can be an engine for economic growth: women. What he was saying made a lot of sense. I won't go into it in detail. I'm sure you can google it.

However, for my purposes the interesting thing was thinking about mobile penetration. OK so nominally just about every country has a 100% mobile penetration but we all know that's hogwash. Not everyone in the world has a phone. Multiple SIM ownership is widespread for cheaper off-net calling, there's a lag in ceasing counting old SIMs that have stopped being used, and there is a lot of multiple ownership due to business/consumer use, mobile broadband etc. From a personal standpoint, I suspect I'm still counted as 2 Indian mobile phone subscribers.

So I began wondering what the likelihood was that mobile penetration of women was lower than men and I suspect there's a strong chance. Probably not in Europe and the US, but potentially in Africa and Asia. It has to be said that in some developing countries I've visited the village phone is always controlled by a matriarch. However, there's some difference between that and personal phone ownership. According to the excellent report Women & Mobile: A Global Opportunity from the GSMA: "a woman is still 21% less likely to own a mobile phone than a man. This figure increases to 23% if she lives in in Africa, 24% if she lives in the Middle East, and 37% if she lives in South Asia. Closing this gender gap would bring the benefits of mobile phones to an additional 300 million women".

While looking into this I also read an article from the Cherie Blair Foundation, which reiterates the idea that GDP grows 0.6% for every 10 percentage point increase in mobile penetration. So, increasing mobile penetration amongst women should boost GDP.

I also read an interesting paper on the impact of mobile phones on the status of women in India. The author Dayoung Lee concludes that "mobile phones significantly decrease both men and women's tolerance for domestic violence, increase women's autonomy in mobility and economic independence" and draws the startling conclusion that owning a mobile phone is "in some cases equivalent to more than five extra years of education".

It seems therefore that there is a huge amount of circularity about this issue. Higher mobile ownership by women creates a higher degree of economic independence, reducing the barrier to mobile phone ownership. It also provides a much (and I mean MUCH) needed economic boost. Of course, cultural factors may still prevail. It is the job of government to break these down. Not because it's right to empower women (although implicitly that's a good thing) but because it's good for business and good for the economy.

This has been a very superficial look at this intriguing topic. I'm sure I'll return to it in the not-too-distant future.

Tuesday, 20 September 2011

Telekom Austria's M2M launch (and others like it) threaten Vodafone's partner arrangements

Telekom Austria has announced the establishment of a dedicated M2M business unit. The press release is here. I don't really need to regurgitate what's in that, particularly as the launch was trailed back in June/July. However, I am intrigued by a number of the issues associated with this launch. Most particularly the change it may herald in relations between Vodafone and some of its partner operators as their interest in M2M grows.

Up until now the major noise in the M2M market has been made by the big boys. Vodafone, OBS, AT&T, VZW, Telenor (OK, so they're not huge in Europe but their Asian assets mean they're #7 in the world by subscribers) etc. The TA announcements indicates that they want to be taken seriously in this space. I'm sure other mid-tier MNOs will follow suit.

And it makes sense to do so. Clearly there's some money to be made from M2M. The question is whether the smaller players will lose out at every turn to the big boys? Well, yes and no. In some applications all that matters is national coverage. Smart metering being the prime example. TA will, I'm sure, dominate that market in Austria and take a strong share in other footprint markets.

For other application categories, such as automotive or transport & logistics, geographical coverage is vital. Of course MNOs have access to roaming deals (although in some prominent cases these have been withdrawn for M2M by some cunning MNOs) but these have two drawbacks: (i) they cost more, which may matter depending on the application and its margins; and (ii) it's not as easy for the service provider to support their clients without 100% transparency of the network elements.

It is also important to note that M2M is not a stand-alone service. It tends to be provided to companies that are also wider corporate customers (and important ones at that) of the telco. Failing to provide an M2M service could have implications for the wider ability to sell to verticals. If TA fails to support the M2M requirements of its major customers, and in particular large corporates based in Austria, then it may lose them as customers to the likes of Vodafone.

This raises an interesting issue. Mobilkom Austria is a Vodafone partner operator. In M2M these partner players offer VF the ability to extend their reach into non-footprint markets, often with great transparency over network elements. Some of the partner operators are supported on Vodafone's GDSP platform. However, I suspect there will be a backlash from these partners simply because Vodafone knows too much about their customers and operations. The solution for Vodafone is fairly simple though. They need to hive off the GDSP platform into a separate company (a la Jasper Wireless). This will allow them to support third party carriers (such as TA) without TA fearing for its wider corporate customer base.

We at Machina Research will be exploring this and many similar issues in our M2M Benchmarking Study which will compare the capabilities of major CSPs across the world in providing M2M solutions.

Monday, 19 September 2011

MNOs should take a leaf out of the utilities' book on load balancing

As I'm sure you know I've been focusing a lot of attention on smart metering as a major M2M application. Our report from back in May predicted 1.5 billion smart meters worldwide by 2020, up from about 100 million today. One of the major benefits touted is the ability to carry out load balancing on the electricity network. Since it's hard to store electricity efficiently utilities have to ramp up and down generation capacity as demand grows or declines. This is also very inefficient. Smart meters should allow utilities to smooth that demand by reducing the price of electricity at off-peak times, encouraging users to consume at those times and reduce consumption at other times. The aim is not so much to reduce the overall usage (although hopefully this will happen too as people become more aware of how much power they're using) but to smooth out the peaks.

The same is true for mobile network operators. They also have to provision their networks based on peak demand despite the fact that for a lot of the time the network will be underutilised. As a result investment in RAN is typically inefficient. MNOs are rolling out LTE so people can get better speed at the new busy hour but that infrastructure will remain underutilised the rest of the time. I've previously examined (here) the need to focus on particular geographical areas rather than rely on the macro network. But MNOs also need to think about the timing of usage as well as the location.

The key for MNOs is to follow in the footsteps of utilities by spreading demand, rather than just increasing supply. The time of heaviest usage for mobile broadband is 11pm-midnight. And most of the traffic is adult video. I'm not going to speculate on the ability of MNOs to time-shift the consumption of that type of content. That's a thorny subject indeed. I'm not sure a "specialist gentlemen's content" happy hour from 3pm-4pm would really work too effectively. However, other options might include local caching of content, throttling of video content during the busy hour or charging a premium for usage during that time. No easy solutions but potentially a cheap way to better balance network load.

