The Wireless Noodle

Machina Research's ten predictions for M2M in 2012

2012-02-24T10:20:00.002Z

Ahead of Mobile World Congress, Machina Research’s Directors have gazed into their crystal balls and have made the following predictions for what will happen in the world of M2M in 2012. We will score these forecasts and provide another ten in time for Mobile World Congress 2013. More details on our predictions is available on our website.

A clear top tier of operator alliances will emerge

Satellite operators and Systems Integrators will join global M2M alliances

Android @home products will hit the marketplace

2G will become accepted as a long term technology option

Some M2M platforms that currently partner with CSPs may begin to look like competitors to CSPs

Huawei will launch an M2M platform

There will be further restructuring in the module/chipset market

MNOs will position themselves to take advantage of the growth in connected CE devices

True standardisation proves harder than expected

The mobile industry will agree on a definition of M2M, and start counting

Machina Research publishes its inaugural M2M Leaderboard: Vodafone, DT and AT&T top the list

2012-02-22T17:08:00.004Z

We at Machina Research made a very exciting announcement today. We've launched our inaugural M2M Leaderboard, a ranking of the top 20 global mobile network operators (MNOs) based on their expected revenue from mobile M2M in 2020. Between them, these top 20 global MNOs will secure approaching EUR25billion in revenue from M2M applications in 2020.

Vodafone, Deutsche Telekom and AT&T were the top 3 players. Click here to find the press release and the complete top 20 ranking.

Sprint partners with Orange...another member for the emerging DT/Orange/Telia alliance?

2012-02-08T08:48:00.004Z

Sprint yesterday announced that it was partnering with Orange Business Services to extend its reach beyond the US market for M2M. Press release here. The aim is to offer global connectivity to Sprint's US clients looking to expand geographically. This is more than just a footprint agreement though. Orange will provide SIM cards for Sprint's M2M devices, it will also provide the SIM management platform.

So, effectively, Sprint is launching a dual mode 3GPP/3GPP2 M2M offering in conjunction with Orange. This makes sense as Sprint is rather hamstrung in offering cross-border services as CDMA networks are barely deployed anywhere outside of the US. Having a single GSM partner whose expertise and network of alliances they can tap into is also sensible.

This is just another example of the patchwork of alliances and agreements that we can expect for M2M over the next few years. These will have different levels of obligation from roaming through to complete intra-network transparency and the ability to offer SLAs. Orange has already committed to an alliance with Deutsche Telekom and Telia Sonera. Based on these developments Sprint is an affiliate member of that grouping.

I have covered CSP alliances in various Research Notes published by Machina Research. To access them a subscription is required to our Advisory Service. OBS is one of the CSPs profiled in our M2M CSP Benchmarking Report 2012.

It's impossible to gauge the importance of this announcement without clarifying a few details. I'm hoping to chat with the relevant parties over the next day or two about the implications. I'll be sure to update this when I do.

Swisscom selects Ericsson's DCP as M2M platform

2012-02-05T09:17:00.005Z

Remember this blogpost from December where I complained that Swisscom had not told us their big piece of M2M news? Well, that big piece of news was this. They've selected the Ericsson Device Connection Platform, making them the second operator running the platform after Telenor Connexion which developed it before selling it to Ericsson.

The first trials will be in February 2012 and commercial deployment in the summer.

Good news this for Ericsson, which really needed a second reference customer. Swisscom isn't exactly a global player, as its facilities-based footprint only covers Switzerland. But it is the dominant player in both the Swiss fixed and mobile markets by quite some way. It also has a strong brand and established reputation with multinational companies. As a result it might hope to pick up some global deals for enterprise M2M implementations, for instance for supply chain management.

Also it's good news for Telenor, which must be hoping for more potential partners to migrate onto the platform. Currently it's struggling with issues of scale against Vodafone and the emerging alliance between DT, Orange of Telia Sonera. Building up a bit of global scale will help. Having Ericsson clearly gives them that to a certain extent but basically, the more partners the better. Swisscom is just a small step in the right direction for Telenor.

For Swisscom it's also a good move. The DCP is a great platform and will help with efficiently addressing the M2M opportunity. In terms of future-proofing and ensuring the requisite M2M feature-sets Swisscom has made a good choice.

Although Swisscom wasn't one of the CSPs that featured in our inaugural M2M CSP Benchmarking Report, we do profile Telenor Connexion and one of the criteria upon which we judged CSPs was platforms, so we run the rule over the DCP. Further Reports and Research Notes are planned on the theme of platforms over the course of the next few months. Contact me for more details.

Machina Research estimates that there will be about 46 million M2M devices, including 10 million cellular, in Switzerland by 2020, up from about 4 million at the end of 2010 (Source: Machina Research's Connected Intelligence Forecast Database, 2012).

Is this the right approach from Everything Everywhere...

2012-02-01T14:08:00.003Z

I was in East Grinstead the other week. You don't need to know why. They had a fresh and brand-spanking Everything Everywhere store (picture on the left courtesy of www.thisissussex.co.uk, my third favourite "this is" site in the South East). For those not from the UK or familiar with such things EE is a 50/50 joint venture between T-Mobile and Orange which has combined the two company's UK mobile assets. As well as their own stores they're also rolling out combined EE stores.

I can't help but think that this is crazy. I understand, of course, that it's good to reduce costs. One store in EG instead of two, for instance. But surely by using EE as a consumer brand they're throwing away a big opportunity. In lots of industries the same company tries to sell more-or-less the same product to different people at different prices. Basic segmentation. VW/Skoda/Seat for instance. Or PC World/Dixons/Currys. Surely it would be more sensible to hide the EE brand and use the Orange and T-Mobile brands to address different market segments.

I know the arguments about neither MNO wanting to devalue their brand by having theirs as the 'value' brand while the other is the premium. Fine. Don't. Do something more interesting. Use Orange as the business brand and T-Mobile as the youth brand or something like that. Either way, it would be a crying shame if EE threw away a set of perfectly serviceable brands with certain characteristics attached that could be used for segmentation.

MNOs will have to charge for signalling for some M2M applications

2012-01-31T15:09:00.003Z

A very brief post this, in fact more of a musing. It has struck me over the last few weeks that MNOs will have to charge for signalling when it comes to M2M. I remember many years ago when I needed to call my parents to come and pick me up from somewhere we'd arrange that I'd dial the phone, let it ring three times and then put it down. They'd know what that meant, I'd get collected. It didn't cost anything. If I actually needed to speak with them, I'd just let it ring longer.

With some M2M applications it's potentially the same. Routine reporting can be done through signalling. Only exceptions need the actual transfer of packets of data. Simply charging for traffic does not reflect the network 'load'. In fact in some instances, e.g. an alarm, it may get to the point where a service provider can build an application that simply works on signalling. Anything where you're simply engaging in switching a device on/off or polling the network or doing binary alerts (e.g. something has happened to me), can be done just with signalling.

MNOs need to commercialise signalling. There is an awareness about this and I wait with interest to see who does something about it first.

North Korea bans mobiles for 100 days. Probably not, just shoddy journalism.

2012-01-30T17:34:00.004Z

I'm no apologist for the regime in Pyongyang but I have to do a bit of rumour control. The Times of India, The Telegraph and various other sources are reporting that North Korea has banned the use of mobile phones for the next 100 days. None of them seem to quote any sources other than each other.

My suspicion is it's utter nonsense. Remember this story about Kim Jong Il scoring 5 holes in one on his first round of golf? Nonsense. It was never reported in the DPRK. I was there 18 months ago and no-one knew what I was talking about when I mentioned it. It was just made up by someone and no-one else checked facts. To be fair, who were they going to check them with?

I'd put money on this being the same. For one thing, why would the DPRK government bother? If the aim is to ensure that there is no Arab Spring type uprising then mobile phone owners probably aren't the people to worry about. All mobile phones are owned by the elite. At least legal ones. I'd imagine quite a few illegal Chinese phones using Chinese networks will have found their way across the border from Dandong. But those will only work along the border anyway as they won't register to the N Korean network. And using them would have been illegal anyway.

And what's more, why wouldn't they just tell Orascom to switch the network off?

Deutsche Telekom Trend Forum: embrace disruption and build a platform for innovative partners

2012-01-27T18:23:00.003Z

I've spent most of the week in Germany. First stop was Bonn for Deutsche Telekom's Trend Forum where I (and the great and good of the analyst world) spent the day listening to their execs talking about DT's strategy. And a very interesting day it was too. Chief Product & Innovation Officer Thomas Kiessling and CTO Olivier Baujard took to the stage in the morning to tell us about their overarching strategy.

Essentially the approach, as outlined by Kiessling, is to embrace disruption and become a platform for innovation, in particular embracing partners. To achieve this DT is looking to get the most "broadband for your buck" to use a phrase from Baujard. The aim being to reduce the cost of providing connectivity. To do this they plan to simplify and scale.

I spent the afternoon talking to the M2M-related folks, Jurgen Hase, VP M2M Competence Center and Holger Knoepke, VP Connected Home. The macro approach given by Kiessling and Baujard in the morning is being neatly replicated within the BUs: providing a platform for partners to shine.

If this blog post seems a bit brief, that's deliberate. I've written up my thoughts in more detail and with rather more incisive analysis as a Research Note available as part of the Machina Research Advisory Service. If you'd like to know more, you'll need to become a subscriber. Mail me to find out more. If you're already a subscriber, the full Note will be published in a day or two.

A plug for the Embedded Mobile: State of the Market session (Weds 15.45) at Mobile World Congress

2012-01-20T06:42:00.007Z

I'm just about starting to get geared up for Mobile World Congress. I'll be chairing the Embedded Mobile: State of the Market congress session. The speaker line-up is great, spanning a whole host of verticals. I'm hoping to hear about AT&T's success in the consumer electronics space from Glenn Lurie, President Emerging Devices. We also have Dr. Michael Würtenberger, VP ConnectedDrive at BMW, and Chris Chung, Head of Emerging Technologies at British Gas to give us the Automotive and Utilities perspectives. Between those three we're covering off probably the three most exciting sectors in M2M. The final speaker is Amir Lahat, Head of Business Ventures at Nokia Siemens Networks. I once described him as having the best job in telecoms. If you want to know more, you'll have to come along. He'll be pulling all the strands together and talking about how MNOs can make money, which is why we're all here.

The session is 3.45-5.15 on Wednesday in Hall 5, Room 5. It should be an absolute corker and I recommend you come along.

The other big thing we have going on at MWC...I can't talk about right now. Watch out for at least one very interesting announcement from us.

Yesterday I saw a tweet that it was "only 38 days to go" until MWC, which I guess means that today it's 37 days. Which seems about right. Shifting it back a couple of weeks seems helpful until I remember that I'm also off to CeBIT to speak at M2M Zone's half day M2M session the following week.

Two announcements on M2M standardisation in a week

2012-01-19T07:27:00.005Z

This week there have been been two announcements about M2M standardisation from august and highly respected bodies.

On Monday the ITU announced that it was setting up a Focus Group on the M2M service layer. It will "study and evaluate the M2M landscape and M2M work currently being undertaken by regional and national standards development organizations (SDOs), with a view to identifying a common set of requirements". All of the details of what they're planning to do can be found through the link.

Then on Wednesday there was this joint announcement from a gaggle* of Standards Developments Organisations (SDOs) including ETSI and TIA that they would also be developing a common set of standards for M2M. Again, you can see all the details of what they're doing by following the link.

There doesn't appear to be any reference between the two other than the fact that the ITU talks about how it will work closely with SDOs. Not, apparently, that closely given that the European, Chinese, Japanese, Korean and US SDOs all have a separate initiative going. It's also unclear how these initiatives relate to the GSC MSTF which has been carrying out some exploratory standardisation work up until now.

Of course I should also be praising these initiatives for attempting to introduce some much-needed standardisation. Given the diversity of this thing we call "M2M" it's going to be a painful task. I've rambled on in the past about how open APIs is not really that useful without having standardised APIs. With that in mind, wouldn't it be good if we just did it once? As the old adage goes: "the great thing about standards is that there are so many of them".

*I'm not sure what the collective noun for SDOs is. Perhaps 'contemplation'. I'd be interested to hear any suggestions.

Despite a well-deserved reputation for innovation, Telia is not at the top table for M2M

2012-01-19T07:04:00.007Z

It seems that Telia has performed something of a revamp on its M2M offering with a new website and new partner programme.

This set me thinking about their strategy. Given that they're a company well known for innovation it is perhaps a little surprising that they're not at the forefront of the M2M revolution. However, they've always been rather stymied by a couple of factors.

Firstly Telenor Connexion has been on their doorstep in Stockholm for 4 years hoovering up all the M2M opportunities across the Nordic region. Telia struggles to compete either at home or within its regional footprint. The two companies' footprints overlap quite considerably. Secondly, they've lost out in Sweden, their main home territory, to service providers of the likes of Maingate.

All this has meant that M2M innovation in Sweden (and the rest of the Nordic region) has been done predominantly by other players and that Telia is not at the top table when it comes to M2M despite being a highly innovative company. For this reason the company doesn't make it into our ranking of Tier-1 CSPs that was announced earlier this week: click here for more details.
One of the issues I'll be looking at as part of the Machina Research Advisory Service over the next few months is how tier-2 CSPs can compete with the big boys like Vodafone and Orange. There are ways and if you're a tier-2 CSP looking at expanding in M2M, drop me a line.

Vodafone is (or rather will be) top dog in M2M according to Machina Research's new CSP Benchmarking Report

2012-01-17T09:41:00.007Z

This week we published our M2M Communication Service Provider Benchmarking Report. If you want to download the press release as a PDF, you can find it here. Here it is in all its glory:

Vodafone takes top spot in Machina Research’s 2012 M2M CSP Benchmarking Study
Vodafone is the CSP best positioned to take advantage of the global M2M market opportunity between now and 2020 according to a new study from Machina Research.
[London, UK 18th January 2012]

Specialist M2M research firm Machina Research today revealed the results of its 2012 M2M Benchmarking Study, which found that Vodafone was the communications service provider (CSP) best placed to take advantage of the EUR714 billion global opportunity[1] presented by machine-to-machine communication. In compiling the study Machina Research rated major M2M CSPs in six key areas that will determine their future success: Pedigree, Platform, Place, Partnerships, Process and People. Based on ratings across each of these six ‘P’s, Vodafone was the top-ranked CSP.

Commenting on the result, the study’s author Matt Hatton said: “Machina Research rates Vodafone as the CSP with the best potential to exploit the massive opportunities presented by machine-to-machine. In particular, its global scale gives it a substantial competitive differentiator. While I wouldn’t say that they are streets ahead of the competition, Vodafone was our clear winner. However, the race for second spot was very hotly contested between AT&T, Deutsche Telekom, Orange, Telefonica, Telenor and Verizon, with little to choose between them. Each has strengths and weaknesses”.

Ultimately second place went to Deutsche Telekom which was praised for its partnership strategy, has a natural advantage in the M2M world with an in-house systems integrator in T-Systems, has good geographical coverage courtesy of last year’s alliances with Orange and Telia Sonera and its US presence, plus the group is focusing a lot of attention on building up M2M capability.

