Wednesday, 30 May 2012

Open Mobile Summit - connected car and home panels

I was chairing a couple of sessions at the Open Mobile Summit yesterday on the connected home and the connected car, or, as I put it, connecting the most and second most expensive things most of us will ever buy. There were many interesting topics for discussion, but a few in particular stuck with me:
  • There was no issue with 2G switch-off for either segment. Clearly for connected home cellular is not really a big issue (unless we're counting smart meters) and for automotive they're already very much in a 3G (and increasingly 4G) mindset already. This is interesting because automotive accounts for 1.4 out of 2.4 billion cellular M2M connections in 2020 (see here for more details). If automotive doesn't really care about 2G switch-off, perhaps it's not that big a deal after all.
  • Roaming charges was the big bugbear for the automotive OEMs. They are correct, of course, that the current set up is not fit for purpose. Stephane Lagresle of TomTom refered to the fact that people from Switzerland often come across the border into France to buy cars but once they get them home they find that the navigation system doesn't work because it is not in the 'home' territory. Clearly not acceptable. The recent European Commission decision on roaming rates will obviously bring prices down substantially by 2014. As I commented in a recent Machina Research report, the roaming fee reduction goes a long way towards the creation of a pan-European M2M market. It will certainly happen a lot faster for M2M than it does for anything else.
  • In the connected home it was price overall that was the biggest limiting factor for adoption. This is completely understandable. For the applications that we are talking about (white goods, HVAC, home automation etc), to simply "put a SIM in it" as Vodafone Kim Bybjerg recommended has some significant cost implications. Even for smart metering, British Gas's Dean Keeling commented that lowering prices would help enormously. No big surprise there one might say. However, it remains true that cellular is not truly optimised for M2M in terms of price of services or devices.
  • The vehicle platform won't really be an open application development platform for in-vehicle entertainment. It will be driven by and controlled by the auto OEMs. Initially there will be so few 'devices' on the market that it will represent only a limited opportunity for 3rd party developers. Secondly there needs to be a huge amount of attention paid to quality control.
Just a few nuggets from the sessions.

Friday, 11 May 2012

Across Supply Chain and Smart Cities M2M the challenge is integrating vertical solutions

Last month we at Machina Research published a new Sector Report looking at the Manufacturing & Supply Chain sector. It incorporates industrial automation, transport & distribution, extractive industries and a few other things too. A very interesting sector and one that is already making substantial use of M2M.

The challenge with this sector is not so much connecting it, although there are lots of trucks and pallets and pieces of industrial equipment that are not already connected. The challenge is to stitch it all together in a meaningful way so that the whole of the supply chain is integrated. It's a similar challenge to that faced by Smart Cities (stand by for our Smart Cities report which will be published in the next few weeks). There are lots of vertical applications but the real benefit will be reaped by integrating all of the elements onto a single horizontal platform. I was talking to a major European MNO about this only yesterday and they have a very progressive approach to this, anticipating a shift from the vertical to the horizontal over the next 12 months.

In the Smart Cities sector things are a bit different from in the supply chain. With Smart Cities there tends to be a single overarching authority with the will and muscle to push through integration. Although in many cases, jurisdictional issues (e.g. some applications are the responsibility of local government, some of national government and some private organisations) might mitigate this. In the Supply Chain sector, there is no organisation that can really stitch that together, other than perhaps very large MNCs who have a largely integrated internal supply chain. That's quite rare though.

As I haven't talked much on the blog about the Manufacturing & Supply Chain report, here are a few of the key findings:
  • Transport & Distribution – The fleet management sector is by no means a new one, but still boasts a huge amount of opportunity. Many MNOs are eyeing it with interest, particularly in emerging markets where there are few, if any, established fleet management specialists. In more developed markets MNOs are typically partnering with fleet management specialists, such as Telefonica’s high profile deal with Masternaut.
  • Manufacturing – This sector includes asset tracking of large industrial equipment and the monitoring and control of factory assets, e.g. for consumables replenishment, remote diagnostics and maintenance or process control. There is increasing pressure to improve efficiencies within manufacturing and M2M has a strong role to play, albeit typically through short-range connections.
  • Extractive industries – M2M offers a great opportunity to make certain extractive processes more cost-effective, in particular through the remote monitoring of otherwise unprofitable unmanned oil and gas sites.
  • Warehousing and Storage – This is largely a mature sector and with comparatively little direct revenue opportunity for M2M solutions, although they will be critical for increasing supply chain efficiency. Passive RFID solutions, which Machina Research does not consider as M2M, dominate along with barcodes.
  • Vending Machines – Vending machines are an ideal candidate for M2M connectivity. By definition they are remote devices that benefit substantially from constant or frequent monitoring to allow the monitoring of stock levels and quality, reduce unnecessary restocking visits, and handle payments.
As I said in the press release: "This is a diverse sector with a wide range of different applications, many of which can substantially benefit from M2M, in particular through driving efficiency savings. The reason we have grouped them together is that ultimately we can envisage a situation where all of these elements are combined into an transparent supply chain. The benefits of such transparency would be phenomenal. Today, and for the foreseeable future, however, we expect them to remain largely as point solutions, but in the long-term there are huge gains to be made from stitching together all of these diverse applications. And, indeed, linking up with other sectors such as retail which we will be covering in a report to be published later on in 2012.”
Overall, the five application sectors above combine to form Machina Research’s Manufacturing & Supply Chain sector. Combined, the sector had 71 million connections at the end of 2011. This is set to increase to 175 million by the end of 2020. The sector will generate EUR13.5 billion in revenue in 2020, up from EUR3.8 billion in 2011. The Transport & Distribution application group will account for the lion’s share of wide area connections and revenue.
Another press release quote from me: “For the most part M2M in this sector is relatively mature and there are a lot of well-established companies such as Axeda, Redline Communications and Trimble selling into the space. It is also a highly fragmented sector with large numbers of relatively small clients. For the most part MNOs will need to partner with best-in-class service providers to effectively address the opportunity.”

About the report

Machina Research is a UK-based telecoms research and consulting firm focusing principally on the emerging opportunity associated with new forms of connected wireless device, specifically machine-to-machine (M2M) and mobile broadband.

Machine-to-Machine (M2M) Communication in the Manufacturing & Supply Chain Sector 2010-20 provides invaluable qualitative and quantitative analysis of the emerging opportunity for machine-to-machine communications in five key areas: extractive industries (e.g. oil & gas), transport and distribution, warehousing and storage, manufacturing and vending machines. 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.

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 application groups with splits by technology (short range, 2G, 3G, 4G, MAN, fixed line and satellite) 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 us.

Thursday, 10 May 2012

In-car entertainment at the Open Mobile Summit

On the 29th May I'll be chairing a session at the ever-excellent Open Mobile Summit. It will focus on in-car infotainment and feature such illustrious companies as Audi, BMW, Qualcomm and TomTom. It should be an excellent session. If you want more details on the event, click here. This year the theme is "Connecting Everything" which is music to my ears. Should be a great event.