Machina Research's report Mobile Broadband Global Forecast & Analysis 2010-2020 will be published later on this month including our forecasts for the growth in MBB connections and traffic in 54 countries.

Tuesday, 13 September 2011

M2M will give a massive boost to satellite communications providers

According to this article in yesterday's Total Telecom, almost one-third of the connections to Iridium Communications' satellites are M2M. To be exact 32% of its commercial connections were M2M and 21% of government (with government accounting for one-tenth of its subscriber base).

M2M offers satellite providers such as Iridium an opportunity to go beyond the satphone market where the opportunity was always limited (mostly to the CIA, oil workers and journalists). M2M connections are, by definition, remote. In some cases VERY remote. For this reason satellite has a big part to play. I've recently been looking at a number of sectors where satellite has a big opportunity including mining and transport.

One of the categories of connectivity that we cover in the Machina Research Connected Intelligence Reports is Satellite. We're currently in the process of pulling together the global figures for all the M2M sectors we've been forecasting. Once we've done that we will have a comprehensive view of where the satellite M2M market (as well as every other M2M market!) is heading. Don't worry, we'll be pushing it hard, so you're bound to hear about it.

Tuesday, 30 August 2011

Mobile network operators focus on the HetNet to deal with ten-fold mobile data traffic growth

Over the last three or four years industry commentators have been predicting that mobile networks would imminently be swamped by the growth in data traffic. Hyperbole-strewn language spoke of “the mobile data tsunami”, spurred by widespread adoption of mobile broadband dongles and increasingly powerful smartphones. It is easy to see how such a fever was whipped up. Many mobile network operators (MNOs) were reporting huge increases in data traffic. In August 2011 even the UK regulator Ofcom got in on the act reporting that mobile data traffic had increased 40-fold in the last three years. However, according to forthcoming research from Machina Research the picture is much less worrying than most MNOs imagine.

Take the example of Austria, which is a great test case for mobile broadband as it was, until recently, the leading market in the world. At the end of 2010 there were 1.6 million laptop mobile broadband connections for a population of just 8.4 million. Austria was replaced as number one world mobile broadband market by Finland in 2009 but prior to that it was the preeminent example of how successful mobile broadband could be. Mobile network operators in many other markets have looked to Austria as an indication of how their market may develop. Initially they did so with some excitement as penetration grew, but at the same time the amount of traffic on the network also surged with implications for network demand. For one major Austrian MNO mobile data traffic more or less trebled each year from 2006 to 2008, resulting in a 34-fold increase in traffic over those three years. Subscriber numbers increased only six-fold. At this point most MNOs would be fearful of a continuing growth swamping the network. However, over the next two years subscriber numbers and total traffic increased by only a further 50% each and the total amount of traffic seems to be plateauing rather than continuing to grow at an exponential rate. The evidence from Austria indicates that traffic growth is very rapid during the early adoption phase of mobile broadband but it slows as the market matures, rather than continuing to accelerate away.

By the end of 2011 Machina Research anticipates that globally there will be 2 billion 3G/LTE phones and almost 300 million datacards and tablets active. Between them these devices will generate 4 exabytes of data. By 2020 there will be 7.3 billion 3G+ handsets and 1.6 billion datacards and tablets, altogether accounting for 40 exabytes of data: a ten-fold increase in traffic over the next ten years. Of course that belies some significant variation between countries. Across developed markets the average growth is 8-fold over the ten years. Naturally, those markets that have very high mobile broadband penetration today will see the lowest growth. Austria, Australia and Finland will all see growth of less than 500% over the period. In contrast, growth will be much more rapid in emerging markets in Latin America, Africa and Asia. On average Machina Research expects countries in these regions will see a 14-fold increase in mobile data traffic over the period. The biggest growth will come in China, India, Pakistan and Peru which will all see data traffic increase by more than twenty times, albeit from a relatively low base today.

Of course MNOs must act to cope with the traffic growth. Even a 500% increase in traffic is substantial. However, the key figure for mobile networks is not the total amount of traffic but the peak traffic which the network must be provisioned to support in a particular location. Typically the busiest 10% of cells carry 50% of traffic. Traffic growth in traditionally quieter periods or less active cells will have little implication for capacity planning. The key for MNOs is to focus on shifting user behaviour to reduce the peak in the mobile broadband busy hour from 10-11pm and to deal with high localised traffic demand. With this in mind, MNOs should be focusing their attention on delivering localised capacity rather than simply pouring more money into the macro network. The implication is that the focus of MNOs should not be on acquiring additional spectrum or the widespread deployment of the latest technology. It should focus on using a variety of different technologies and access methods to provide the best coverage areas of high demand. Ultimately MNOs will be forced to adopt a varied approach including public WiFi, femtocells, small cells for localised capacity and the macro network for coverage. The main role of the MNO for the next five years will be stitching together all these varied technologies into what is becoming known as the HetNet or heterogeneous network.

Thursday, 18 August 2011

Another Machina Research blogger

My colleague Jim Morrish has also started blogging and I recommend you take a look. He'll be covering the same sorts of stuff as me, with a particular focus on M2M. Cheekily he's called the blog "Not Quite 50bn" in reference to Ericsson's oft-quoted figure for number of connections by the end of 2020. We're currently putting together our own estimate of the total number of connections. Rest assured we'll be telling everyone about it once we've finished it.

Wednesday, 17 August 2011

I always knew my market forecasts were a work of art: telecoms-themed modern art at Estonia's KUMU gallery

I've been away in the Baltic states for a couple of weeks (hence no blog posts). When I was in Tallinn I visited KUMU, the Estonian Art Museum. A phenomenal building.

As well as all the treasures of Estonia's art history (mostly portraits of the duke of somewhere-or-other) there is also a rich vein of modern art in Estonia, including some fantastic surrealist, modernist and pop art in the 70s and 80s and some excellent current stuff. KUMU also featured a wonderful spotlight on the work of Jules de Bruycker which was outstanding.

For me though the highlight of the visit was an exhibition of internet and telecoms related art called Gateways. Given that it's vaguely related to telecoms I also feel justified in sticking it on this blog. Most relevant to my current work were a couple of pieces that made heavy use of RFID.

"Real Snail Mail" by Vicky Isley and Paul Smith of the boredomresearch collective is an installation piece involving real snails with RFID tags collected. Members of the public address and send an email using the associated PC and one of the snails will pick it up at an RFID tag marked "collect" and eventually deliver it a tag marked "forward" at which point it will be sent over the internet.

More explanation is provided in the picture below.