The aim of the study is to identify which CSPs are set to prosper in the future, rather than simply identify those which are succeeding today. AT&T and Verizon both have M2M installed bases significantly bigger than Vodafone: 12 million and 9 million respectively. As Hatton explains: “It is important to note that Machina Research’s ranking is forward-looking. It’s an indicator of who we believe is best set for future success. Of course we take account of historic experience and success by AT&T, Telenor, Verizon and the like in our “Pedigree” category, but it is only one element in this most nascent of markets”.

Vodafone’s future success will owe much to its scale and geographical coverage: by 2020 its own footprint will cover 600 million addressable cellular M2M connections[2], second only to Deutsche Telekom, courtesy of its continuing presence in the US. The Vodafone figure grows to 1.8 billion when we include partner operators such as Verizon Wireless, whereas the comparable figure for DT is just 1.1 billion. As a result, Vodafone achieves comfortably the highest ranking in the “Place” category.

Machina Research’s overall ranking is far from simply an analysis of longevity and geographical footprint. It also involves critical evaluation in a number of other areas. It includes an appraisal of the CSPs’ software “Platforms” in effectively managing large numbers of M2M connections. It also assesses the success of each of the CSPs in building “Partnerships”, a critical factor for success in M2M. Vodafone and Deutsche Telekom have been particularly strong here. The “Process” category looks at a variety of practices involved in the supply of M2M services including application development, device certification, client support and systems integration. AT&T, Deutsche Telekom, Telenor and Vodafone scored highly here. The final category is “People” which looks at the CSPs’ organisational structure and general fitness for addressing the M2M opportunity, e.g. through the establishment of dedicated M2M business units. Here AT&T is rated as the most sophisticated, although Machina Research will watch with interest how the development of the ambitious newly-established Telefonica Digital unit will progress.

Summarising the findings, Hatton comments: “None of the CSPs has a monopoly on best practice in all of the categories. Each has room for improvement. Each also has particular advantages due to their company structure or approach that can give them a lead or allow them to differentiate. Above all, however, each of them can learn from the others.”

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. The M2M Communications Service Provider Benchmarking Report, 2012 provides an independent analysis of the M2M capabilities of seven key CSPs: AT&T, Deutsche Telekom, Orange, Telefonica, Telenor, Verizon Wireless and Vodafone.

The purpose of this report is to give Machina Research’s view on the likely long-term success of each of these major M2M CSPs. Enterprises looking to implement an M2M solution will be looking for a trusted and competent partner and making a long-term commitment. As a result they require a high degree of certainty that they are making the right choice of CSP.

The seven CSPs have been selected as the tier-1 M2M service providers, courtesy of their existing scale and focus and their international remit.

Machina Research analyses the CSPs on six criteria:

Pedigree – The experience that the CSP has in addressing the M2M market. This will often be vertical-specific. While historical success is no guarantee of what will happen in the future it does demonstrate a level of experience in delivering M2M services, which is frequently a very different proposition from traditional voice and data services.

Platforms – The software platform(s) that the CSP uses for supporting its M2M connections. Platform choices will often have implications for the efficiency with which a CSP can address the M2M opportunity, in particular in the provisioning and connection management process.

Place – Where the CSP is well placed to provide services. This includes analysis of geographical footprint as well as horizontal partnerships with other CSPs in non-footprint markets. In the latter case, particular focus is given to the ability to perform end-to-end troubleshooting. Also included within this analysis is the availability of broadband (3G and 4G) wireless networks. With regard to network technology choice, the availability (or lack of it) of broadband networks will affect the ability of a CSP to address the needs of particular applications as efficiently as a rival may. It should be noted that there is a well-defined evolution path for most CSPs from 2G to 3G and LTE. Differences related to network deployment will only be highlighted where it differs substantially from the industry norm.

Partnerships – Partnering is critical for the success of M2M. The focus is on vertical partnering (i.e. tying up with other players in the value chain to provide the best solution for the market). Horizontal partnering (i.e. with other CSPs to provide the broadest footprint possible) is predominantly considered in the “Place” category where it expands geographical coverage.

Process – Examining a variety of processes involved in the supply of M2M services including application development, device certification, troubleshooting, SLAs, project management/systems integration, and client support.

People – Much of the success in M2M will depend on having the right personnel in the right place. This section examines the number of dedicated M2M professionals, the CSP’s organisation and the fitness for purpose in addressing the M2M opportunity.

The report provides a ranking of each of these CSPs as well as a 3-4 page profile of each CSP, examining their capabilities in each of the six areas.

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 sales@machinaresearch.com.

Contact
For further comments of more information on this press release, please contact:
Matt Hatton
Director
Machina Research

[1] According to earlier research from Machina Research, “M2M Global Forecast and Analysis 2010-20” (October 2011), there will be 12 billion M2M connections on the planet by 2020, generating a revenue of EUR714 billion.
[2] Assuming same geographical footprint as today.

M2M: comparing CSP footprints

2012-01-17T08:49:00.007Z

As you might have seen, Machina Research is publishing its M2M CSP Benchmarking Report this week. More details on that here.

One of the graphics that I pulled together for that report was of the likely addressable cellular M2M subscriber base for each major CSP in 2020. This is based on data from our Connected Intelligence Forecast Database. How I built it was to look at the current geographical footprint of each of the major global CSPs and compare that with the number of cellular M2M connections that will be contained within that footprint in 2020. I have also included a calculation (the red bar) of the 2020 footprint taking account of the current alliances and partner arrangements, e.g. DT's arrangemenent with Orange or Vodafone's Partner Programme.

DTAG has the biggest footprint with 800 million addressable connections, thanks largely to its retention of T-Mobile USA. Behind DTAG on around 500 million are AT&T, Sprint, Telefonica, Verizon and Vodafone.

When we take account of partnerships and alliances the picture changes somewhat. Vodafone/Verizon are streets ahead with 1.8 addressable connections, courtesy largely of access to each others markets. Behind them are DTAG, Everything Everywhere, Orange and TeliaSonera, which are benefiting from a cross-partnerships. Telefonica and China Unicom, which recently inked a deal for strategic co-operation, are the only other CSPs with a footprint of more than 600 million when partnerships/alliances are taken into consideration.

Of course there are a few caveats to attach to this analysis. It pre-supposes that each company will maintain the same footprint and won't be involved in any M&A for the next 9 years which is, let's face it, pretty unlikely. It would also be wrong to assume that CSPs can only address M2M opportunities within their footprint. Of course that's not the case, although they will probably have an advantage in terms of network transparency and roaming rates. Finally, it should not be assumed that M2M is all about footprint. It's not. It would be possible for a company with a huge footprint to make a complete pig's ear of M2M if it gets its partnership, platform or process decisions wrong. Which is why in the report M2M Communication Service Provider Benchmarking Report, 2012 we look at all of those elements, and more. I'll be blogging on the results of the report, but thought you'd all be interested in seeing the table.

Drop me a line if you'd like more details about the report and how to get access.

Vodafone/Verizon merger "would make sense". What?

2012-01-09T09:11:00.004Z

So I pulled up Fierce Wireless this morning and was confronted by this monstrosity: "Analysts: Vodafone/Verizon merger would make sense". Apparently Goldman Sachs (remember them?) reckon it would make sense for Verizon to merge with Vodafone. Because, you see, Verizon could demerge its fixed assets and merge its mobile assets with Vodafone. And that would all be brilliant.

I agree. It would make sense for Vodafone. They'd love to get full control (including branding) on Verizon Wireless. And that's why they've been trying off-and-on to do it for the last 5 years. What's stopping them? Verizon. They want to maintain a fixed and mobile presence. And what's changed? Nothing.

The article is right that they've been co-operating on a lot of things recently, not least M2M. After all Verizon Wireless is a 45% subsidiary of Vodafone. The ARE the Vodafone Group's presence in the US. Of course they co-operate!

OK, sorry, rant over.

Verizon Wireless's buy out of Qualcomm's stake in nPhase was necessary

2012-01-06T09:18:00.004Z

In the UK we have a saying: "like painting the Forth Bridge". Other countries may have similar sayings. It means to be engaged in a piece of unending work. Once you think you're done you have to start again at the other end. I'm currently engaged in such a piece of work, our M2M CSP Benchmarking Report. It'll be out in the next week or so, presenting our views on who's best placed to take advantage of the opportunities presented by M2M. Click here for more details on the report. The problem is that stuff keeps changing, and thus changing our view on the market. The latest development was Verizon Wireless (one of the CSPs profiled) buying out Qualcomm's share of their 50/50 joint venture nPhase.

The nPhase platform, in all its incarnations, has been in existence for 10 years, supporting industrial applications from the likes of ABB and Siemens. In 2006 it was acquired by Qualcomm. In July 2009 Qualcomm and Verizon Wireless formed a joint venture and named it nPhase. In their own words this reboot "was created to leverage Qualcomm’s advanced connectivity technologies and Verizon Wireless’ expertise and simplified device certification process. The joint venture will deliver seamless, fully integrated M2M communication with global connectivity. Key new capabilities will include cloud computing solutions to automate device provisioning, and to track, monitor and manage assets. Custom white label applications for OEM customers, productized applications for end-use markets, new diagnostic tools for monitoring network health and device performance, data aggregation services, back office integrations and other professional services required to deliver whole solutions also will be provided”.

The nPhase connectivity platform is active in three areas: wireless network services (i.e. the usual activities of an M2M platform such as provisioning and management); application services (providing open APIs for 15-20 standard M2M device actions, e.g. wake-up, timings, thresholds, delivery etc which are abstracted out and provided to the customer to make application development very simple); and device performance services (taking advantage of Qualcomm’s device management expertise to optimize remote diagnostics).

So why has Verizon bought nPhase and what are the implications for the wider industry? At least partly, I suspect, because the two partners had slightly different visions for what nPhase could/should be. Qualcomm's focus is clearly global and multi-carrier. As a result they'd want other carriers to be adopting the nPhase platform. In contrast VZW would want to focus nPhase on being the most effective M2M management platform for their operations in the US. They'd want full control over the development roadmap for the platform given what a differentiator it could be. This is also just another manifestation of the vertical integration we're seeing in the industry (e.g. Gemalto acquiring SensorLogic). If, as a CSP, you have scale (as the likes of Verizon, AT&T and Vodafone do) then it's more important to have development control over your platform than it is to try to take advantage of economies of scale from using a multi-carrier platform. With this in mind it'll be interesting to watch how the AT&T/Jasper relationship plays out. It's working well so far, particularly as it's allowing AT&T to export applications to a big footprint of territories.

These are just my first thoughts and we'll be chatting with Steve Pazol and various others over the next few days and getting some insight.

Telit acquires Navman

2011-12-23T10:10:00.003Z

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.

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

2011-12-20T10:19:00.003Z

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.

Vodafone Germany to offer HDTV service over LTE

2011-12-01T09:04:00.003Z

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.

Vodafone selected to provide 3G connectivity for PlayStation Vita

2011-11-25T09:49:00.003Z

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.

All the fun from Mobile Asia Congress in HK last week

2011-11-21T18:31:00.003Z

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.

Talking M2M at 4G World

2011-11-02T16:16:00.002Z

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...
Link

Telstra announces M2M matchmaking service

2011-10-21T08:49:00.003+01:00

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.

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

2011-10-20T09:59:00.004+01:00

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.

Telefonica O2 secures EV charging deal

2011-10-18T08:06:00.004+01:00

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.

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

2011-10-11T06:10:00.003+01:00

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.

Living PlanIT: Now that's what I call M2M

2011-10-04T11:48:00.001+01:00

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.

DTAG puts M2M partners front and centre

2011-10-03T17:41:00.000+01:00

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.

Everything Everywhere M2M announcement is puzzling

2011-10-02T20:26:00.005+01:00

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.

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

2011-09-26T18:39:00.003+01:00

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.

Women: an untapped mobile opportunity and engine for economic growth

2011-09-24T09:33:00.006+01:00

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.

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

2011-09-20T08:11:00.005+01:00

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.

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

2011-09-19T11:46:00.003+01:00

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.

M2M will give a massive boost to satellite communications providers

2011-09-13T08:19:00.002+01:00

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.

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

2011-08-30T16:00:00.003+01:00

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.

Another Machina Research blogger

2011-08-18T08:57:00.004+01:00

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.

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

2011-08-17T11:16:00.006+01:00

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?

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

2011-08-02T11:55:00.008+01:00

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.

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

2011-08-01T09:52:00.002+01:00

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 sales@machinaresearch.com.

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

2011-07-28T20:20:00.004+01:00

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.

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

2011-07-25T14:22:00.003+01:00

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.

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

2011-07-21T15:10:00.002+01:00

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

2011-07-21T10:10:00.004+01:00

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.

Machina Research chairing Breakfast with Total Telecom on mHealth

2011-07-19T10:36:00.004+01:00

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.

My interview about M2M on the Peggy Smedley Show

2011-07-18T07:56:00.005+01:00

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 wsRadio.com. To view archives, go to www.peggysmedleyshow.com/archives.aspx

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

2011-07-15T09:03:00.005+01:00

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 more...ahem...adult 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).

Onavo - making unfriendly applications friendly for network operators

2011-07-08T11:51:00.003+01:00

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.

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

2011-07-07T15:23:00.004+01:00

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 Italy...watch 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.

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

2011-07-01T11:13:00.004+01:00

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.

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

2011-06-28T07:50:00.004+01:00

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).

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

2011-06-23T07:44:00.003+01:00

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.

Telenor seeks opportunities outside of Europe

2011-06-22T11:16:00.004+01:00

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.

Orange launch sound wave-powered phone charger T-Shirt. If they could only make a rain-powered version.

2011-06-20T15:00:00.003+01:00

Orange has launched a T-Shirt that charges your phone from sound waves. And what better place to launch it than Glastonbury. And that's what they're doing. See here.

Anyone who knows me knows that I love Glastonbury. I couldn't get tickets this year but it's a usual fixture in my calendar. Orange has been a long-term sponsor and they've done reasonably well out of the arrangement. The Chill & Charge area where you can charge your phone normally has queues around the block. But I've yet to see a sea of people sporting Orange T-Shirts as I'm sure they'd like. This might change. If you want a charged phone, you'll have to wear an Orange T-Shirt. In terms of branding it's a genius idea. Obviously the idea of everyone wearing a uniform black T-shirt is pretty much anathema to Glasto, but kudos to Orange for coming up with something genuinely useful. Now, if they could just come up with a rain-powered version.

Latest research: 1.8 billion automotive M2M connections in 2020

2011-06-16T13:57:00.004+01:00

The next tranche of Machina Research's highly segmented M2M forecasts is proceeding apace. I'm currently looking at everything transport-related. The report Machine-to-Machine (M2M) Communications in the Automotive Sector 2010-20 will be out in the next few weeks. Here's a preliminary sneak peek of the numbers.

By 2020 there will be around 2.4 billion road vehicles (including cars, motorcycles and commercial vehicles) in the world with approximately 1.8 billion M2M connections between them. Unsurprisingly it is North America and Europe that dominate the figures, by virtue of their larger automotive markets, higher disposable income, faster vehicle replacement, wider mobile broadband deployment and (in some cases) government pressure.

Around 350 million vehicles will have a vehicle platform (such as GM's OnStar) running multiple applications. There will also be a further 1.5 billion stand-alone connected devices, predominantly accounted for by four types. In order of number of connections they are: accident alert systems (e.g. eCall), connected satnav, pay-as-you-drive insurance and security/tracking devices (such as SIMRAV in Brazil).

M2M in the automotive sector is definitely not as simple as one connection per vehicle. Lots of vehicles will have multiple connections. Some application developers/service providers will want to keep their modules separate from the vehicle platform, for example insurance companies. In other circumstances, commercial arrangements will discourage using the vehicle platform. For instance, high bandwidth applications will not be suitable for a roaming SIM since per-MB charges will be too high. However, this is exactly what many cars will have for their vehicle platform since the automobile manufacturer will do a deal for connectivity at a regional level, meaning roaming will be standard. I raised this issue in a previous blogpost here, so please take a look for more detail.

O2 and BT claim UK LTE auctions amount to state subsidy. Really?!?

2011-06-13T09:11:00.002+01:00

It looks like the UK LTE spectrum auctions will face another delay courtesy of a challenge from Telefonica O2 and BT that the bidding rules will bake in a GBP1 billion subsidy to Everything Everywhere and 3UK. Their argument is based on the fact that the Ofcom rules require that there will be maximum and minimum amounts of spectrum available to each bidder with the intention of having at least 4 national operators [If you want details of exactly who can bid for what in which frequency bands, see my previous blogpost]. As a result of these restrictions O2 and BT claim there will be a distortion to the bidding process which could result in some companies picking up spectrum cheaper than they otherwise would. This, claim the pair, amounts to state aid. Take a look here for more details.

I'm sorry, what? Really?!? State aid? In other countries auctions have been conducted as beauty contests with spectrum allocated to the best bidder rather than the highest. These haven't maximised the payments for the spectrum. Would they also be categorised as state aid to the winning bidders? According to BT/O2 presumably they would. But, I'm sure there are numerous counter-arguments that could be rustled up to differentiate beauty contests from the Ofcom proposed process. After all, the latter is an auction, but with restrictions, rather than a beauty contest. However, for me it all boils down to the fact that Ofcom is putting the restriction in place for an admirable reason: to promote competition. This is a slightly different admirable reason from the justification for beauty contests, e.g. guaranteed coverage or investment, but it is a reasonable thing for Ofcom to do. They could have simply divided the spectrum into 4 chunks and told the bidders that they couldn't win more than one but that would have been a mess. They wanted to include more flexibility and rightly so.

I'm not so innocent as to believe that this is anything other than a tactic from O2 and BT to gain some advantage. Do they really think it's state aid? I'm sure not, but if they can gain some competitive advantage by appealing then why not? I've been involved in numerous legal challenges and you use every possible line of attack (and a good smattering of mock incredulity) to secure the outcome that you want. So I can understand BT/O2's stance. However, this will continue to delay the LTE spectrum awards. If they appeal on this and get their way, the other operators will appeal on some other points. The whole process could drag on for years and years. But, as I commented in a previous blogpost, perhaps a bit of delay is no bad thing for the MNOs

"Start to prepare" for the internet of things

2011-06-10T08:12:00.004+01:00

You know when your mate who doesn't really know a lot about football starts talking about it and you get a bit embarrassed? Well, that's the feeling I get reading this article about Ed Vaizey, UK under-secretary of state for various things including, seemingly, telecoms. Ed was talking on IPv6 day about the move from IPv4 to IPv6 and M2M and the IoT. I guess it's hard to expect an elected official to be a technical expert but it was somewhat cringe-making.

Link here.

The bit that set me laughing was this from Ed: "In fact, the slogan that I came up with this morning, which I thought was rather neat, was, "Don’t panic, but do start to prepare"". Steady on now Ed. Let's not be too hasty now.

M2M Forum Europe summarised in 2 words: howdy partner

2011-06-09T09:18:00.003+01:00

I've been at the M2M Forum Europe for most of this week organised by the lovely people over at IQPC. And very interesting it was to. The big message: partner.

On Monday we at Machina Research ran a pre-conference workshop looking at how MNOs should exploit the opportunities presented by M2M. We focused a lot on the healthcare and utilities segments that have been the basis of a couple of our published Connected Intelligence reports. All very interesting and interactive.

Day 1 highlights included a presentation from Larry Haddad of Nissan which I summarised in yesterday's blogpost and Stephan Keuneke of Deutsche Telekom. Stephane's emphasis was that MNOs' focus M2M should be on partnering. He identified the four different go-to-market models that they would be simultaneously adopting:

'Sell to' - the customer buys a complete solution from DTAG

'Sell with' - connectivity is provided by DTAG and the device elsewhere

'Sell through' - where an M2M partner has a strong relationship with verticals they will effectively sell on DTAG's connectivity

DTAG as a supplier - sales via an MVNO or service provider

At the moment around half of their M2M business is as supplier. He also emphasised that they were addressing M2M in a very different way from traditional services. For example by thinking about lifetime fee rather than monthly fee. Another specific example being not issuing a monthly invoice for connections that barely generate any revenue.

The afternoon saw us all break off into roundtable sessions. The one I ran, covering the impact of EU regulations on smart meter deployments, was a pretty cut and dried discussion. The EU has said member states will probably have to roll out smart electricity meters to 80% of households by 2020, with slightly less stringent requirements for gas. It's not definite until September 2012 and details depend on the member state. The only real stumbling blocks are ensuring that the meters have the right funtionality and issues of privacy, i.e. a conflict with the EU principle that a person should be able to opt-out. Can you opt out of smart metering? These sorts of issues are dealt with in our recent report: Machine-to-Machine (M2M) Communications in the Utilities Sector 2010-20.

The more interesting discussions seemed to be in the other groups. Not sure I should admit that! They were dealing with business models. Again the message came across loud and clear. The key is to partner.

Day 2 saw a diverse bunch of presentations. Mila Milenkovic of Telekom Srbija presented some really interesting case studies across a variety of verticals including fleet management, security, public transport, home automation and healthcare. TS has clearly done some thinking about M2M and is already making progress, even breaking out of the traditional M2M verticals of transport and security. The message from Mila was clear though: the key is to partner. TS handles the connectivity, marketing and sales while the partner looks after devices, maintenance and administration.

DTAG popped up again in the form of Markus Breitbach who also talked about partnerships and the way in which the new M2M competence center can act as an aggregator for application developers in the M2M space. The center provides support to all local entities (of which there are 50+) with M2M-specific knowledge, resources and solutions. In so doing it can bring together an application developer for a particular M2M service from Slovakia with an end customer in the US. The benefits of partnership very clearly work both ways.

And if you want to know more about the DTAG M2M competence center check out the June/July issue of Mobile Europe. There's an Insight Report supplement in the magazine focusing on M2M, compiled by Machina Research, including an interview with Jürgen Hase, VP of the center. The supplement should be out soon and available on the Mobile Europe website here.

Markus also talked about DTAG's expectations with regard to the value chain, indicating that about 15-25% of the value was in the devices, 15-25% in the communications and 50-70% in the applications. The message from that is clear (and echoes what we were talking about in our pre-conference workshop): there's not much revenue in carrying traffic. If anything, we think that he might be a bit ambitious with regard to the comms element, certainly in future.

Krzysztof Kwiatkowski of Comarch put it quite neatly when he described how MNOs can adopt one of three approaches: in-house, partnership and licensee. He was discussing M2M management platforms specifically but this applies equally across almost all elements of the value chain from channels and marketing to billing and SIM-management. On this note, Krzysztof provided the quote of the day about how telecoms service providers could not become "civilisation service providers", which is effectively what they're trying to do if they try to cover all of M2M themselves.

There were numerous other interesting presentations on day 2 including Marc Overton of Everything Everywhere on the ways in which MNOs can help freight management (including one client who said that better knowledge of its stock in China can reduce stock in channel by 50%) Davide Pratone of Telecom Italia setting minds at rest about OTA provisioning, Tom Gardner from my old employers 3UK talking about the sweet spot for a 3G-only player and David Boswarthick talking about the role of standards bodies, particularly with regard to smart metering.

Electric Vehicles and M2M are made for each other

2011-06-08T07:54:00.005+01:00

I've been at the M2M Forum Europe for the last couple of days. My personal favourite of yesterday's presentations was from Larry Haddad at Nissan. It's always useful to hear directly from the industry verticals and Larry didn't disappoint. His focus was on electric vehicles (EVs) and how connectivity was essential for making them as efficient as possible. The big draw-back with EVs is their range, typically 100km today. However, by connecting the car you can mitigate that, or improve the EV experience in some other way:

Range indicator telling you how far you can still go with the remaining charge

EV charging point locator

Timing of charging - so it can charge when it's cheapest, either through remote timing or real-time request.

Remotely turn on climate control - if you can get your car gradually to the right temperature before you get to it it is less of a power drain altogether and will get to the right temperature initially while still plugged in meaning the battery still has maximum range.

It'll send you a plug-in reminder.

You can receive diagnostics and energy efficiency reports, including an element of gamification through telling you how many trees saved.

On phone app informing you how much further you can drive (with or without a/c) and you can remotely switch on the climate control.

Given the limitations of battery technology, it seems that the natural status of electric vehicles is as connected devices. Electric vehicles will all be M2M-connected. Nissan bakes in the cost of the connectivity/applications to the purchase price for 5 years.

They partner with AT&T, Rogers Wireless, NTT DoCoMo and Telenor Connexion. The latter provides connectivity across the whole of Europe, primarily through roaming agreements. This leads us to a particularly interesting point: car manufacturers are not in the business of making country-by-country deals for M2M. They need regional agreements such as that done with Telenor. Anything else seems too fiddly. However, Telenor is paying roaming rates for data in countries outside of its footprint (i.e. most countries in Europe). This is OK for low bandwidth, high value applications, but doesn't work for entertainment. The assumption must be therefore that the vehicle platform, paid for by the auto manufacturer, is not the platform for in-car entertainment. From the Nissan perspective, users will bring their own entertainment to the car via their handsets.

I have many other interesting conclusions from day 1. In the next month we at Machina Research will be publishing a report on M2M in the automotive sector. Email me if you would like more details.

Neul's new kid on the RAN block faces challenges but there are opportunities

2011-06-05T13:54:00.004+01:00

Machina Research recently hooked up with the ever-excellent Mobile Europe magazine to produce their Insight Report supplement which dives into a particular theme in depth. For the June/July issue the focus is on M2M. As part of the work I interviewed a lot of people about the evolution of the market. To get the whole thing you'll need to read the report but I thought I'd flag up an interesting interview with newcomers Neul. Here's the gist.

There is a new potential competitor to these established WWAN technologies (GSM/GPRS/EDGE, 3G, LTE) in the form of Neul’s new open standard, “Weightless”, which is specifically aimed at M2M. There is a real need for an M2M-specific WWAN standard according to Neul’s CTO William Webb: “There is no ubiquitous low-cost low-bandwidth M2M network standard. Cellular just about cuts it, but it’s high power, bulky, complex and expensive. GPRS has been around for 15 years and has failed to address the opportunity and with 3G and 4G the operators are going in the wrong direction”. With a battery life of 5-10 years and an expected price point of “a couple of dollars” the new standard does overcome some of the hurdles with traditional WAN technologies.

However, there are some continuing barriers. Unlike existing WAN technologies, there are no existing deployments today although Webb anticipates that roll-out is relatively cheap and easy: the UK would require around 5,000 base stations to achieve 99.7% population coverage. Neul are even prepared to deploy the first network themselves: “The goal is to license our technology to multiple operators around the world” said Webb, “but we may need to deploy the first network, in the UK, to get interest going”. As noted above, it cannot cope with high bandwidth applications such as in-car entertainment. Also, Weightless uses unlicensed spectrum although Webb claims the frequency hopping used by the technology mitigates the risk from other users of the spectrum. In the event that the band does become too crowded Neul also has a strategy to migrate to licensed spectrum. The new standard also has high latency, typically around one second, which is higher than existing WWAN standards although Webb points out that many M2M applications don’t need very low latency when you dig into it.

So do I think Neul is the solution to all of M2M's problems? Of course not. M2M encapsulates a diverse range of applications, all with different needs. There is no single network technology that would be appropriate for every application in every circumstance. Some need coverage, some need capacity, some low latency, some low cost. Even within applications or indeed within a single connection there will be multiple technologies used. Smart metering for instance will use WWAN, powerline, short range or a combination of them depending on circumstances. When the technology answer is 'horses for courses' then a new technology with characteristics that set it aside from the alternatives has an opportunity. Then it just becomes about costs. Is it affordable to deploy and run a network given the amount of revenue that can be generated by the applications that will run on it? Existing WAN networks have the advantage that they are already installed and have profitable services running over them. Supporting M2M has a negligible cost. Deploying a whole new set of infrastructure to support M2M services has radically different economics. That is where Neul will stand or fall.

We are all Knight Rider now - M2M in the automotive sector

2011-05-27T13:42:00.002+01:00

I'm currently working my way through our M2M forecasts for the our forthcoming report on the automotive sector and it seems to be one of the most uncertain sectors. Notwithstanding some of the established issues (such as the implications of the eCall directive and technology choices between 2G, 3G and 4G) there is one other that stands out as being particularly complicated and important: the role of the vehicle platform. By that I mean the on-board computer that provides an interface with some or all of the connectivity applications on the car. They're increasingly common on new cars and GM's OnStar has been successful in North America blending navigation, security, emergency and communications apps. Other manufacturers have established their own equivalents. GM has even sought to spread the virtues of OnStar to other car buyers through an aftermarket model launched in early 2011.

However, this is all rather reminiscent of the mobile phone world 10 years ago with proprietary OSes with relatively basic functionality gradually giving way to smartphones. And what an almighty ding-dong that's been. Vendors with strong OSes prospered (Nokia - until recently), while those with terrible OSes plummeted (bye bye Moto). I'm not going to be so presumptuous as to claim that the fortunes of motor manufacturers will rise and fall based on what their vehicle platform looks like. But, if anything, that exacerbates the issue. Car manufacturers needn't really worry too much if their vehicle platform is the most sophisticated. Their cars will probably sell anyway. There won't be a survival of the fittest where OSes rise and fall due to their relative superiority to the competition (I'm looking at you Symbian). A manufacturer can plough on with something fairly primitive. But that is a missed opportunity to give car buyers a really appealing connected experience in the car.

Some of the questions yet to be resolved are as follows:

Despite what I've written above, will users start to differentiate between cars based on platform experience and feature-set? It's an important part of the user experience and maybe it doesn't fit well with a premium car experience to have an on-board computer that acts like a Star-Tac (sorry, I'm having a bit of a go at Moto today seemingly!) rather than an iPhone.

Is it going to be a walled-garden or can we expect a plethora of third party application developers? Wouldn't you rather have access to your Skype account from the car rather than having yet another phone number? Will the vehicle manufacturers accept this?

Hand-in-hand with the above goes a question of whether most cars will have a single connection with multiple applications running on it or one connection per application? Would it make sense for a black-box style eCall module to be anything other than a stand-alone device? Will insurers want their own dedicated device for pay-as-you-drive? Strangely, although it's far from a perfect analogy, the thing that springs to mind here is Knight Rider. Clearly KITT had a very advanced voice-activated AI UI. So why did it (I hesitate to use the word "he") need a "Turbo Boost" button? I guess you just don't rely on the vehicle platform for some applications!

Does it make sense to draft in an established operating system rather than rely on a proprietary one? Windows? Apple iOS? Android? Will you get a choice or will different marques adopt different OSes?