The average delivery time is about 5 days. I sent a message to myself on the 11th August and I'm still waiting.

Another piece, "Trapped", involved the artist, Anna Irapanciere, equipping 40 objects in her home with RFID tags to basically record everything she does. Apparently this lifeblog is accessible via the internet. I didn't try and, to be honest, probably won't bother as the minutiae were rather dull. In the exhibition itself the results were presented on a very 1980s green screen computer. More details in a rather blurry picture below.

Another fun piece was by Timo Toota. It was a giant computer console that basically took your name, date-of-birth etc from your passport and performed a web search on that name, telling you some stuff about yourself. Naturally it got me confused with my namesake the British boxer but it's nice to be told you're a maximum 20/20 on the fame scale. It also told me that I'd served in the armed forces and that I'd die at 69 (which was more than a little bit worrying). So all-in-all pretty inaccurate. The machine is, however, very impressive to look at and makes a suitably futuristic pulsing/clanking noise while performing its check on me.

A final one to excite (within reason) all mobile industry analysts was Ingo Gunther's "Worldprocessor". It featured a set of globes aimed at showing the world in different ways, including the relative sizes of country economies vs turnover of the biggest multinationals. One globe showed mobile penetration and CAGRs.

So apparently the plotting of mobile penetration and subscriber CAGRs is art. Who knew? Turns out I've been an artist all along. I have to confess to wondering slightly who they got their figures from. Anyone know?

Tuesday, 2 August 2011

Preview from Machina Research's forthcoming mobile broadband report: MBB traffic will grow 10x from 2011 to 2020

Mobile broadband has been one of my main coverage areas at other analyst firms and it's now something that I'm carrying over into Machina Research. As of later on this month we'll be publishing our report Mobile Broadband Global Forecast & Analysis 2010-20. The forecasts are pretty much finished bar a little bit of tinkering here and there so I thought I'd share a few of the topline figures.

We estimate that there are around 6 billion personal wireless wide area connected devices in the form of handsets, MBB-connected PCs/laptops and tablets in use today. By 2020 this will have increased to over 9 billion, including 1.4 billion connected PCs/laptops and well over 200 million wireless wide area connected tablets (i.e. excluding WiFi-only devices). Today about 1/4 of the world's 6 million connected devices are 3G+, a figure that is set to rise to 95% by 2020, as illustrated in the chart below.

Our forecast for traffic growth isn't as aggressive as many. Realistic I call it. We estimate that it will grow from about 4 Exabytes annually this year to about 40 in 2020. So a ten-fold increase on average globally. Obviously there will be massive geographical variation in there. Some markets in Europe are already seeing what looks like the start of a plateauing in total data usage. It's still growing pretty rapidly but it is not exponential. In other emerging MBB markets such as India the growth will be more rapid in percentage terms.

As you can see from the chart below, it's mostly PC/laptop connectivity generating the data traffic however the variation in the mix between handsets and PC traffic across different countries is quite dramatic. In the Netherlands for instance 2/3 is handset data, whereas for more mature mobile broadband markets such as Austria it's more like 15%.

These are just some of the topline figures. I'll be sharing a few other nuggets as the report nears completion.

About the report

Mobile Broadband Global Forecast & Analysis 2010-20 provides invaluable qualitative and quantitative analysis of the evolving opportunity for mobile broadband. The report reviews the major drivers and barriers for growth of MBB and analyses the key market dynamics, including how MNOs should approach customer acquisition, retention and management. It also examines the implications of the growth in mobile data traffic and the strategies that MNOs should pursue to cope with that growth including pricing and bundling. The three major device types (smartphones, datacards/USB sticks and tablets) are examined individually with case studies and forecast analysis.

The forecast excel data sheet includes very granular 10 year market forecasts for 54 countries and 6 regions. The forecast covers numbers of connections, traffic and revenue for each of the device types with splits by technology (2G, 3G and 4G).

To order your copy, find out more about the report or to discuss annual subscriptions please contact us.

Monday, 1 August 2011

Machina Research Press Release: Automotive M2M forecast to hit 1.4 billion connections generating revenue of EUR157 billion by 2020

The automotive sector promises a plethora of connected applications from in-vehicle entertainment to pay-as-you-drive car insurance making it one of the biggest and most dynamic M2M opportunities

[London, UK 1st August 2011]

Automotive will be one of the most vibrant sectors for machine-to-machine (M2M) communications over the next ten years according to a new report from M2M analysts Machina Research. From less than 90 million connections globally in 2010 the market will grow to almost 1.4 billion connections by the end of 2020. Of these, over one billion will be application-specific ‘aftermarket’ devices, and over 300 million will be vehicle platforms, such as GM’s OnStar, supporting multiple applications.

Commenting on the findings, the report’s author Matt Hatton said: “With 1.4 billion connected devices in 2020, automotive will be one of the biggest M2M segments. Today it is dominated by security and tracking applications, courtesy of high adoption of stolen vehicle recovery (SVR) services in markets such as Brazil and South Africa where concern over car theft is rife. By 2020 the domination of security applications will have given way to a more diverse landscape, with major applications including emergency assistance (on the back of regulatory mandates such as eCall in Europe), multi-application vehicle platforms and pay-as-you-drive insurance.”

Revenue will rise from EUR10 billion in 2010 to EUR157 billion in 2020. In the early years, aftermarket hardware sales will account for a large proportion of the revenue: 40% in 2011. Over the forecast period, as the market starts to saturate and applications gradually migrate to the vehicle platform, the importance of the devices market diminishes. By 2020 it accounts for only 20% of revenue. The provision of services over the hardware comes to dominate. However, for mobile network operators there is not guarantee of riches in store. The proportion of overall revenue generated by mobile network traffic is small, reaching only 3.2% (EUR5 billion) in 2020. Commenting on these numbers Hatton said: “As with most other M2M sectors mobile network operators are not going to make their fortunes from the mobile network traffic generated by the automotive sector. They need to be more involved with the service wrap. Worldwide only EUR5 billion is guaranteed to them for carrying mobile traffic but there is a further EUR120 billion in service revenue of which they should aim to take a portion”.

It would be a mistake, cautions Hatton, to consider the automotive M2M opportunity as a homogenous mass: “Automotive M2M is a diverse market and MNOs, module vendors, automotive OEMs and all other service providers must be aware of the dynamics of each of the sub-segments. It involves a combination of B2B, B2C and B2B2C sales either provided via aftermarket devices or through the vehicle platform. Services range for very low bandwidth, high integration and rarely-used applications such as security and tracking through to high bandwidth in-vehicle infotainment which is more reminiscent of consumer mobile broadband.”

About the report

Machine-to-machine (M2M) Communication in the Automotive Sector 2010-20 provides invaluable qualitative and quantitative analysis of the emerging opportunity for machine-to-machine communications in cars, motorcycles and other road vehicles. The report reviews the major drivers and barriers for growth of M2M in the sector and analyses the key market dynamics, including how MNOs, fixed operators, service providers and vendors might go about identifying and realising addressable opportunities. Each application is examined individually with case studies and forecast analysis.

The forecast excel data sheet includes very granular 10 year market forecasts for 54 countries and 6 regions. The forecast covers numbers of connections, traffic and revenue for each of the identified automotive application groups (including Vehicle Platforms, Security & Tracking, Emergency Assistance, Vehicle Recovery/Roadside Assistance, Entertainment & Internet Access, Navigation, Voice, Insurance and Manufacturer) with splits by technology (2G, 3G and 4G) and a break-out of mobile traffic revenue.

For a copy of the executive summary, table of contents and a blank sample data sheet, or to order your copy, find out more about the report or discuss annual subscriptions please contact

Thursday, 28 July 2011

Prospering in an M2M world demands a fundamental shift in the way mobile network operators do business

In the spirit of recycling, here's a blogpost that I did for Tekelec the other day. Check here to see their excellent blog.

Mobile telephony is probably the world’s most successful technology: there are in excess of 5 billion mobile connections worldwide, representing an unprecedented level of technology penetration. To date, MNOs worldwide have built successful businesses based on selling voice, SMS and data connectivity to individual handset users. Recently, business dynamics have changed slightly with the introduction of mobile broadband and mobile content data services. On the whole MNOs have coped reasonably well with the arrival of these services although it’s not all been plain sailing as illustrated by continuing fears about exponential data traffic growth and concerns about being relegated to a bit-pipe role. One thing that has helped MNOs is that the underlying business logic is broadly the same: sell a device to a person which they use to access services for which they pay. MNOs may have needed to do some work on the network and create a few product management teams for the new services but it hasn’t required a fundamental shift in how they do business. It is a moot point whether they will cope as successfully with the arrival of machine-to-machine (M2M).

As we set out in the table below, in almost every conceivable way, M2M is different from the services MNOs provide today. The most obvious change, from the perspective of industry-watchers is that expectations for traffic, ARPU and revenue are completely different. This has some implications for how MNOs manage the cost of serving those customers. They must keep it as low as possible if they are to be able to cope with ARPU of less than EUR0.5/month. Also, a new consideration within the M2M market is that data volumes per connection are typically sufficiently low that installation costs are often a more significant financial consideration than on-going data transmission costs. MNOs must adapt their tariffing to reflect this dynamic.

Other immediate differences stem from the fact that M2M communication is typically a component of a wider offering, rather than a service in itself. As a result there is often no active end-user. This has implications for swapping providers, complaint handling and device management. M2M is an enabler, and the more transparent the M2M component of an overall service is, the better. In many cases the end user may not even be aware that the device is connected at all.

Furthermore, M2M connectivity is often mission-critical. In many cases customers are entrusting a key part of their business to telcos. Examples include smart metering, insurance tracking devices for cars, a range of fleet management telemetry services and, of course, mobile connected medical devices. As a result customers will have very different expectations over quality-of-service and service level agreements compared to voice and data services where best effort was often enough. Conversely, latency is often not an issue with M2M connections: devices are often connected via M2M with a view to maintaining a certain level of timeliness of information, but without a requirement for real-time information. For instance, smart meters may take meter readings at quarter-hourly intervals, but there may be no urgency in when they are delivered to the utility.

MNOs must also revise their channels and sales strategies. The sale of M2M connectivity by MNOs is often B2B2C: an MNO’s M2M connectivity solution must be integrated into a product which is then provided to a consumer. As a result MNOs must build completely new channel arrangements including identifying sectors they should address via direct and indirect channels. They must also secure sales in an aggressively competitive B2B environment while at the same time delivering a solution that is sufficiently polished and intuitive for a consumer market.

Monday, 25 July 2011

Bloc party: Telefonica/Etisalat cooperation agreement points the way for MNO M2M alliances

Etisalat and Telefonica have announced a partnership for "broad-based cooperation". This partnership will cover collaboration in a number of strategic areas including "technological standardization, new global technology initiatives, R&D, and new emerging products and services". With regard to the latter they specifically identify M2M, financial services and cloud services. Clearly for me the area of particular interest is how they might collaborate with regard to M2M.

This comes on the back of an announcement in July that French MNO Bouygues would be joining the newly established Telefonica Partners Program. This appears to be a similar set-up to Vodafone's partner program (which includes the likes of Mobilkom Austria) to extend the reach of their international services into out-of-footprint markets. I was speaking with Vodafone last week about exactly this issue. There are evident benefits of a tight integration of partner operators to ensure quality of service, trouble-shooting, SLAs etc for the provision of M2M services. The old arms-length relationships as we've seen with roaming just aren't good enough for M2M. Obviously for some sectors it's less important than for others, e.g. smart metering tends to be country-specific, but automotive or transport & logistics demand cross-border deals.

This requirement for deeper integration is further evinced by the agreement between Orange, DTAG and TeliaSonera that I discussed a few weeks ago on this blog.

The logical conclusion is that MNOs will form into several blocs with a tighter integration between operators within those groupings. Thus far three are evident in the form of Vodafone (with Verizon and partners), Orange/DTAG/TS and the emerging grouping of Telefonica, Etisalat + partners. In the case of the latter it's perhaps likely that KPN will join grouping as they've long-term strategic cooperation deals with Telefonica, particularly in the business sector.

What'll be interesting to watch is whether the formation of these groupings is influenced by the use of shared technology platforms. One obvious examples is that of Jasper Wireless whose platform is used by AT&T, KPN, Telefonica/O2, America Movil, Rogers Wireless, Vimpelcom, SingTel and Telstra. Perhaps this indicates the likely trajectory for the Telefonica partnership programme, to include these other global operators. There are benefits to clients of having a single platform across multiple network operators. The other obvious example is the Ericsson Device Connection Platform. Currently it has only one operator, in the form of Telenor, running on it but with potential for many more.