Will people use the vehicle platform just as an interface and control everything from their mobile phones, circumventing the need for a sophisticated car platform at all, leaving said platform simply to simply carry out remote diagnostics and send manufacturer servicing alerts.

All of these questions are intertwined. If, for example, control of the car platform is managed through the handset with individual rather than vehicle specifications, this has implications for how car insurers might shape their products. Are you insuring the car or the driver?
One thing seems certain and to misquote the old McCarthy* song: "We are all Knight Rider now".

This vehicle platform issue is just one of many that I'm addressing as part of the research for Machine-to-Machine (M2M) Communication in the Automotive Sector 2010-20 to be published in June. Drop me a line if you're interested to know more.

*It's called "We Are All Bourgeoise Now" and if you haven't heard it, you should.

M2M Forum Europe 6th to 9th June

2011-05-25T07:57:00.004+01:00

If you're based in London, or indeed anywhere in Europe, and you're interested in M2M you really should get along to the M2M Forum Europe from the 6th to the 9th June. The speaker line up is excellent including Deutsche Telekom, Everything Everywhere, Ericsson, GSMA, KPN, Nissan, Orange and Telefonica O2. Plus a dedicated mHealth day on the 9th June.

Machina Research will be running a workshop on the first day (6th June) from 10am to 4pm, which will be very interesting. We'll be examining a number of key verticals to see what the dynamics are, presenting our M2M forecasts and assessment of market opportunity and examining some of the key challenges that need to be addressesed. We can even promise a special guest that will give a truly innovative insight into addressing the M2M opportunity. If you're a provider or consumer of M2M services or devices then you really need to attend this session.

Health industry M2M forecast to exceed 770 million connections in 2020

2011-05-24T11:31:00.004+01:00

Machina Research officially published it second Connected Intelligence report today, entitled Machine-to-Machine (M2M) Communication in Healthcare 2010-20. Lots of really interesting stuff in there including detailed M2M forecasts for adoption, traffic, technology and revenue across eight categories of healthcare application across 54 countries.

Here's a quote from my colleague Jim Morrish, the report's author: “The market for M2M healthcare applications will be huge, EUR69 billion in 2020. We expect that EUR3.1 billion of this revenue will go to mobile network operators for provision of data carriage services. A further EUR36 billion will be contested between systems integrators, device manufacturers, mobile operators and other service providers. At least EUR30 billion will almost certainly go to established manufacturers of medical equipment.”

The key findings of the report are as follows:

The installed base of M2M connected devices within the health sector will exceed 774 million by 2020. North America will be the largest region, with a share of worldwide connected medical devices peaking at 54% in 2014 and falling back to 42% by 2020, as growth in Europe accelerates

Short range connectivity technologies dominate throughout the forecast due to the typical topology of M2M healthcare solutions: the majority of solutions are characterized by multiple devices, connected to a central hub or aggregation device. Accordingly, we expect that the overwhelming majority of M2M connected healthcare devices will be connected only indirectly to wide area networks.

Consumer markets, particularly for the ‘worried well’ will be particularly attractive to mobile network operators, accounting for 76% of global M2M connections by 2020. The barriers to participation in consumer markets are also considerably lower than business markets, and available margins for solution providers can also be expected to be higher.

To take advantage of the opportunities in M2M connected healthcare, Mobile Network Operators should focus mainly on the consumer healthcare market, where brand assets, distribution channels and billing and customer service capabilities can be leveraged most effectively.

MNOs, Systems Integrators and the manufacturers of medical equipment should consider partnerships to bring to market products and services to support Clinical Remote Monitoring of patients in their homes, and certain Assisted Living solutions.

Potential manufacturers of connected medical devices for the consumer market should consider the benefits of partnering with fixed and mobile telecoms providers as channels to market, and also potentially to take advantage of the ability of such telecoms service providers to support the delivery of differentiated and higher-value service ‘wraps’.

The report examines the opportunities for MNOs, fixed line operators, device manufacturers, systems integrators and other service providers in addressing the rapidly growing market for embedded connectivity in the health sector, specifically home monitoring and personal monitoring for the worried well, telemedicine, first responder connectivity, connected medical environments, clinical remote monitoring, assisted living and clinical trials.

If you have a question about the report, you can contact Jim or me. We'll be happy to send you out an executive summary. More details of the report are also available on the website. The price of the report is EUR4,000 + VAT.

Google's Android@Home promises to solve compatibility issues for the connected home

2011-05-19T09:35:00.003+01:00

Last week saw Google's I/O developers conference in San Francisco. As well as all the smartphone and tablet stuff the thing that really interested me was Android@Home, an initiative to allow control of connected home devices such as HVAC (heating, ventilation and air conditioning), lighting and security via the Android platform.

This is all great news for home automation Android@Home promises to be more user-friendly and, critically, developer-friendly. The Android Open Accessory Kit is open source, there are "no NDAs, no fees and no approvals process" as pointed out by Joe Britt. One of the issues holding back the connected home has been a lack of standardisation. Lots of different devices using different standards and not interoperable with your central management systems or indeed with each other. A colleague of mine has a horror story about a friend who spent GBP4,000 networking all the lighting in his house only to find that the switches were not compatible with the lights.

Indeed one of the first manifestations of this Android-powered home devices was a lightbulb from Lighting Science Group. Link here. It's damn ugly and at USD40 it not the cheapest but scale should bring down prices significantly.

The approach taken by Google initially appears to differ from the prevailing tide of home automation because it concerns itself first and foremost with the end points. Make those compatible with Android and everything else is irrelevant. No proprietary central device management. Just the smartphone, compatible with any end device. But, it seems that one can't get away from the idea of a central hub and a semi-proprietary technology.

Google is looking at introducing a wireless mesh networking technology to connect all of the devices. They're a little cautious to reveal too much but it's low cost, low power, not WiFi, not Zigbee and it operates in the 900 band (which is bad for Europe where 900's dominated by GSM and eventually will be refarmed to W-CDMA). There can be up to 500 devices connected, up to 50m apart (I'm not sure about everyone else but that SHOULD be enough for my apartment) and connects via an Android@Home base station. That's all they're saying. Given that many of the applications will be very light in terms of traffic, a few KB a day/week/month, perhaps WiFi isn't the perfect option.

While Google and Android are big proponents of open source systems, should we assume that this new wireless tech will only be usable by Android@Home devices? That's the big question for me.

Machina Research will be publishing a report in June 2011 entitled Machine-to-Machine (M2M) Communication in the Intelligent Building 2010-2020 examining the connected home. Furthermore we will also be releasing a report on M2M in the Consumer Electronics sector around the same time. Both are critically affected by announcements such as this. Visit the Machina Research website or email me for more details.

UK environmental targets will be a boon to M2M

2011-05-18T11:28:00.002+01:00

UK Environment Secretary Chris Huhne has been grabbing the headlines for all the wrong reasons in the last couple of weeks. The controversy over affairs and allegations about avoiding a driving conviction have overshadowed some major news. Yesterday he committed the UK government to being the greenest ever and possibly the greenest in the world by reducing carbon emissions to 50% of their 1990 level by 2027. Full story here.

The implications are substantial for M2M as the commitment implies a complete overhaul of electricity generation, much wider adoption of electric vehicles and substantial improvements in home energy efficiency. All of this promises more transport & distribution monitoring equipment, connected cars, connected EV charging points and smart meters (OK, so the UK was already committed to rolling out smart meters in the next 5-10 years, so that's already expected).

For Machina Research's analysis of the market for M2M in the utilities sector take a look at our latest report: Machine-to-Machine (M2M) in the Utilities Sector 2010-20.

Sprint's M2M ARPU of USD5-10/month will be hard to maintain

2011-05-18T00:02:00.003+01:00

Hooray for Sprint. They're the first MNO to put out anything approaching usable figures for M2M ARPU*. Speaking at the Ericsson Business Innovation Froum, Geoff Martin, Manager of Platforms and head of Sprint's new M2M Collaboration Centre spilled the beans on how much revenue some M2M applications generated.

Overall ARPU from M2M was USD5-10 per month. The outliers are digital signage, generating USD150/month, while smart grids accounted for a more modest USD1/month. To be honest, they'll be very lucky indeed to maintain a USD1/month ARPU on smart meters over the long term. More competition, OTA provisioning and increasing awareness by utilities will drive that down. In terms of traffic it's at most a few MB per month. Not worth USD1. More on this issue in our recent report Machine-to-Machine (M2M) Communication in the Utilities Sector 2010-20.

Critically M2M is flagged up by Martin as being very profitable with no handset subsidies and no customer care. The latter point is somewhat debatable. There is no direct customer care for the end-point itself. However, the enterprise customer, which control the lion's share of the M2M market, will be demanding. These are business critical systems in many cases and MNOs will have to make commitments regarding QoS.

One of the biggest issues for Sprint going forwards is what technology choices they make. Currently running CDMA, WiMAX and iDEN (courtesy of the Nextel acquisition a few years back) and with some strong hints that they'll switch to LTE, there is some technological uncertainty for Sprint's customers. For a lot of applications, most notably smart grid, the devices have a long life expectancy. Chopping and changing technology causes a high degree of consternation for potential customers.

Martin also revealed some figures relating to module cost. Referring specifically to the "Qualcomm tax" he commented that CDMA modules are 15-20% more expensive than GSM. He also noted that WiMAX modules were half of the price of CDMA. However, he also noted that M2M applications were very light in terms of bandwidth. Obviously we know this already but it is perhaps a hint that low bandwidth mature techs (in Sprint's case CDMA) should be retained. LTE modules cost USD60-USD70 but the price needs to come down to be attractive.

Machina Research has recently published a report on M2M in the utilities market (including smart meters and smart grid) with comprehensive forecasts for 54 countries of connections, revenue and technology. Click here or email me here for more details.

*Obviously "ARPU" isn't really the right term here as there isn't really a user, but we'll stick with the term for now until something more appropriate comes along.

T-Mobile US outsources M2M operations - a vote of no-confidence in M2M?

2011-05-17T08:04:00.004+01:00

T-Mobile has decided to outsource its M2M operations to a third party, Raco. The latter will take control of all provisioning and management and take over T-Mobile's in-house M2M staff. Article here.

At first glance this seems crazy. M2M promises to generate almost no revenue from traffic for large numbers of applications including smart meters (see our report here) and vehicle tracking. Let's not get blinded by what's going on with eReaders, tablets and a few other bandwidth heavy devices. Most M2M apps are low bandwidth and low traffic. Hauling bits around won't generate much revenue. Where an MNO can generate revenue is from provisioning and management. Being a bit-pipe was OK-ish for mobile data services but for most M2M applications it's just not viable as a stand-alone if MNOs are serious about M2M.

So why have they done it. Two possibilities spring to mind.

Maybe this all tied up with the putative AT&T acquisition. The latter is probably stronger in M2M, although this is kinda debatable given what they consider to be M2M, see my earlier blogpost here. Maybe the idea is that they can shift all the direct clients onto a third party platform which should be easier to migrate to a merged AT&T. Is that the logic here?

More likely they've decided that it'll be too difficult in the crowded market place to guarantee that they'll get enough revenue over and above traffic. So, rather than try to fight a losing battle for what is effectively value added service revenue they'd rather just accept that they're going to make only a tiny amount of revenue from wholesale data and move on to doing something more profitable. This is in stark contrast to the prevailing mentality which is to set up specialist M2M business units and competence centres.

Of course the AT&T acquisition confuses the issue somewhat given that a huge chunk of their competition is soon to become part of the same company and they can't make big decisions like this without one eye on their new partner. However, imagining for a moment that that wasn't occuring maybe T-Mobile's decision is genius. Or at least supremely realistic. Take a punt on M2M being only a marginal opportunity for MNOs and all your competitors getting bogged down.

M2M opinion survey from Machina Research and Mobile Europe

2011-05-16T15:34:00.002+01:00

We've joined up with the folks over at Mobile Europe to produce their Insight Report on M2M and embedded technology for the June/July issue. As part of that work we're running a survey asking the wise people of the telecoms industry how they see the opportunity for M2M. If you'd like to take the survey (and we know you want your voice heard!) then please follow the link here.

If you'd like to know more about the Insight Report, then you can find more info here.

1.5 billion smart meters in 2020 will drive M2M in the utilities sector

2011-05-16T08:50:00.004+01:00

It's exciting times for Machina Research as we published our report on the M2M market in the utilities sector last week. Utilities have been using M2M-style monitoring equipment for decades so the market is not a new one. However we expect the segment to see very rapid growth over the next 10 years driven by government intervention in the form of legal requirements for smart meter deployment, stimulus packages for smart grid roll-outs and wider installation of electric vehicle charging points.

Machina Research’s Connected Intelligence report Machine-to-Machine (M2M) Communication in the Utilities Sector 2010-20 forecasts the following:

The number of M2M connections in the utilities industry will grow from 100 million in 2010 to 1.5 billion in 2020, of which 99% will be smart meters.

Cellular connections will ultimately dominate, growing from 38% to 57% of installed base by 2020. Metropolitan Area Networks (MANs), including powerline communications (PLC) and community WiFi connections, will also be significant, accounting for 28% of connections in 2020, albeit down from 53% in 2010. Of the wireless wide area connections, 3G is will dominate.

The total market for M2M in the utilities segment will be worth EUR24 billion in 2020, up from EUR4 billion in 2010 and having peaked at EUR28 billion in 2017. From 2017 onwards the number of new additions starts to decline, resulting in a reduction in device, installation and provisioning revenue. The largest region in revenue terms is Emerging Asia-Pacific, courtesy of China’s significant investments in utilities upgrades. By 2020 China will account for 40% of global M2M utilities connections and 31% of revenue.

Pure traffic revenue, that is the revenue associated with carrying bits, is tiny. Excluding device, installation, provisioning and other associated services, mobile traffic revenue will amount to only EUR50 million worldwide in 2010, growing to EUR1.2 billion by 2020. Proportionately that is 1% of total revenue growing to 5%. The revenue opportunity for M2M in the utilities sector does not lie in carrying traffic. Mobile network operators must be involved in other associated elements of the service provision if they are to secure a significant portion of the EUR190 billion that will be generated between 2011 and 2020 in the sector.

About the report

Machine-to-machine (M2M) Communication in the Utilities Sector 2010-20 provides invaluable qualitative and quantitative analysis of the emerging opportunity for machine-to-machine communications in the utilities sector.

The report reviews the major drivers and barriers for growth of M2M in the utilities 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 three applications (electric vehicle charging, smart metering and transport & distribution management) with splits by technology (2G, 3G, 4G, short range, MAN, fixed WAN and satellite) and a break-out of mobile traffic revenue.

To get hold of a copy of the executive summary, table of contents and a blank sample data sheet, email me.

The price of the report is EUR4,000 + VAT. To order your copy, find out more about the report or to discuss annual subscriptions please contact our sales team.

AT&T M2M success is built on semi-familiar CE. Other sectors will be more disruptive.

2011-04-21T07:57:00.013+01:00

AT&T's Q1 2011 results are just out. The most interesting thing for me is how they're doing in their emerging devices category, which basically comprises everything that ain't a phone. As it turns out it's another good quarter and another major revenue driver. Of the 2 million net adds recorded by AT&T in Q1 2011, 1.3 million were "connected devices" (i.e. M2M) with a further 300,000 embedded computing (i.e. laptop) connections. The total for the emerging devices category now exceeds 12 million on a subscriber base just shy of 100 million.