Thursday, 21 July 2011

New report from Machina Research predicts 4.2 billion connected consumer electronics devices by 2020, generating a staggering EUR400 billion revenue

We at Machina Research just published a new report on M2M in the Consumer Electronics Sector. Here's the press release, verbatim. If you'd like more details drop me a line...

New report from Machina Research predicts 4.2 billion connected consumer electronics devices by 2020, generating a staggering EUR400 billion revenue

Increased functionality and energy-cost efficiency will drive the adoption of M2M in consumer electronics markets, and yes, there will also be some connected fridges

[London, UK 21st July 2011]
By 2020 there will be in excess of 4.2 billion M2M connected Consumer Electronic devices in use worldwide, the majority of which will be connected Audio Visual Sources (1.7 billion) and Displays (1.1 billion), primarily driven by consumer demand for web-TV and internet audio-sources. The White Goods market will begin to adopt M2M connectivity towards the end of the decade, as smart metering and pro-active energy management become more prevalent. By 2020 the market for M2M connected consumer electronics will be worth EUR400 billion, with Europe and Emerging Asia Pacific being the largest regional markets. However, with the vast majority of devices likely to be connected by means of short-range technologies, and with some applications being very data-hungry, connected consumer electronics devices are more likely to be a headache for fixed network operators than a revenue opportunity for mobile network operators.

These findings are based on the report Machine-to-Machine (M2M) Communication in Consumer Electronics 2010-20, published today. The report is the third in Machina Research’s series of Connected Intelligence Reports and examines the opportunities for MNOs, fixed line operators and device manufacturers in addressing the rapidly growing market for embedded connectivity in consumer electronics, specifically Audio Visual Sources, Audio Visual Displays, Personal Multimedia, Household Information Devices, White Goods, Network Equipment, Tracking Applications, and Other devices.

Commenting on the findings the report’s author Jim Morrish said “The role that mobile operators, and mobile connectivity standards, might potentially play in the Consumer Electronics market is severely limited by the cost of WWAN embedded modules. Chipsets for Wi-Fi and other short range communications technologies generally contribute under USD 2.50 to Bill of Materials costs, and often less than USD 1.00. By comparison, 3G embedded modules cost of the order of USD30-60, with 4G costing more still, and effectively price the technology out of the highly competitive Consumer Electronics market. If those prices don’t fall, then the mobile industry might just have to sit out the opportunity for M2M connected consumer electronics and stick to already established mobile broadband devices.”

The key findings of the report are as follows:

  • The installed base of M2M connected Consumer Electronics devices will exceed 4.2 billion by 2020. By 2020, North America will be the third largest regional market in terms of device count, representing 21% of the market. Europe will be the largest market, representing 29% of connected Consumer Electronics devices, and Developing Asia Pacific markets will represent 27% of the total device count.

  • The White Goods market will begin to adopt M2M connectivity in the out years of the forecast, as smart metering and pro-active energy management become more prevalent. At the start of the forecast, however, the count of connected devices is dominated by Audio Visual Sources (mostly Computer Gaming Consoles) and Personal Multimedia (mostly Mobile Gaming Consoles).

  • Total traffic generated by M2M applications in Consumer Electronics (and carried over wide area networks) will exceed 700 Exabytes annually by 2020. The vast majority of this traffic (99%) will be generated by web-TV applications, with internet radio generating the buk of the remaining traffic. However, Consumer Electronics applications will generate only approximately 1.6 Petabytes of mobile network traffic by 2020. The majority of this traffic will be generated by a few niche applications, including household Internet Information Devices, digital Photo Frames digital Cameras and Mobile Games Consoles. Tracking Applications (for children and pets) will generate only approaching 0.5 Petabytes of wide area wireless traffic by 2020

  • The total market for M2M connected Consumer Electronics will grow to approaching EUR 400 billion in 2020.
To take advantage of the opportunities in M2M connected consumer electronics, Mobile Network Operators should focus mainly on niche applications such as devices for tracking children and pets, and certain household information devices. As Morrish comments: “The main driver behind the adoption of M2M connected Consumer Electronics devices is the potential for connected devices to offer a better user experience than non-connected equivalents. The second most significant driver behind the adoption of M2M connected Consumer Electronics is the potential for such devices to be more energy-cost efficient by timing periods of heavier power consumption to coincide with periods when electricity is cheaper. But there is no sweet-spot. There is no device for which M2M connectivity can both significantly improve user experience and substantially reduce operating costs.”

Concluding, Morrish commented: “And, yes, many fridges and freezers will one day be connected. But not to tell you what you had for breakfast that morning, or to send you an email that you are running low on milk. The ‘killer apps’ for connected fridge-freezers are ice making and defrost cycles. Both of these functions consume significant amounts of power, and can be easily shifted to times of day when power is cheaper. Connected fridges and freezers won’t be a big market opportunity any time soon, but they will be one day. And, anyway, a better way to monitor your stock levels of various household essentials would be to place RFID-, or barcode-, scanners near household bins. If you really wanted to do that, that is.”

About the report

Machine-to-machine (M2M) Communication in Consumer Electronics 2010-20 provides invaluable qualitative and quantitative analysis of the emerging opportunity for machine-to-machine communications in consumer electronics.

The report reviews the major drivers and barriers for growth of M2M in consumer electronics and analyses the key market dynamics, including how MNOs, fixed operators, service providers and vendors might go about identifying and realising addressable opportunities.

The forecast excel data sheet includes very granular 10 year market forecasts for 54 countries and 6 regions. The forecast covers numbers of connections, traffic and revenue for each of eight applications (Audio Visual Sources, Audio Visual Displays, Personal Multimedia, Household Information Devices, White Goods, Network Equipment, Tracking Applications, and Other devices), based on analysis of twenty-nine underlying device types and with splits by technology (2G, 3G, 4G, short range, MAN, fixed WAN and satellite) and a break-out of mobile traffic revenue. Each application is examined individually with forecast analysis in the accompanying report.

To access a copy of the executive summary, table of contents and a blank sample data sheet or for details on how to purchase the report please contact our sales team.

Mobile Europe supplement on M2M available to download

The latest (June/July) issue of Mobile Europe has a stonking great "Insight Report" supplement on machine-to-machine from yours truly at Machina Research.

If you're interested in downloading a copy, follow this link.

Tuesday, 19 July 2011

Machina Research chairing Breakfast with Total Telecom on mHealth

An advanced note for your diary: Breakfast with Total Telecom mHealth Update on the 14th September 2011 in London. Jim Morrish from Machina Research will be chairing and sharing some of the work we've been doing on M2M in the healthcare sector.

These events are really focused. A half day looking at one specific area. I was at the event on mobile traffic offload last week and that was excellent and we're expecting this will be a great morning.

Monday, 18 July 2011

My interview about M2M on the Peggy Smedley Show

Last week I was interviewed on the Peggy Smedley Show (if you don't know it, it's an M2M-focused web radio show) talking about the M2M forecasts and research that we've been doing at Machina Research. If any of you would like to hear it, here's the details. There's a bit of a technical hitch initially while they try to connect me to Peggy but stick with it. Also, towards the end Peggy gets a little hung up on eCall, but we'll forgive that.

The Peggy Smedley Show

This interview is courtesy of The Peggy Smedley Show, hosted by Peggy Smedley and broadcast on To view archives, go to

Friday, 15 July 2011

Maybe I don't want to be offloaded...

I was at a Breakfast with Total Telecom event on Wednesday morning looking at traffic offloading. Very interesting it was to. However, I'm worried that we're overstating the need for offloading and we're also overestimating the potential of femto etc to deal with those non-existent needs.

We seem, as an industry (and particularly us analysts), to obsess about the total amount of wireless traffic being generated and what proportion will be offloaded on business/domestic femto or WiFi (by which I mean the backhaul is paid for by the end user). There are two fundamental problems here...

The first problem is that the total amount of traffic is not an issue. Networks are not provisioned based on the total, they're provisioned based on the peak. In the case of mobile broadband, this tends to be 10-11pm ish and seems to mostly revolve around streaming video content of a nature. Furthermore the usage also tends to be highly focused on a very few cells (the busiest 10% of cells carry 50% of traffic). It also tends to be focused on a small number of users (10% of subscribers generate 50% of traffic is about average). So actually, the issue becomes less "how do we deal with all this traffic?" it's "how do I deal with this usage spike at this time by these small number of users in these few cells?". That seems much more manageable.

The second problem, which follows on from the first, is that we assume that all this WWAN traffic is just waiting to be offloaded. Here's a shocker for people...90%+ of data traffic is already offloaded. Domestic broadband usage, which accounts for the vast majority, is predominantly WiFi. People already use WiFi/DSL to connect their laptops. We generally choose to exclude them from the analysis if they don't also have WWAN access. This is an error. What MNOs are hoping with a femto strategy is that those subscribers who have chosen to connect at home with WWAN are going to be easy to shift onto WLAN. OK, so in some cases it may be that they've connected via WWAN when WiFi/Femto was available, but a simple prioritisation algorithm on the connection manager like Vodafone's Always Best Connected can sort that out. For the most part, however, we have to assume that WWAN is a definite choice. If it were a legacy product then I might be willing to accept that there was an inertia effect and users needed nudging onto femtos. It's not though. It's new and people have adopted it because it suits their requirements. They either prefer the flexibility or the prepaid pricing or they're transient. There are millions of people like that. And they won't buy DSL, so they can't be offloaded. Live with it. Offloading strategies seem to have chosen to focus on a group of people who have opted very recently to use a mobile broadband connection at home, rather than DSL/WiFi. In so doing they've assumed that all that traffic is ready and raring to be offloaded. It isn't.

Now then...what happens when we put these two problems together? A solution. Or more accurately a set of solutions. There are a small number of subscribers who probably won't be "offloaded", concentrated in a small number of cells whose usage peaks at a particular time. You deal with that with a combination of small cells for boosting capacity in areas with very high usage (and that's fairly predictable since 90% of MBB usage is within the home postcode), traffic compression (see Onavo blogpost) and subscriber management (i.e. making sure that those fellas who are using all the bandwidth are actually paying their fair share).

I've focused here on private WiFi and consumer/domestic usage. I certainly think there's a place for public WiFi, although to be honest I don't see a wild amount of difference between that and small cells. They achieve the same objective and the end user isn't paying for the backhaul, which is one of the main benefits to the MNOs of femto/offloading. There's also definitely space for enterprise Femto. But enterprise users aren't the ones creating the so-called traffic tsunami.

I'll be dealing with all these sorts of issues in forthcoming reports. The next imminent release is Mobile Broadband Global Forecast & Analysis 2010-20, which will be available later this month. It will include detailed forecasts of 54 countries and 6 regions (including connections, traffic and revenue across datacards/USB modems, smartphones and tablets).

Friday, 8 July 2011

Onavo - making unfriendly applications friendly for network operators

I was at the Mobile Entertainment Forum awards last night. A great bash honouring some truly innovative apps. Congratulations to the OnStar mobile application that won in the Technology Innovation category that I was judging. A great app. Also congrats to ForgetMeNot Africa with a great SMS-based app allowing access to loads of social networks and messaging apps.

Another winner that really grabbed my attention was from Onavo. It's an iPhone app (with Android version coming soon) that reduces the network load from other iPhone applications. My discussion with them comes on the back of a few days spent at the Managing Mobile Data conference in Vienna where operators were talking about traffic load and in some cases complaining about how there's no incentive for app developers to be network-friendly. They're not incentivised to keep utilisation of network resources to a minimum. Onavo helps make network-unfriendly applications friendlier. And the benefit is not just to the network operator. For end-users it reduces their total data usage, which they'll obviously be happy about. So for those MNOs struggling to cope with large volumes of data from iPhones (and for one MNO at the conference iPhones account for 1/3 of all mobile data) perhaps look at this before spending big on spectrum and LTE BTSs.

I need to write up more on the Managing Mobile Data conference and will do when I have a little more time. A very interesting couple of days. In the meantime, check out Onavo.

Thursday, 7 July 2011

TeliaSonera joins FT/Orange and DTAG's M2M co-operation cabal

The big M2M news this morning is that TeliaSonera has joined the cooperation agreement that was kicked off earlier this year between FT Orange and DTAG. Link to the announcement here.

The first (and not wildly insightful) observation is that this substantially expands the geographical scope of this burgeoning M2M alliance. To the existing coverage of France, Belgium, Germany, Netherlands, Luxembourg and the UK can be added Sweden, Norway, Finland, Denmark, Estonia and Lithuania. DTAG and Orange have presence in a bunch of other markets too (including Spain, Poland and elsewhere in southern and central Europe), which could be added to the mix at a later date. That said, there seems to be a policy of avoiding including any markets where there is geographical overlap. FT/Orange and DTAG in Poland or Slovakia for instance. It's interesting to note that Spain was excluded from the initial agreement. Perhaps they were already planning for a deal with TeliaSonera which is present in Spain. Anyway, footprint overlap shenanigans aside, this is all so far, so helping-compete-with-the-geographical-scale-of-Vodafone.