But for me the question is always this: how does that number break down? What types of devices? What types of applications? AT&T has certified more than 1000 products and I got to check out a few of them at Mobile World Congress, and was impressed. But, how many of them actually account for more than a handful of connections?

Of the 12 million total, 3.4 million are "branded computing". Of the remainder, the lion's share seems certain to be accounted for by eReaders (particularly the Kindle) and other consumer electronics devices. When the Kindle 2 International was released via AT&T in Q4 2009 there was a very pronounced spike in the number of "connected devices" connections.

That spike during 2010 is pronounced. This, and a few other qualitative comments from various people leads me to believe that non-consumer electronics M2M makes up only a small fraction of AT&T's "connected devices". What's more, the announcement of the availability of the Kindle 3G through AT&T direct channels means there will be a further boost to the CE sector.

Why does this matter? Well, in a way it doesn't. CE's as good a segment as any. In fact ARPUs will be distinctly healthier there than in, for instance, utilities. The point is that selling a slightly different form of CE doesn't represent much of a fundamental shift from the usual job of selling phones. It's a bit different, not least in the prevailing wholesale model, but not miles away from what MNOs are used to. It's one SIM to one device. It's used by a person and with fairly predictable patterns. Carriers such as AT&T, who are ostensibly at the cutting edge of M2M, haven't had to adapt very much to take advantage of the CE opportunity. There's much more change coming and anyone at AT&T who thinks they're on top of M2M because 12% of their subs base is "connected devices" has got another thing coming.

Smart meter growth 2010-2020

2011-04-20T14:26:00.011+01:00

I'm currently putting the finishing touches to the Machina Research Connected Intelligence Report on M2M in the Utilities segment. So I thought I'd drip-feed a little bit of data from the report as I get finished.

Firstly, the total size of the installed base of smart meters globally is set to grow from 100 million in 2010 (dominated by Italy and the US) to 1.6 billion in 2015 (by which time China is comfortably the #1 market in the world, accounting for almost 1/3 of smart meters).

The report, entitled "The Global Market for Embedded Connectivity in the Utilities Sector 2010-20", to be published in April 2011, examines the M2M market opportunity in the Utilities sector. The report examines the drivers and barriers of M2M adoption and looks at the prevailing business models, the major players, technology developments and regulation.

A major feature of the report is the detailed market forecast for 54 countries and six geographical regions (North America, Latin America, Europe, Middle East & Africa, Developed Asia and Developing Asia). For each application category (smart meters, transmission/distribution monitoring, electric vehicles and home energy management) and each country the report forecasts number of connections, traffic, technology used (cellular, powerline, MAN etc) and revenue.

The reports provide invaluable insight for those companies (such as network operators, service providers and device manufacturers) that want to understand the size and structure of the M2M market and wish to address the opportunities presented by the Utilities sector.

The price is EUR4,000 for the stand alone report and EUR6,000 including client enquiry hours and a strategy session. For further information please contact me by clicking here.

Ericsson acquires Telenor Connexion's platform: good business all round

2011-04-19T23:42:00.006+01:00

Well that was a big bit of M2M news! Yesterday Ericsson announced that it would be acquiring the technology platfrom of Telenor Connexion, the Norwegian telco's M2M arm, and effectively fusing it into its Device Connection Platform, adding technological capabilities and practical know-how of M2M implementations. The DCP is a software-as-a-service (SaaS) managed service aimed at allowing MNOs to offer M2M services to enterprise customers. Telenor will be the first operator using the platform. Full article here.

So what do we think about that?

It shows how seriously Ericsson is taking M2M. It always recognised that it'll be massive, obviously. That's evidenced by the 50bn devices splash headlines that have been doing the rounds, seemingly for years. But this is really putting its money where its mouth is.

Telenor Connexion has clearly been finding it difficult in an increasingly competitive environment. Why did Telenor sell? Rumour has it that they've been struggling to acquire new customers and keep hold of those clients that they signed up a few years ago when they were the only game in town. Now that the johnny-come-latelys (i.e. the established MNOs) are coming to the table unencumbered by roaming level pricing it's tough for Telenor to compete outside its few home markets. This deal allows them to piggyback on Ericsson's scale.

Scale is everything in M2M. Some M2M applications naturally work well at a national level, such as utilities, but many don't, e.g. consumer electronics. The success of Jasper Wireless is evidence that multinational customers appreciate being able to port onto the same platform across multiple geographies and operators. The recently announced deal between DTAG and France Telecom/Orange was aimed at a similar desire to gain scale.

It reinforces that M2M is a managed services play where the large vendors see a bit opportunity. Developing a platform in-house is expensive and largely unnecessary for small MNOs. Ericsson is strong in this field and always has been. It allows them to pursue smaller MNOs with a SaaS approach to M2M.

It's good news for smaller MNOs with national footprints. Previously these guys were left behind. Now they can get in on the M2M act.

It strengthens Ericsson ability to compete with SIs and pursue enterprise clients. We heard this at MWC. Ericsson can more effectively market vertical-specific M2M products to the end user, i.e. the enterprise. And critically, it can do this globally, with global clout.

At first glance it looks like a good piece of business for both companies. Ericsson gains some practical managed services experience and Telenor gets out of an increasingly rough marketplace. The above are just some thoughts at midnight. I'll possibly have something more once I've been able to speak with all parties.

Get a room already...DTAG/FT and why M2M will drive more consolidation.

2011-04-17T06:13:00.009+01:00

More news emerged over the weekend of closer and closer collaboration being planned between France Telecom/Orange and Deutsche Telekom. News article here. This is just the latest in an ongoing series of cosying-ups that have been occuring in the last few years. There have been acquisition/disposal deals over assets where they have had too little market share (Austria and Netherlands). There has been the merger of the UK assets to form Everything Everywhere. In February they also announced an agreement to collaborate on various things.

The latest agreement focuses on joint purchasing of network equipment, network sharing in Poland and collaboration on a number of M2M projects. In an increasingly mature industry it's natural that we get consolidation. Sometimes it takes the form of good ol' fashion M&A. For the mobile industry, though, there are lots of other ways to consolidate that fall short, such as network sharing.

For me, obviously, the most interesting thing in the announcement relates to M2M. FT and DT have the potential to dominate their home markets for those applications that are national or local in character. See my blog post about Orange. For instance smart metering. However, the multi-national agreement announced in February between T-Mobile and Orange should also bring them some benefit for cross-border applications such as transport and logistics, although the scale was somewhat limited.

M2M may be a contributing factor to an increasing amount of M&A. It's not the only factor, of course. Reducing costs and improving the bottom line are all encouraging MNOs to move in this direction. However, it seems increasingly apparent that MNOs need regional (and in some cases global) scale for some M2M applications. Those MNOs who have to pay national data roaming rates will struggle to compete with those multinational MNOs with a domestic network, rendering them uncompetitive. Therefore, pooling geographical resources will be essential. More alliances are inevitable, as is more M&A one suspects.

In fact there could be an M2M behemoth heading our way. If the AT&T acquisition of T-Mobile is successful it will give DTAG an equity stake in AT&T and thus a strategic partner in N America. AT&T is strong in M2M in the US. Partnered with a resurgent T-Mobile and Orange in Europe this will be a very strong global player.

Why do forecasters still split Eastern & Western Europe?

2011-04-11T11:01:00.003+01:00

I'm up to my ears in M2M forecasts at the moment and one of the things we decided to do at Machina Research was to abandon the old split of Eastern vs Western Europe. Why? Here's the reasons...

Geographically it's a nonsense. I don't want to dwell on this one too long as it's not really a big deal but there's lots of W Europe that's actually pretty east. Greece and Finland were historically western Europe even though they're way east of Prague. That's fine. But, for instance, where do I put Turkey in my forecasts? If we're considering it to be Europe (and we at Machina are), does it go in Western or Eastern? Neither make sense according to the old definitions.

The market dynamics are broadly the same. OK, so Belarus and Belgium are pretty different, but there's little to choose between say Czech Republic and Austria in terms of fundamental dynamics of the telecoms markets.

In terms of wealth, it's becoming less and less relevant. Czech, Hungarian, Slovenian and Baltic GDP/capita is catching up and in some cases exceeding those for Portugal and Greece.

In terms of politics and regulation it makes no sense at all. OK, so it made sense in 1988 when there were Soviet and US spheres of influence, but last time I looked the iron curtain had well and truly rusted. Today half of what makes up E Europe is in the EU. So they're following the same rules as most of W Europe. It would surely be more sensible to split EU vs non-EU. But Norway and Switzerland tend to follow the same rules as the EU and (as noted above) they don't have a lot in common with Ukraine, Belarus and Moldova. Also, as new countries accede to the EU the definition would keep changing.

Telcos don't see it that way. Many many European MNOs have presence in both Eastern and Western Europe. Vodafone, T-Mobile, Telefonica/O2, Orange. For the most part they consider them as part of a single European footprint. And so should we. Most of my contacts within European operators want to know about implications for the whole of their footprint. It makes no sense for me to have to say "I can tell you about France and Denmark, but you'll have to wait 3 months before I can tell you about Estonia and Romania". As it happens, at Machina ALL our forecasts are global, so for any given sector we'll always have all countries covered.

So, the only real argument is that (a) we've always done it that way and (b) you have to split it some way or it's too big to do. The former is a nonsense argument. The latter has some credibility. As forecasters you need to segment. For instance, we have 6 global regions. However, the fact that a European telco wants Europe level data and that the countries have such fundamental similarities means that the old Eastern/Western split for Europe makes little sense.

Machina Research will soon be publishing our market forecast reports for embedded connectivity/M2M in the Utilities and Health sectors. The reports include detailed market forecasts for 54 countries. If you'd like more details, email me.

Mobile market forecasting: you can predict WHAT, but not WHO

2011-03-30T12:19:00.006+01:00

There's been a lot of noise (like this) over the last few days about IDC's smartphone forecasts. The issue seems to revolve around how the 5 year forecasts from 2006 missed the growth of Apple (of course, it didn't exist) and Android (basically ditto), so how can the 2011 forecasts be relied upon out to 2016. Even a year or two ago they were forecasting that Symbian would dominate, which is now clearly not going to be the case. I'm very sympathetic to their plight. I've done more than my fair share of mobile forecasting at Yankee, Analysys Mason and now at Machina. However, it seems obvious to me that this is the problem that you run into as a market forecaster if you try to predict WHO (e.g. which companies or OSes or whatever), rather than WHAT (e.g. smartphones vs featurephones, number of subscribers, prepaid vs postpaid, ARPU).

There are a number of fairly predictable trends that will influence the WHAT: macro-economic trends, Moore's Law, market liberalisation, technology, regulation, competition etc etc. All of these change gradually (for the most part). Unfortunately, when it comes to predicting WHO, it comes down to individual decisions made by executives. Clearly the WHAT factors are also influenced by a multitude of decisions by the WHOs, but if company A makes a stupid decision company B can jump in and seize the opportunity, which tends to level things out. Every so often you do get a game-changer like 3's massive price reduction on mobile broadband to GBP15/month which effectively created a consumer market. Those things don't happen very often though.

My focus in the past has tended to be on forecasting things like subscriber adoption and ARPU. These tended to rely on some of the trends I outlined above. Every so often, however, clients would ask me to forecast individual operators. I generally said no, or attached the caveat that they were likely to be so wildly inaccurate as to be virtually useless. If a single person can make a single decision that completely invalidates your whole forecast (like Stephen Elop's decision to dump Symbian for Windows) then forecasting with any accuracy at all is impossible. So, forecasting the number of smartphones, or the number of subscribers or the revenue generated is do-able and worthwhile. Forecasting which OS or operator will dominate is basically impossible.

At Machina Research we're currently going through a long process of forecasting each of the constituent parts of the M2M market. Nowhere will we definitively predict which companies will dominate. We will offer some views on whether it will be operators or SIs or service providers, for instance, although the business models are almost too uncertain today for even that level of forecast. We'll never forecast at the level of individual operator. A single decision by an executive at Vodafone, Orange, Jasper or whoever could change their fate totally.

Top 10 tips for M2M

2011-03-25T14:43:00.002Z

Jim and I recorded a podcast of Machina Research's top 10 tips for M2M last week and it's now up on the M2M Forum Europe website.

The highlights are as follows, although you'll need to give the whole thing a listen to get the detail (and the pleasure of listening to our dulcet tones):

There's no such thing as M2M. There are many many ways in which embedded connectivity can benefit vertical sectors. All of the sectors (and applications within those sectors) have different dynamics. So homogenising it as "M2M" misses a lot of the complexity.
There's no common currency or agreed segmentation or terminology for the opportunities. That's what drew Machina Research to this area. It's not been covered in a consistent and comprehensive way.
Business models are unclear. There are still a lot of players jockeying for position in the value chain, be they MNOs, SIs or service providers.
M2M isn't just a top-down or B2B sale. In most sectors, end-users are involved in the process, either because it's a B2B2C sale or because it needs some form of buy-in from them. Neglect the end-user at your peril.
M2M initiatives are part of an environment and need to move in step with that environment. There's no point, for instance, in implementing an ambulance system where there is no hospital system to talk to and no electronic records.
A lot of the benefit is not really M2M. It's in the SI development and additional capabilities which are unlocked by M2M.
The business logic of the M2M world is very different from mobile, so MNOs beware! There are a many differences from the MNOs' usual area of comfort. For instance, it's business critical (and often life critical) rather than best effort. The device isn't always on. The end points don't complain if there's no service. And many many more.
One SIM does not equal one account. Users will have multiple SIMs on a single account. So MNOs will need to bill appropriately.
Remote SIM provisioning is coming. Are you ready? The various standards bodies are looking at methods for remote provisioning of SIMs to allow M2M clients to swap operators once they've installed the devices. It will happen. The question is how, and are the operators ready for it?
There are a lot of tough technology choices to be made, both by MNOs but also by potential customers. When will MNOs switch off GSM? What are the implications of the arrival of LTE? What about short-range wireless?

All of these issues and many more will be addressed during our session at the M2M Forum Europe on the 6th June.

The M2M Forum Europe is 6-9 June 2011 at Chelsea Football Club. Day 1 will be a full day workshop from Machina Research looking at strategies for network operators, vendors and all the relevant industry sectors to maximise the benefits of M2M. It will build on all the valuable work we're doing at Machina Research examining the way in which embedded connectivity will affect each and every vertical sector and major application type.

Orange's M2M strategy will focus on utilities and intelligent environment

2011-03-24T12:28:00.010Z

I had a call this morning with the M2M folks over at Orange. Very edifying with lots of talking points. They've not been doing that well with M2M recently. They've picked up some good wins (e.g. the ERDF trial) that gave them a pretty good growth rate in 2010, but they're decidedly tier-2. So it seems they're sensibly focusing on those sectors/markets where they have a competitive differentiator. They can't compete with the scale of Vodafone (despite the deal with T-Mobile announced at MWC) so they're adopting the strategy in M2M that has permeated the rest of the Orange group: go deep in a few territories. It has been the policy of the wider group for a few years to focus on cross-selling in the UK, France, Poland and Spain where they have fixed and mobile assets (although obviously the UK has now been hived off to Everything Everywhere).

Their approach (and it's a logical one) is to say:

Orange has a potential competitive differentiator in a few countries where it has both fixed and mobile operations.
There are some M2M segments that benefit from the use of fixed and mobile connections. Let's not be blinded that M2M has to be mobile. M2M is nothing more than (to quote the Machina Research definition): "Connections to remote sensing, monitoring and actuating devices, together with associated aggregation devices." Nothing in there that says it has to be mobile. In fact businesses were using fixed lines for SCADA for years before "M2M" arrived or anyone realised that was what SCADA was.
There are some sectors and applications that require national level connectivity only. Orange announced a win with Coyote, a national radar detection and alerting system, in France. This is national as most of the relevant motoring is national (plus it's banned in a number of neighbouring countries). As an aside, it's now fraught with problems mentioning Orange alongside anything animal-related. What with Dolphin, Canary etc. it'd be easy to assume they had a Coyote tariff now.

All of this puts Orange in a strong position to win contracts with utilities. Their requirements are national and, since meters and network infrastructure don't move much there is a strong argument for using a fixed connection (in fact that's what's been happening for decades). So we can expect FT/Orange to bring in some utilities deals in France, Spain and Poland where it has that strength as an integrated operator. There's something in the works at the moment and I'll let you know about that once it's not embargoed.

There are a bunch of other sectors where local or national contracts will dominate: intelligent buildings, smart cities (see Orange's trial in Cagne-sur-mer) and emergency services to name a few.

I'm currently working on the Machina Research report on embedded connectivity in the Utilities sector, which will be published next month. Lots of lovely opinions and forecasts on smart meters, smart grids etc. Drop me a line if you want more information or would like me to let you know when it's available.

UK LTE spectrum: how likely we'll see a new operator?

2011-03-22T11:28:00.007Z

Looking through the Ofcom document on digital dividend and 2.6GHz awards, one question crossed my mind: "Why couldn't I have been a professional cricketer instead?". Then another more relevant thought was "what is the likelihood that we'll see a new mobile entrant in the UK market?".

Ofcom has not mandated a new entrant in the same way that it did with the 3G awards where 5 licences were offered to a market with 4 exisiting operators. It's nice to see that they're "ruling it out" though. Any potential new entrant must be stunned by the regulator's enthusiasm for increased competition :

"We have also considered the potential for market entry. In proposing a minimum of four licensees capable of being credible national wholesalers it is important to realise that we are not ruling out the potential for some of those licensees to be new national wholesale entrants. We would not be surprised if one or more prospective new entrants were to bid for the minimum spectrum portfolios that we have identified; for example in the recent 800 MHz auction in Sweden two of the bidders were prospective new entrants. Our proposals are neutral as to the identity of the four licensees; they seek to provide all parties with equality of opportunity to bid for sufficient spectrum to be credible national wholesalers in the future."

The fact that it's four operators does lead one to suspect that it'll be the existing four players who tie up the spectrum between them. The award does place some limits on the amount of spectrum that each operator can own, but it's unlikely to hinder them. H3G alone, if it decided to go on a spending spree, would be allowed to buy 72% of the spectrum available (2x30MHz at 800MHz and 2x70MHz/1x50MHz at 2.6GHz). O2 could buy 44% and Vodafone 40%. Everything Everywhere is the most limited due to its hulking great 2x45MHz (down from 2x60MHz due to merger requirements) at 1800MHz and the fact that it currently holds 48% (to be reduced to 40%) of UK allocated spectrum. It would be allowed to buy 32% of the newly awarded spectrum. Added together that gives 188%. So it's difficult to foresee a scenario in which all of the spectrum is not hoovered up by the existing 4 players.

But maybe there's hope for a new entrant. One of the blocks of 2x5MHz spectrum in the 800MHz band (lot A3) has a coverage requirement:

"We propose to include a coverage obligation in one licence for the 800 MHz spectrum to deploy an electronic communications network that is capable of providing mobile telecommunications services with a sustained downlink speed of not less than 2Mbps with a 90% probability of indoor reception to an area within which at least 95% of the UK population lives. We believe this should result in coverage of future mobile broadband services that approaches today’s 2G coverage by the end of 2017. We consider that such an obligation would be proportionate taking in to account the likely costs and benefits. A key question on which we are seeking views from stakeholders is the best way to specify such an obligation, in particular as regards coverage in more rural areas."

But will that encourage a new entrant? With the roll-out obligations, that licence will be cheaper. But it's a double-edged sword as the roll-out obligations would require a huge investment. Risky when demand is unproven and they'd be reliant solely on selling data plans which are much less profitable than voice. Also it rather depends how the existing incumbents see it. If they plan for 95% population coverage anyway (I rather doubt it, but just for argument's sake) then the discount on that piece of spectrum would be modest.

[Update] After some thought I'd not rule out BT (and at a push maybe Virgin) bidding on the basis that they'd be filling a gap in their portfolio, there is a good opportunity for synergies with their existing business and they already have the channels to market. Cell sites and infrastructure deployment costs is clearly a major issue but maybe they'll find an innovative way of deploying LTE, e.g. a focus on femto to give something like what FON should have been.

AT&T/TMO's 43% market share would be normal in Europe, but this ain't Europe

2011-03-21T09:16:00.004Z

My first thought on AT&T's acquisition of T-Mobile USA was that it's by no means guaranteed that the competition authorities will allow something that gives one operator 43% market share. Initially it looks to be handing too much power to one player. However, if US authorities choose to look overseas they'll find that such a thing is the norm. Eighteen months ago, when T-Mobile and Orange (which co-incidentally also gave them a market share of 43%) were merging their UK assets I examined what was a normal market share for a #1 operator in Western Europe. When that merger was announced, the UK was the only market in Western Europe where there was no single operator with a market share of >35%. In 11 of the 15 other major Western European there was an operator with 43% market share or greater. So this merger puts the US on a par with the norm in Europe.

However, there are some differences. Firstly the scale. European markets are much smaller and most operators operate across multiple countries. So, for instance, Vodafone, T-Mobile or Telefonica will make some handset purchasing decisions on a regional basis. To some extent what is important in Europe is regional market share, and this is much more fragmented.

Secondly there is the issue of technology. While AT&T/TMO has a 43% market share in mobile it has ~85% market share for GSM, and thus a de facto monopoly for the purchase of handsets and network equipment*. That's not what the general public would consider to be the issue for consideration by competition authorities, but it's definitely a competitive issue.

Thirdly there is the question of whether it will spark further mergers. A T-Mobile/AT&T tie up creates a GSM powerhouse with 130 million customers. It is likely that the CDMA operators will consider doing the same to give themselves 150m subs and a nearly 50% market share, thus effectively creating a duopoly for services and another monopoly for the purchase of handsets and infrastructure.

* Once everyone starts rolling out LTE equipment the network element disappears, although handsets is still an issue as they'll need to be multi-mode, either CDMA/LTE or GSM/W-CDMA/LTE.

Delays in LTE spectrum awards will help UK operators

2011-03-14T08:15:00.006Z

The other day I was asked by a journalist to comment on the delayed (and still legally threatened) UK 800MHz and 2.6GHz spectrum auctions. My comment was something pithy about MNOs crying out for spectrum while at the same time delaying the award with their squabbling. And it's true, they are crying out for it. And it's also true that they're delaying the award. That's not to say that they don't have some justified grievances of course. For instance that it's impossible to bid for spectrum if they don't know what's happening with refarming.
However, all this set me wondering whether a delay in award of spectrum for LTE might not have some positive consequences for them.

It will save them money. If the UK doesn't manage to get LTE deployed until 2014 or 2015 then the equipment should be cheaper, due to scale.
There's not really any point deploying LTE until LTE Advanced anyway. Plain ol' LTE doesn't offer many advantages over HSPA+. They both run at about 50MBit/s and the greater spectral efficiency of LTE only applies with big chunks of spectrum (which none of the MNOs have, but they may be able to negotiate during the current discussions). It's only with LTE+ that the benefits of spectral efficiency can cut across fragmented spectrum. So, the smart operators have generally taken the view that they'll upgrade their networks to HSPA+ and wait a bit until deploying LTE. In this the UK operators are being forced to make the smart decision. Not that I don't have ultimate confidence they would make the smart decision anyway you understand, but this at least guarantees it.
It delays the inevitable '4G' arms race. MNOs will be trying to outdo each other with who has the best '4G' network. Leaving aside whether LTE really counts as 4G, it will be interesting to see whether T-Mobile imports from the US its tactic of describing HSPA+ as 4G.
It worked for O2 with 3G. O2 is the leading operator in the UK. Part of that is down to adopting a pragmatic approach to deploying 3G. They did it when they had to (based on regulatory requirements) and when they felt the technology was up to the job (i.e. when HSPA kicked in).
It encourages innovation. The solution to greater and greater bandwidth demands and squeezed margins is not simply to keep adding more macro network capacity. If mobile broadband is unprofitable, as many MNOs are claiming, then STOP SPENDING MONEY ON ADDITIONAL EXPENSIVE KIT. Focus your attention elsewhere. I'd argue that a delay in LTE encourages MNOs to execute on these cheaper initatives first (as they should do) rather than last. There are numerous good examples: femtocells for offloading home traffic; better subscriber management to make all the bandwidth hogs pay up; and then there was this announcement from O2 that it would be rolling out a massive network of 'free' (i.e. ad-funded) WiFi hotspots. All good stuff.

So, my conclusion is that making the UK operators hold off LTE deployments might be the best thing for them. I'm pretty sure they're not going to see it that way.

ECJ ruling on insurance gender discrimination means 100m more M2M connections in Europe

2011-03-06T07:46:00.008Z

Part of my job is to predict the future. It is only very rarely that I can make a prediction with virtually 100% confidence. One seemingly unrelated event happened last week that will definitely have significant consequences for M2M. The European Court of Justice ruled that insurers will no longer be able to take gender into account when setting premiums. The ruling comes into effect from December 2012.

Gender is one of the prime statistical determinants of how safe a driver is. It's arguably not fair for the many many male drivers who are perfectly safe, but statistics ain't fair. The insurance industry works with what it has and knowing gender gives a pretty good indication of risk. That said, if particular ethnic groups had statistically greater risk and car insurance companies were using that to profile users and determine premiums, people would be up in arms. And rightly so. But I digress.

For the car insurance industry the ruling has taken away one of the main methods of segmentation. That will definitely push insurers in the direction of insuring based on actual usage rather than profiling since they can't really do the latter very effectively (and what happens when age discrimination is also banned?). So, they're going to rush for any solution that can monitor users' actual usage patterns. If they're a bad driver they have high premiums. No need for statistics. And what does that involve? Some form of black box travel monitor, ideally connected to allow insurers to provide new and innovative pricing models (as discussed in an earlier blog post). This means that the 250 million cars in the EU will need to be fitted with a device and many of them will have a wireless modem. So maybe 100 million extra M2M connections as a result of this piece of legislation. Of course no-one will be obliged to fit one of these devices. However, anyone who opts to do it the old way (i.e. just a flat annual fee) will look suspicious and attract higher premiums.

All this is bad news for Sheila's Wheels. But it does mean it might be a wise time to buy shares in these guys.

We at Machina Research will have a report coming out on M2M in the Automotive sector in Q2. Please get in touch if you would like me to keep you posted on when it is released.

M2M and CDMA-450, a match made in heaven?

2011-03-04T13:25:00.001Z

A very interesting article on Mobile Business Briefing yesterday quoting Harbir Sing Nat, CEO of Zapp, a portuguese CDMA-450 operator. There's a bit of ranting about: how MNOs can expect low ARPU from utility meters (no big surprise there), how no-one's likely to want to support M2M customers on 700MHz LTE networks (again, not a shocker) and that shutting off 900MHz will leave big gaps in GPRS coverage (it won't for the many operators that only have 1800MHz spectrum and we can't see all MNOs in a given market switching off GSM for the foreseeable future). So nothing earthshattering there.

But, after that he does mention something pretty sensible: M2M and 450MHz were made for each other. 450 has good coverage, particularly CDMA, making network economics better. At a low frequency it should have better indoor coverage than other frequencies. It's largely unused spectrum that has become commercially redundant. There are some disadvantages, notably support for the frequency amongst module manufacturers. Also, there's no consistency internationally, so no good for any M2M application that requires roaming.

Overall I think it's a bit of a bonkers idea since the economics of running a 450MHz network just to support M2M almost certainly don't add up. But, there may just be a kernel of an idea in there for anyone with 450MHz spectrum.

Vodafone network outage this week should moderate M2M ambitions

2011-03-04T08:45:00.000Z

In my last post I looked at how Vodafone had signed a bunch of strategic agreements with Bosch, Hyundai and Intel covering M2M. However, it's interesting that two of the announcements (Bosch and Hyundai) came in the same week that a break-in at a Vodafone UK data centre crippled the network for almost a day.

There is a massive trust issue associated with M2M. Customers could be putting business critical (and indeed life critical) connectivity into the hands of its trusted communications partner. Can they afford for that network to go down in its entirety. Now there's no doubt that the network issue Vodafone experienced this week was unusual. It rarely happens, but it does go to show that MNOs still have a long way to go to provide anything other than best effort services. Fine for reading your gas meter, alerting you when your car needs servicing or letting your toaster know what time you'll be home. Not so good for health applications or critical business functions such as transport and logistics.

So what's the answer? Greater network robustness? Maybe although M2M revenue is unlikely to justify that. Some sort of fall-back option in the event of macro network failure? Probably. Setting your sights a little lower in the short-to-medium-term and focusing on M2M applications that only really need best effort? Yes.

By the way, it's not my intention here to criticise Vodafone specifically. Every operator has the same issues. The networks were built for best-effort service. That's how they brought cheap communications to billions of people.

Vodafone signs strategic M2M agreements with Bosch, Hyundai and Intel

2011-03-03T06:04:00.012Z

Anyone who keeps an eye on Vodafone won't have helped but notice a couple of announcements in the last week on strategic partnerships that big red has signed with Hyundai (Monday) and Bosch (Tuesday). This on top of an agreement in February with Intel.

Naturally, all of the announcements are light on detail, talking about strategic exploratory partnerships and the like. However, it does point to a few things. Firstly, the rest of the world is starting to take an interest in M2M. It's not just the MNOs who are pushing this. Companies that make stuff, like Bosch and Hyundai, are genuinely interested. Secondly, it's automotive and consumer electronics that are first off the mark. OK, not quite first as transport and logistics and security applications have been around for a while. However, the more B2B2C segments will tend to be faster to move. We shouldn't underestimate the role of the consumer in driving M2M both in terms of their active adoption or passive buy-in (e.g. pay-as-you-drive insurance). I've touched on this before in a previous post, but I'm sure it's one I'll come back to again and again: the consumerisation of M2M.

We heard this week at CEBIT from Vodafone Germany CCO Jan Geldemacher that the company expects M2M to account for 10% of data revenue in 5 years. Not a wildly ambitious target that, as data only accounted for 17% of VF DE's revenue last quarter. So 1.7%. I think we can set our sights a little higher than that.

Britain's 20 Favourite Brands eh? Brits give telecoms the thumbs down.

2011-02-28T10:56:00.003Z

The Centre for Brands Analysis has just published the results of its 2011 Superbrands index of Britain's favourite brands. For those of a telco persuasion, I'll summarise: nothing. Not a sausage. None of the top 20 are telcos. No BT, no Virgin Media or Mobile (Atlantic's in there though at #17), no Vodafone, no O2. No Nokia. And before you ask, no, this isn't limited to British companies. #1 is Mercedes.