More important than the geographical scope is what the alliance is for. As we saw in the past with multi-operator alliances, they're of absolutely no value and geographical coverage doesn't matter at all if they don't really DO anything. Think of Freemove for instance. Did it achieve anything? Not really. It's interesting to note that if you throw TIM into this new troika you basically have an M2M version of Freemove. In fact, given that the only major European country that the newly expanded alliance doesn't cover is this space.

So, what should this alliance's objectives be? How can it better allow its members to take advantage of the M2M opportunity? Well, let's start with what they've stated the objectives to be. Basically it's to facilitate multilateral roaming deals, provide better out-of-footprint service guarantees and introduce some economies of scale through joint testing and certification. Sounds pretty reasonable. Let's run through some of those issues.

Roaming rates are an issue today for M2M. Having in-country presence is critical for high bandwidth applications such as In-Vehicle Infotainment (IVI). Paying EUR1 per MB is just not sustainable. Admittedly most M2M applications are relatively light so roaming charges are manageable. However, even with these, having to pay standard roaming fees bumps up the cost relative to an in-country operator. And many non-facilities-based players are struggling to compete with facilities-based today, even with light applications. A function of the increasing interest in M2M and consequent decreasing costs. So either you need to be in-country or have a favourable roaming rate with a national partner.

Many third party device/application providers want to do multinational deals for connectivity. Amazon for the Kindle for instance, or Nissan for the Leaf electric car. They'd rather do that than signing separate deals in each country, particularly as there is likely to be a high degree of roaming with many of these devices anyway. They want regional deals. Being able to point to lower roaming rates, courtesy of international partnerships, should help the likes of DTAG, Orange and TeliaSonera secure more of these. It also potentially gives them access to better rates than the wholesale deals that third party service providers might negotiate with MNOs, allowing them to compete better with MVNO-style M2M providers. I suspect they won't though, simply because MNOs don't have the bandwidth to deal with thousands of small customers across multiple niches. They'll focus on the tier-1 blue chip clients (such as eOn, Amazon or Nissan) and leave the haulage companies and clinical equipment manufacturers to the sector-specific SPs.

It is, of course, a mistake to think of M2M as a thing in itself. It is a convenient term for the application of connectivity to devices across different vertical sectors. As one would expect, the benefits of a multilateral roaming deal vary massively by sector.

  • Utilities don't care about cross-border issues. Everything's national so dealing with a single MNO is the order of the day and they certainly don't give a tuppenny toss whether their MNO partner has international partnerships or not.

  • Transport & Logistics is nominally one of the most sensitive to cross-border interworking issues. A consistent service environment and high availability/reliability are critical. However services here will tend to be managed through a specialist third party service provider such as KORE Telematics, rather than directly by the MNO. Those guys handle QoS, troubleshooting, international roaming and international interoperability. MNO arrangements don't really mean a lot, although I guess it could make the SP's life easier. They also tend to be light applications with high value add, so roaming rates are less important.

  • Healthcare rather depends on the type of healthcare you're talking about. If it's consumer worried-well applications like heart rate monitors etc. then best-in-class service is hardly an issue. Best effort works fine. For mHealth in the clinical environment then will be substantial benefit to adding robustness to any application since it's life critical. However it is a very small piece of the market. See our Machine-to-Machine (M2M) Communications in Healthcare 2010-20 report for more details.

  • Connected Home. Again, no desperate need for high reliability and availability to picture frames and washing machines. Best effort is fine. Also the vast majority of connected home devices are going to be using WiFi anyway.

  • For Automotive, as noted above, there's a lot of roaming and OEMs want to do regional deals. So having this kind of arrangement will help, particularly as there is a requirement for high reliability, particularly for security, tracking, eCall and vehicle diagnostics applications. Also for infotainment, the amount of data being downloaded will make current EUR/MB rates unpalatably expensive for the end user or service provider (depending who pays). Some kind of multi-national discounted rate is vital.

  • Consumer electronics. Again there could be a reasonable amount of roaming here, for instance with eReaders. It all rather depends whether you count that as M2M or not. For the sake of argument, let's include it. Having a single partner who can do better roaming deals is clearly in the interests of someone like Amazon for Kindle. Again, as with many of these sectors, QoS is a bit less of an issue.

So, it's automotive where we expect this alliance to really make the most difference. There are applications that demand high availability, there's lots of roaming, the clients (auto OEMs) want to do pan-European deals and there are high bandwidth applications that won't be acceptable at current roaming rates.

The other element of the arrangement relates to joint testing and module certification. Sensible stuff. Certified modules centrally for use across all operators' footprints. It keeps costs down and there are some benefits to interoperability.

We at Machina Research publish reports on all of these vertical sectors including healthcare, utilities and automotive and the impact of M2M. Drop me a line if you'd like to know more.

Friday, 1 July 2011

The introduction of LTE is a great segmentation opportunity for mobile broadband

I'm prepping for the Managing Mobile Data conference in Vienna next week and was updating a few slides on mobile data tariffs and in particular pricing in the US set me thinking.

With the introduction of LTE, MNOs had a way of differentiating higher speed services with premium pricing. Makes sense doesn't it? For a commoditised service such as mobile broadband, any differentiation factor is useful. Size of bundle is one popular way to do it, e.g. charging more for 10GB than 5GB. Yes, great, but for a lot of subscribers bundle size is almost irrelevant. Business users generate much less traffic than consumers (approximately 1/3 in Norway for instance) so larger bundles don't really bother them. What they want is more speed. And they'd be prepared to pay for it. They're pretty price insensitive as a sector. Extra $5/month for higher speed? Sure. In Finland, which has the world's highest MBB penetration, MNOs long ago worked out that speed-based segmentation and premium subscriber prioritisation was the way forward. Things are a little different in the US.

Here are the tariffs for AT&T and Verizon...

What's wrong with this picture? Yep, neither of them charge a premium for LTE. Verizon doesn't distinguish at all. AT&T charges less...yes LESS...for LTE compared to its 3G plan. OK, so we all know it has an unwritten policy of trying to push subscribers off 3G onto 4G (see also their deal with Option for LTE devices) but still. It's a missed opportunity. They do get bonus points for having variable pricing depending on device. However, in a market where most MNOs took a very public decision to abandon unlimited plans you would have thought that there eye would be firmly on how they can segment subscribers. Apparently not though. Our recent research indicates that MNOs basically need to revamp their MBB tariffs every 12 months to reflect changing usage patterns. Hopefully when that happens both of them will have a rethink.