The interesting thing from a telecoms industry perspective is that the unholy trinity (as I shall start to call them...I expect you to follow suit) of Google, Microsoft and Apple are in there at #5, #6 and #9 respectively. That's right kids, Apple is less popular than Microsoft. All of you who thought that Stephen Elop's decision to hitch his horse to the Windows Mobile bandwagon was a case of an increasingly uncool brand buddying up with an already uncool brand were wrong! Of course I'm not party to exactly the definition of popularity used in the survey.

It is interesting that as far as telecoms is concerned, hardware and carriage are nowhere (except for Apple making the devices they sell, but the hardware ain't why people buy Apple, see the whole rigmarole about the death pinch). Software is king. Five to ten years down the line those three firms will account for 90% of the smartphone market. They've won the hearts and minds of the public and they've won the battle of the value chain.

NB - BA is a strong #8 which surprised me. I've flown with BA three times in the last fortnight and there's been some kind of screw up on every flight. It can't last surely.

MWC 2011 pt 2 - M2M as a bottom up evolution?

2011-02-18T07:41:00.002Z

I dealt with all the news at Mobile World Congress 2011 in the last MWC post but didn't really refer to all the lovely M2M discussions I've had during the week. Lots of really interesting stuff. One thing that came up is whether the consumer rather than the enterprise will in fact be the main driver of M2M. I'm not yet convinced but there is certainly an argument there.

There is a big assumption about M2M that it will be driven by big deals between MNOs and blue chip firms such as EDF, Glaxo SmithKline and BMW. Clearly deals for tens of millions of SIMs will make the market take off. However, to date, we've only really seen these kinds of deals where there has been some legal requirement such as eCall or automated meter reading in Sweden.

Glancing for a moment at AT&T figures for M2M units it's evident that there is a massive spike associated with the launch of the 3G Kindle. Slow and steady growth from traditional M2M applications gives way to rapid take off, courtesy of consumer adoption.

It's debatable whether a consumer electronics device such as the kindle should really count as M2M. However, even in the much safer territory of smart metering, consumers are in a position to drive this. UK Smart Metering Group offers a product that users can install themselves to allow them to track electricity usage. The benefits to utility companies of installing smart meters is evident (not least that there is no need to send someone to read the meter). However, they still delay on roll out. But it's not just individuals. Companies can elect to install smart meters at their own premises in order to monitor their energy usage and reduce their bills. Better than waiting for their utility to do it.

So, if you want rapid growth in M2M, the general rule is to find something that the end users will buy themselves. There are also, of course, some cases where enterprises have been in the forefront of pushing M2M. This is usually where it gives such an obvious and demonstrable benefit that companies would be idiotic to ignore it. Security is one application. The other is transport and logistics.

So that leaves us with three main drivers for M2M growth:
- legislation
- ludicrously obvious business benefit
- consumer push

When thinking about which M2M applications will dominate you could do far worse than to just take those three characteristics.

MWC 2011 pt 1 - Nokrosoft, Google, "4G", regulation, tablets and LTE

2011-02-17T18:30:00.003Z

Mobile World Congress is over for another year. My feet are sore, I'm glad I instituted a no-drinking rule and I've worn more make-up this week than in the rest of my life put together. Here's my round-up of some of what I saw at MWC.

In the news
As usual I didn't get to see any of the congress sessions. I was just too busy with briefings, client meetings and generally spreading the word about Machina Research. I was aware of some of the goings-on though. Stephen Elop was ubiquitous on the back of his striking move to hitch Nokia's wagon to the Windows Mobile OS horse. He has a lot of explaining to do and MWC seems to have been the place to do it. Apple in contrast didn't turn up as usual, and couldn't be bothered to collect their award for best handset, and were roundly booed for their win. Mike Short of O2 picked up the award after certain others turned down the honour. Elsewhere Google's Eric Schmidt was very complimentary to MNOs about their investments in access networks. At the same time he alluded to the argument about how maybe content providers should pay toward delivery. I won't rake over this one again, but content is the reason people buy access. Notwithstanding all the net neutrality arguments, if network operators demand payment from CPs those CPs may start to demand payment from the operators for providing their valuable content. Subscribers pay for access. That's how it is. If network operators can't make a profitable business out of that then more fool them.

Other interesting news for me during the show, and discussed on the Mobile World Live TV Analyst Daily panel were T-Mobile bringing "4G" (in the form of HSPA+, don't get me started on why that's not 4G) to Europe. Vodafone's Vittorio Colao complained about regulators being out of touch, particularly with regard to mobile termination rates (MTR). This view was echoed by Telekom Austria's Hannes Ametsreiter in the Show Daily mag. Changes to the termination regime (i.e. very low MTRs) will mean low spend users become less profitable and they'll see prices go up. Also, if you thought it was annoying having double-glazing salesmen call you at home, wait til they start calling your mobile (which is a bit too expensive today).

Less interesting (as anyone who saw my very uninspiring response on MWLTV) was the likes of LG's 3D screen and other breakthroughs in mobile phone technologies. I just don't care that much.

LTE - Wait and see
Also interesting was O2's selection of NSN for LTE deployment in Germany. NSN seem to be really kicking on in LTE courtesy of their market leading position in LTE Advanced. Germany is a rather unusual case as the regulator has imposed LTE rollout requirements as part of the digital dividend and 2.6GHz licence awards. One suspects that the German operators would have towed the European wait-and-see line if there had been no such obligation.

The ability to sweat HSPA+ really seems to render the advantage of moving the LTE useless. For 3GPP2 players like DoCoMo and Verizon it's obvious as they don't have access to the HSPA upgrades. Sprint, the only major global MNO to adopt WiMAX, even admitted during the show that it was keeping its options open for shifting to LTE. For smaller WiMAX players like Russia's Yota, shifting to LTE is reasonable as it's a bigger market so unit prices should be lower.

But for 3GPP operators the advantages are modest. This week I heard Ericsson talk about upgrades of HSPA+ to 168Mbit/s and NSN was even talking about 672Mbit/s. I've heard from a few sources that where there are no licence requirements for LTE most MNOs are going to bide their time.

Keep taking the tablets
There was a lot of news on tablets with launches from Samsung, RIM and HTC amongst others. All very interesting but it's yet to be proven that there's a massive market here. And it's not all about who can make the best hardware. Apple wins because their end-to-end experience is better.

An M2M roundup will have to wait...
I've not really mentioned M2M here. There was a lot of it about, not least driven by the GSMA. I think all that's good in the world of M2M is deserving of a separate blog post (or two). Keep an eye out for that in the next few days...

DTAG and FT/Orange announce strategic co-operation on M2M

2011-02-12T11:48:00.002Z

A very quick pre-MWC blogpost on what could be the most important long term news from the show. What with all the talk of burning platforms and the alliance of the Steves (Ballmer and Elop) there was an announcement on Friday that didn't attract quite as much attention. DTAG and FT/Orange announced a cooperation agreement covering various areas including network sharing (good idea, everyone's going to do it), WiFi, equipment standardisation and lots of things to do with M2M. See the press release linked above for more details.

Orange has upped its game in M2M during the last 12 months and looks to be doing well, while T-Mobile has been going through a bit of a reshuffle in order to focus on the changing opportunities. So it's interesting that they're tying up. A bit of co-operation to build a market is no bad thing. Particularly one as nascent and potentially huge as M2M. Also, Vodafone is starting to take advantage of its regional scale and T-Mobile/Orange kinda need each others' footprints (a bit like Nokia and Microsoft) if they want to head off their threat and that of the likes of Jasper Wireless. It's interesting that the most specific piece of the deal is for M2M cooperation across France, Germany, Belgium and Luxembourg, i.e. the heart of Europe.

It's only a cooperation arrangement right now so let's not get carried away though.

The obligatory pre-MWC post

2011-02-08T09:05:00.004Z

I, in my new role at Machina Research, will of course be in Barcelona for Mobile World Congress next week, along with my colleague Jim Morrish. We have many many interesting meetings lined up. I'm looking forward to this year's event more than any I've ever been to for years. Lots and lots of lovely M2M (sorry "Embedded Mobile") and mobile broadband stuff is anticipated. There will probably be some handsets launched as well for those that are interested in that kind of thing. And some people will win some awards.

While we have a busy schedule you should have the chance to catch up with us some time during the week. Jim will be a fixture in the Embedded Mobile congress sessions all day on Thursday, while you can catch up with me in an around the GSMA's Embedded Mobile Seminar on Tuesday 15th from 1pm to 5pm (and possibly afterwards for a drink or two). Drop us an email if you'd be interested in meeting up: Matt, Jim.

Also, see us in glorious technicolour on the GSMA's Mobile World Live TV which will be shown on giant screens at the event, streamed to hotels across Barcelona during the week and available at the website during and after the event. Catch me on the Show Daily Analyst Panel from 9.20 to 9.35. Jim will be recording a piece for MWLTV on Sunday on what he sees as major trends in the industry.

Any members of the press out there who are likely to want commentary on the big breaking news, please send me an email and I'll send you my phone number.

Could M2M be a driver for UMTS at 900MHz?

2011-02-08T08:59:00.002Z

One of the recurring questions related to M2M is technology roadmap and this is an area we're going to be looking at a lot at Machina Research over the next year. Given the 10 year+ lifetime of the terminals (electricity meters etc.) customers don't want to invest in a technology that's going to be turned off and the MNOs don't really want to keep a network going longer than its natural life span. MNOs are definitely moving in the direction of refarming their GSM spectrum for UMTS which appears to put the kybosh on selling too much M2M. A conundrum.

There's a lot of spectrum at 900MHz and particularly at 1800MHz that could be used more efficiently and the MNOs know it is likely to be economically imperative in time to migrate to UMTS. I have my own views on whether it makes sense to abandon GSM altogether, whether it's viable to maintain GSM/GPRS indefinitely to support M2M and whether in fact it would be more simple to just switch off 3G and run with GSM and LTE. But that's not what I want to explore today. The consensus (which I don't happen to agree with) seems to be that MNOs intend to switch to just running two networks (UMTS and LTE). If so, what are the implications for M2M?

The logical thing to do is to go for UMTS 900 as fast as possible. In fact if anything M2M would be a driver for migrating. The logic goes like this:

M2M requires 900MHz - lower frequency is generally better for coverage (particularly in-building), although for the latter it's not quite as cut-and-dried as some might have you believe.

Refarming of 900MHz to UMTS will happen eventually so any device requiring GSM/GPRS at 900MHz will be rendered useless.

No-one wants to change horses mid-stream (to borrow an election slogan from George Dubya). The technology needs to be in place before widespread distribution of units. Otherwise you alienate your clients or incur significant additional cost.

So, why wait to go to UMTS900? You might as well jump quickly and then you can start selling future-proof M2M solutions rather than ignoring the opportunity for fear of selling something that conflicts with your technology roadmap

Of course I've skirted over a number of issues here. Module costs are significantly higher for 3G than 2G which makes it naturally less attractive for low bandwidth applications. As a result there will be pressure from customers for retaining 2G. MNOs may not abandon trusty ol' GSM at all (which I tend to believe). But, if they do plan to, getting ahead in M2M might be an incentive for doing it quickly.

Connected cars: real-time data means new business models for many motoring-related industries

2011-02-02T15:15:00.003Z

Over the last couple of days I've been looking at various applications of M2M in motoring and the automotive industry. One interesting dynamic that emerges is that connectivity to vehicles allows a shift in motoring-related transactions from batch to real-time with major implications for new business models in associated industries. Wherever a business model can take advantage of real-time information we can expect change.

On a basic level, M2M is most applicable where the connected 'thing' is mobile (and so it can't be attached to a cable) and where it benefits from real-time transfer of data for some reason (such as a heart monitor). Cars certainly fit into the first category. Certain applications also require or substantially benefit from the latter, such as in-car entertainment. There are others which don't require real-time data (i.e. they've been functioning fine without it until now) but where the availability of such data can open up new opportunities and create new challenges.

Take satnav for instance. Companies involved in that market were historically involved in selling boxes with little after-sales support. Now that satnavs are becoming connected the relationship with the end-user changes to a term relationship, i.e. x per month. This is a fundamental shift from device vendor to service provider. The nav companies are working through the implications for support and customer care.

There are numerous other examples where motoring-related services and payments will be changed by connectivity. Today in most countries people pay road tax on an annual basis regardless of how big their car is, how much they use it, where they go etc. A fairer* system would include charging for road use based on all of those metrics. M2M can, obviously, create a system whereby users' driving is tracked and appropriate charges applied. So far so good. The usage is definitely mobile. But not necessarily real-time. Users would probably pay on a monthly basis anyway, so uploading usage on a monthly basis would be fine.

With car insurance the ability to charge real-time could have more substantial implications. With insurance you effectively pay your premium based on how you've driven in the whole of the last year. If you didn't claim, it should be a bit less than last time. With connected cars your insurance company can microbill depending on how much you're driving, where you go and how good/bad your driving is. Too much doughnutting in Tesco's carpark and you'll be charged extra. Again, this could be done in batch form, although in an extreme case, a driver could be informed that their insurance would be invalidated if they continued to drive at 90MPH. That needs real-time information transfer. The inclusion of real-time raises the prospect of a whole new dynamic for how insurance is charged for. Prepaid has been well established for mobile for many years, courtesy of real-time charging. The ability to measure in real time opens up the possibility for industries such as car insurance to introduce innovative new charging methods such as prepaid.

*I was hesitant to use the word as these fairer systems almost always end up costing the public more overall than the less fair systems they replaced.

O2 announces plan for new public WiFi hotspot network...but how long until WiFi starts to creak?

2011-01-26T08:08:00.007Z

O2 has announced the launch of a new network of (initially) 450 "premium managed" WiFi hotspots available to be used by customers of any mobile network. Access will be free although customers will have to sit through some adverts. It plans to make it the biggest WiFi hotspot network in the UK. To do so it'll need to outstrip The Cloud's 22,000 hotspots and, arguably BT FON's 2 million, although they might argue reasonably that that's a different thing entirely.

This follows on from the all-very-meteorological announcement that Sky is in to buy The Cloud, which had previously been O2's partner for WiFi connectivity. If Sky is to make a serious play as an MBB MVNO it needs some differentiator (and some way to avoid paying wholesale fees for all the traffic consumed) so picking up The Cloud's extensive network of hotpots seems a good move.

So, as predicted by me last year, offloading is the only game in town and mobile players are jockeying to have a service differentiator (in the form of superior throughput in areas of high demand) and cost reduction tool (WiFi's "cheaper" than WAN connectivity because the spectrum's free).

The cloud (pardon the pun) on the horizon is that the unlicensed spectrum in which WiFi works could soon be clogged up. Just because it hasn't happened yet doesn't mean it won't. It's a finite resource and it's shared with all sorts of other technologies (DECT, Zigbee, Bluetooth) and other ISM applications including microwave ovens and car alarms. Offloading to WiFi is all very well in the home where there's are only ever likely to be a handful of users sharing the spectrum. In key public pinch-points like railway stations or airports there could be problems. Issues of lack of licensed spectrum can be overcome by the operator through frequency re-use. Drop the power and put in another transmitter or two. With public spectrum there is no incentive to act so responsibly.

Frustrated with mobile customer service?

2011-01-25T13:50:00.002Z

Elaborate and funny (wait for the bit right at the end) prank played on Mobistar in Belgium, sending up their infamously bad customer care.

As spotted by Benoit Felten on his Fiberevolution blog.

An outsiders view of India telecoms: mobile broadband

2011-01-25T13:21:00.008Z

Since I'm just back from a couple of months in India I thought it might be worth sharing a European's perspective on using mobile communications in India. First off, the mobile broadband.

I picked up a Tata Photon stick in Delhi for about EUR30 including 1GB of data. The other main option was MTS but I was promised that national coverage on Tata was better. It's a CDMA 1x EV-DO product and I was intrigued to see what the quality was like. The answer is: excellent. Compared to the mobile broadband I've used in the UK the speeds were tremendous. It was occasionally temperamental authenticating to the network but once it was up and running it was delivering 3-400kbit/s which I thought was pretty good. At one point it stopped working and I called customer care to complain. It turned out that I'd used up the whole 1GB in just a few days (well, there was a whole series of The Inbetweeners to catch up on!). There was some initial misdiagnosis of the problem and a bit of miscommunication due to (according to the call centre rep) my accent being very strong. Also, if I hadn't known what I was talking about the whole process of dealing with this hitch may have been more difficult than it was.

The next issue was recharging. No-one in any of the phone shops around my hotel (and there were A LOT) seemed to know how to do it. So I headed off to Connaught Place, where all the top end shops are and where I'd bought the laptop. No-one in Croma, the electronics store, could help with top up, so I set off to find the Tata shop. I didn't find it but I did find a broom cupboard store where they could top it up with no problems. According to them any of the top-up merchants who sell Tata Indicom (i.e. their standard mobile brand) credit should have been able to do it for Tata Photon too. So either that's true and Tata needs to do some big work educating its channels, or it's not true and they need to do some even bigger work GETTING some channels. I was also glad I was in Delhi at the time. If I'd been in a backwaters it's doubtful I would have been able to manage to top up.

Top up was pricy. EUR20 for an unlimited plan consisting of 10GB of data with a fall-back to 128kbit/s once all of that was used up. That's only a smidge cheaper than it would be in Europe. But the Indian operators need to keep the price high to protect what is still relatively scarce capacity.
From then on, it was pretty much plain sailing. Indoor coverage was excellent. Even on the trains around Delhi and Agra it was great. Ditto by the sea in Goa. The only patchy bits were on the bus heading from Hampi through to Pondicherry, where we were going through some fairly sparsely populated places, and in Auroville, near Pondicherry, where I spent my last week. Apparently in the latter the service hasn't been upgraded to EV-DO so I was stuck creeping along at about 40kbit/s.

According to the friends I was staying with (who used the older generation Tata 1x service) Tata still demonstrate the usual pain-in-the-ass customer care that seems to prevail in India. That's unfortunate because the quality of the service is such that MBB should be able to establish itself as the only option for broadband, even with BSNL and others investing in fibre deployments. Good customer care should be a differentiator from state dinosaurs like BSNL, but it seems that currently it's not.

The other interesting thing was the apparent co-branding of Tata with Qualcomm. I'm not sure if Qualcomm's branding is regularly used on products and services in emerging markets, but it certainly was by Tata...

The 4G discussion...it's a bit like Appletise(r)

2011-01-24T16:39:00.005Z

I've been watching the whole "what is 4G" argument from afar for a little while. The announcement (or rather dribbling out of the information) that HSPA+ etc would henceforth be included in the definition of 4G was astounding. Using my overdeveloped analogy skills, hard-earned through years as an analyst I was put in mind of...Appletise.

Back in the 80s there was a drink called Appletise. Not Appletiser, Appletise. But most people seemed to be incapable of calling it by its real name and called it Appletiser. I would characterise these people as idiots. Unfortunately, such was the wilful ignorance of the British public that Appletiser became the name used in common parlance. What did the company do? Did they stand up and say to the British public "stop, the name of our product is Appletise, please refer to it as such"? No they didn't. The company showed eel-like backbone and changed the name to Appletiser. This might not be exactly what went on in the boardroom but it was certainly how it seemed to me as a pedantic teenager.

The ITU has, if anything, been even weaker in its approach as it wasn't one born of consumer pressure. No-one was refering to this stuff as 4G before. It was entirely pressure from telcos. Pathetic.

NB - As a little addendum, I checked and the drink's originally from South Africa where it was always called Appletiser, so all you South Africans are forgiven and can call it 4G if you like.

Welcome back to the Wireless Noodle

2011-01-24T10:00:00.002Z

Over the last couple of years I've been actively blogging about the changing world of mobile broadband on my Future of Mobile Broadband blog. However, since kicking off my new venture, Machina Research, I thought it best to switch back to the old Wireless Noodle as I'm planning to talk about much more than just mobile broadband.

Machina Research is a specialist research and consulting firm focusing on the global opportunity for M2M, IoT and mobile broadband (I'm not abandoning the MBB stuff altogether). Today is my first day full time on the project and I'll have lots of exciting news to share.

First job is to gear up from Mobile World Congress. If you're going to be there and are interested in meeting up, drop me a line.

How much bandwidth is enough? Another analogy.

2008-07-11T12:36:00.006+01:00

I was sitting in a lecture at UCL the other week listening to my fellow attendees argue about how much bandwith households will need (and, of course, participating in said conversation). It was a relevant issue as it determines whether it's necessary to roll out fibre to the home. If ADSL2+ delivers 24Mbit/s (which is enough for HDTV) then why deploy fibre. Most people were of the "if you build it they will come" mentality. I'm not so sure. Surely, once you've met the needs of the users (be it 24 meg or 50 meg or whatever) everything else is unnecessary.

Obviously we're flying blind a bit here since nothing quite the same has cropped up before, so I had to engage my advanced analogy skills.

I thought first of the motor industry. Over the years cars have got faster, more comfortable and bigger until they reached a level at which people said "that's enough for me", i.e. it'll do 100MPH, I don't get haemmoroids from a short trip and it'll seat 4-5 people. Applying the logic of higher bandwidth would have us believe that once that level of sophistication was reached it would continue. Surely in the 21st century we should be driving around in massive opulent palaces on wheels that do 200MPH. We should all be driving suped up winnebagos. We don't because people don't need it, the roads (read copper) won't take it and most people won't pay any more for it. To upgrade the road system to allow us all to drive winnebagos would be expensive and hugely disruptive. Ditto rolling out fibre. All for something we don't need.

The other thing to consider is that operators will penalise adoption of higher bandwith connectivity through sliding scale pricing. So you'll pay more if you get higher bandwidth. Fair enough. So, to get 500 meg, you'll have to pay. This changes the proposition from "if you build it they will come" to "if you build it they will come and pay a premium for something they don't use yet".

Mostly a bit rambling and the analogy isn't a perfect one (when are they ever?) but I think you see the point. Previous trends (people will pay for more bandwidth) are no indicator of future developments. At some point enough is enough. Maybe it's 2 meg, maybe it's 50 meg.

T-Mobile's Worthless Guarantee

2008-06-30T11:38:00.004+01:00

I just spotted the new T-Mobile promise that "You Won't Find More Minutes for £30. Guaranteed" which I thought was quite interesting. I instantly had a few issues with it, but having dug around a bit more, it's even less valuable than I thought. Why?

The phones on offer aren't the greatest and a very limited range. 4 phones: LG KF600, Nokia 6650, SEMC W580i and K660i.
No-one buys at £30. The whole market is pretty much at £35 or under £25. The middle ground is empty and the offers there are typically not the best in the market. It's like a restaurant advertising that it has the cheapest Turnip Surprise. No-one buys it anyway.
If the market is shifting cheaper, it's going to £25. 3's £25 offer of 500 mins/unlimited SMS is a market leader and offering an extra 200 mins for an extra £5/month isn't exactly going to set the world on fire. Particularly as the handset range is limited, whereas with 3 you'd get a free Nokia 6500 Classic.

What's most interesting for me is that the trend of segmenting tariff and handset together (i.e. you can have the cheap tariff but only with a crappy phone) continues. It surely can't be too long before everyone adopts handset charging. Want a top-end handset? Great, pay me. Don't care about handset? Great, here's some extra mins and texts.

At the moment, most efforts to implement this model haven't been user friendly. Take this T-Mobile offer. If you want this £30/month offer you can only choose between four handsets, which seems ludicrous. Why not offer all the handsets and bump up the price a little if someone wants a pricy one. It might not fit with the "can't get more mins for x" shout, but it would take the unusual step of actually giving people what they want. How about that?

How were my 2007 predictions?

2008-06-13T14:45:00.006+01:00

I just remembered that I made a bunch of predictions at the start of 2007. Let's see how I did:

Vodafone to sell out of Verizon Wireless (and expand further in Africa) - A bit right. They did invest further in emerging markets, but not really Africa and they didn't sell Verizon. In fact Verizon is on a buying spree itself, although let's see how that all plays out. Could be one for 2008. 3/10
Hutchison Whampoa sells 3 - Nope. 0/10
SonyEricsson will have a good year - what a great range of devices! Absolutely. SEMC kicked butt in 2007. It sold 103m units in 2007 up from 74m in 2006, increasing global market share from 7% to 9%. And these were typically pretty high-end phones, so they weren't just riding the wave of emerging market growth. The K850 and W910 sold by the millions in late '07. I think they may find '08 a bit more challenging though. 10/10
Flat-rate mobile internet becomes the norm - yes, yes, yes. Everyone's doing it now. Charge by the MB? Not any more. £5-£8/month for "unlimited" mobile internet is the standard, be it Web'n'Walk or whatever. Not that tricky a trend to spot though if I'm honest. 8/10
Mobile music still won't generate any revenue (except for ringtones) - Also true. O2 has done well with its music strategy: it doesn't sell downloads and has made loads of good publicity from sponsoring the dome...sorry, the O2. 9/10
Everyone will plump for DVB-H - Still up in the air this one. Vodafone has come out as being agnostic and Qualcomm has secured spectrum suitable for MediaFLO, at least in the UK, so maybe things will be more complicated. 4/10
Fixed mobile convergence won’t make the splash it’s expected to in the consumer market - Right again. No-one cares about FMC. Which makes me question the wisdom of getting into the LLU market in a big way (O2, Vodafone, Orange). Surely FMC must be the order of the day rather than simple bundling. But there doesn't really seem a particularly persuasive business model for FMC. 8/10
MVNOs will continue their onward march. Sort of. Tesco's doing OK. Couple more launches, but nothing that's really tearing up any trees. 3/10
Consumer mobile IM and email won’t take off - we're still waiting, even with flat rate data plans. 9/10
Carphone Warehouse will suffer - not really. Agreement was reached and CPW seems pretty healthy, albeit at risk from the impending recession. 2/10

So, overall 56/100, which from memory is about a "C+". Must try harder.

Subscribers aren't stupid, they buy big bundles because they need big bundles

2008-06-12T11:05:00.003+01:00

Mobile operators spend (necessarily) a lot of time thinking about pricing. One of the issues that crops up is why people buy more mins/SMS than they logically need. Surely a cheaper contract with lower limits would be better, given a utilisation rate of about 40%. Right? Wrong.

I like to equate it to car parking charges (I'm really sharpening up my analogies in advance of getting back into the analyst space). If you regularly park in a shopping centre and regularly spend 50 mins doing your shopping, how much time will you put on your car? 1 hour? Almost certainly not. For a small incremental cost you can get 2 hours and remove the risk of being landed with a parking ticket. Let's not forget, your average is 50 mins, but you may be 1 hr 5 mins. So buying what you 'need' is risky. Buying more than you need is not.

In mobile the same is true. People don't want to exceed their allowances. They pay x for what should be their monthly need and they don't want to exceed it. Admittedly proportionately the cost of exceeding (10p-15p/min) is nothing compared to the cost of a parking fine relative to a ticket, but I believe psychologically it's pretty much the same. This situation is particularly exacerbated by the fact that most people have no idea how much they'll pay for out-of-bundle usage. They'll assume "a lot".

So, if, on average, I use 200 mins per month, I'm not going to buy a 200 minute bundle because logically I can expect to exceed that limit on a reasonably regular basis, say 4-5 months per year. If that's the case, then 500 mins is a much more logical option. It means I definitely won't exceed my allowance and it'll probably only cost me an extra £5/month. £60/year for the certainty that even when I exceed my usual 200 min usage I won't be charged any more.

Throw in the fact that most people have no idea how many minutes they use and that better handsets are thrown in free on higher value contracts (and lots of people only buy based on handset) and you have a very logical set of factors driving users towards a bundle utilisation rate of only about 40%.

People are generally pretty logical in their choices. They buy big bundles because they need big bundles. Not because they will use it, but because they might. And it's the only way to get a free N95 8GB.

Keeping 70s Rock Alive...Thanks Facebook

2008-06-11T15:25:00.006+01:00

I went to see Glenn Hughes last night at the Astoria 2. As well as a corking gig, it was also quite thought provoking. Glenn's well into his 50s now but he was name checking MySpace, Facebook, the people who ran his website and suchlike. It set me thinking about the influence these sites have had on keeping old rockers rockin'. Everyone who's interested is kept up to date on gigs and so on. It generates a really strong bond between artist and fans. The relationship seems to be summed up by the title of an album by Trapeze, one of Glenn's former bands:"You Are the Music...We're Just the Band".

This also set me thinking about how this might have been influenced by the recent evolution in the digital music market. I generalise: Older, less tech-savvy and (let's face it) more solvent people buy music in the form of CDs. Young folk get it free from file-sharing sites. The result is that the music that older people like will dominate, leading to the slightly disturbing fact that there are currently three Neil Diamond albums in the top 20. But, on the positive side, the only way that many bands can guarantee to generate cash is through playing live. Hence the rash of big money reunion tours (Duran Duran, Led Zeppelin, Take That). The result is that if you can't perform live, you won't make much money. It also means that any artist that can generate and keep a small loyal fan-base prepared to pay regularly to see a kick-ass show (as I witnessed yesterday) they can keep going forever. And they can achieve this largely without coming onto the radar of the 'mainstream' courtesy of social networking and fan sites.

Now, if I could only work out who's buying all those Neil Diamond albums...

Recession brings imminent consolidation...

2008-06-11T15:07:00.002+01:00

Some big M&A activity is in the off-ing. Verizon has bought Alltel. Orange is in for TeliaSonera. All, apparently, as a result of the global credit crunch. I'm not 100% convinced that the events can be ascribed to the problems with sub-prime mortgages and the associated economic problems. But, it does seem that recession provides additional impetus for consolidation.

The logic works like this: Where everyone is making money eyes are on the top line. When the money starts to dry up the eyes go to the bottom line and thoughts turn to creating economies of scale and generating efficiency savings. What's the best way to do that? Consolidation. Also, in hard times good deals tend to be easier to come by. Compare the $28 billion Cable & Wireless got from PCCW for C&W HKT in 2000 with the couple of shiny stones that they got for all the rest of their assets mere months later.

So recession naturally leads to consolidation and, let's face it, in most European markets with the proliferation of MNOs and MVNOs a bit of consolidation wouldn't be amiss. In the UK it's hard to see Orange, O2 or Vodafone selling, but T-Mobile and 3 would be potential targets, both for each other and for other MNOs or maybe Virgin or BT. Not a new prediction perhaps, but I think the chances have increased substantially with the imminent threat of recession. I would be surprised if there were still 5 MNOs in the UK by the end of '09.