I hope you're joining us for the Managing Mobile Data conference where we'll be talking more about this. If not, watch this space for details of forthcoming mobile broadband reports from Machina Research.

Tuesday, 28 June 2011

No hope for over-the-top M2M as Google dumps Health and PowerMeter

Google has announced the imminent demise of a couple of its vertical initiatives. Google Health is being retired on the 1st January 2012 (with data available for download for a year after that) and Google PowerMeter is being switched off in September this year.

On the official Google Blog, the following comment summed it up:

"Both were based on the idea that with more and better information, people can make smarter choices, whether in regard to managing personal health and wellness, or saving money and conserving energy at home. While they didn't scale as we had hoped, we believe they did highlight the importance of access to information in areas where it’s traditionally been difficult."

The principle behind both was sound. To open up access to information and allow people to make more informed choices. The main problem (as identified above) seems to have been gaining scale. There just weren't enough people interested in these applications to justify continuing with in its current state. This is somewhat ironic since we at Machina Research expect that smart metering and healthcare will be a couple of the major drivers of M2M, accounting for 2 billion connections.

It's also interesting to contrast these free apps with the multi-billion dollar/euro/pound healthcare IT systems which inevitably don't work properly and run over budget. Or indeed to contrast with the billions that will be spent on smart meters. Admittedly both of these will offer additional functionality (for instance, it's tricky doing electricity network load balancing without a smart meter) but the lack of appetite for applications that do broadly the same thing is eye-opening. Admittedly I don't think Google did much of a job of advertising them, so some fault could be levelled at them. It seems however, that at least for these applications, unless someone forces the public to adopt something (e.g. through the EU mandate on smart meter deployments or large IT projects) nothing happens. Google had hoped it was otherwise.

Personally I think they were pushing at an open door with both applications and with a bit more promotion and a lot of patience I think they could well have taken off. It would have taken a few years though. With regard to PowerMeter, I'd anticipate that it will resurface at some time in the future, folded into the Android@Home development, as discussed in an earlier blogpost. Power usage is clearly one of the main parameters relevant to a home automation system, so its inclusion seems obvious.

In the title of this blogpost I've termed this over-the-top M2M. That's a bit of a tortuous expression and not 100% accurate but it is trying a non-facilities-based approach to solving some of the issues that M2M seeks to address. It's not a perfect analogy but I liked it.

Incidentally, Machina Research has reports out currently on M2M in both the healthcare and utilities industries (the latter being focused heavily on smart metering).

Thursday, 23 June 2011

Is it time for car-as-a-service? Adding connectivity changes every business model, as car makers are soon to discover.

A few years ago I was focused heavily on mobile broadband and spent some time looking at the relationship between the mobile broadband service and the laptop. One of the conclusions was that the addition of connectivity (in the form of mobile broadband) could fundamentally change the relationship between the user and their laptop. Whereas previously it had been a unit purchase, the addition of bundled connectivity turned it into a term relationship (i.e. paying monthly). That was usually with the mobile network operator, but we've seen a few examples where it's with the laptop manufacturer, e.g. Macheen with Dell. As a result some of things that were previously bought up-front came to be bought on subscription, such as security, software (e.g. MS Office) or storage. Even the price of the laptop itself could be spread over 2-3 years.

Today I'm working on the Machina Research report on M2M in the Automotive sector and I'm examining the ways in which connectivity changes the model for the automotive industry. The analogy is an interesting one particularly because we're very unlikely to see MNOs taking on the cost of the device as they did with laptops. Subsidised cars from Vodafone anyone? Unlikely. So the impact is all on the automotive industry, and a few other associated sectors. How do they exploit the opportunities allowed by connectivity to build ongoing relationships?

The answer is: in many many ways. As I discussed in a previous blogpost insurers and satnav providers will completely change their way of doing business. For TomTom and its ilk the addition of connectivity turns a business model based on shipping boxes into a business model based on servicing subscribers. This requires a radical rethink in the way that the company works.

More interestingly though is that it allows (or maybe forces) the manufacturers themselves shift from just shipping products to managing the whole 'automotive experience' if that doesn't sound too pretentious. It does? Yes, you're probably right. Anyway, what that includes could range from remote diagnostics and servicing scheduling all the way through to CaaS. Yes, "car-as-a-service". OK, maybe that's an overly buzzwordy expression for car leasing/sharing, but actually it could be much more sophisticated with the manufacturer (or third party) handling every aspect of keeping the vehicle running. No up-front payment for a car, or servicing or oil changes or petrol, just a per-mile fee. OK, maybe it's a bit impractical to have someone come and fill your petrol tank every time you need petrol, but once we've shifted to electric vehicles, bundling in the electricity price into a per-mile rate isn't impossible to envisage.

Adding connectivity changes business models. The automobile manufacturer who realises first will steal a march on the competition.

Wednesday, 22 June 2011

Telenor seeks opportunities outside of Europe

Interesting story from Total Telecom about Telenor's expansion plans in Asia. A couple of points particularly chimed with me.

Firstly, transferring a lot of its learnings from Europe to its A-P territories is a sensible move for Telenor. Few other operators in India, Pakistan, Bangladesh, Malaysia or Thailand can draw upon such a wealth of expertise.

Secondly, where Telenor doesn't have footprint it represents a good opportunity as the region is a few years behind Europe. Once these non-footprint markets get more sophisticated, competition kicks in and prices come down, roaming is not a viable strategy. You need to be an incumbent or have some sort of special low-cost partnership deal. Otherwise you can't compete on price. Telenor has found this in Europe, so it's switching its attention to Asia. It may, however, only have a few years in non-footprint markets to grab market share before competition drives down prices.

Thirdly they have correctly identified that smart metering is a big opportunity in Asia due to the need to reduce "non-technical losses", i.e. theft and fraud. For utilities in Asia the need for smart metering is real and the return-on-investment is substantial. No need for mandates here as we have in the EU. Some of the largest implementations of smart metering so far are in emerging markets. According to Machina Research's Machine-to-Machine (M2M) Communication in the Utilities Sector 2010-20, Telenor's 5 Asian markets will have over 50 million smart meters by 2020, representing an annual revenue opportunity of over EUR1.5 billion. For more details on this report, contact me.