By 2020, there will be more than 50 billion connected devices – which means M2M revenues could reach $948 billion, according to Ericsson and Machina Research. For communication service providers (CSP) the M2M opportunity is huge, but like anything else in business, the opportunity is directly proportional to their degree of involvement with it.
Providing connectivity for M2M services is a promising revenue stream, but the real value for CSPs lies beyond connectivity and differentiating via end-to-end M2M solutions. Offering connectivity for transportation providers and then an additional “analytics-as-a-service” to help customers glean valuable insight from the data is one example.
M2M communication will also challenge the way CSPs do business by introducing the Telco 2.0 ecosystem, characterized by multi-sided business models. CSPs will be at the epicenter of an ecosystem with a large number of upstream and downstream partners including content providers, individual software vendors, cloud infrastructure providers, consumers, enterprise customers and vertical industries. To be successful in this ecosystem, they will need an infrastructure to tie in all stakeholders and enable and monetize services.
The M2M infrastructure should fulfill four basic functions:
- Data Analytics to process the data collected from connected devices and provide necessary insight
- Device and Connectivity management to secure devices and the data on them and to keep them up-to-date with the latest applications and upgrades
- Application Support for creating and enabling applications that run on connected devices
- A flexible Billing system to accommodate new and evolving business models.
Besides providing the infrastructure, CSPs need to approach the M2M opportunity strategically with a clear action plan in mind. The solutions across various industry verticals are diverse and must meet industry specific requirements and standards. CSPs need to have a clear road map for the industries they want to target to earn ROI. In the near future, automotive, healthcare, utilities and transportation and logistics industries have the highest revenue-generating potential, making them the best targets.
Although M2M solutions tend to be industry-specific, CSPs can be more efficient by reusing the four basic functions mentioned above across all industry verticals. A framework fulfilling these functions provides CSPs a launch-pad to win in the M2M communication space every time they approach a new customer or industry.
Here are examples of CSPs that are committed to the M2M market:
- Verizon’s contribution and then complete acquisition of nPhase
- AT&T’s numerous partnerships with Jasper Wireless, KORE telematics, Axeda DCX and Trimble
- Deutsche Telecom’s collaboration with Intel for providing tool-kit to developers and application providers
Clearly, the M2M opportunity is up for grabs and CSPs need to act now to be successful and sustainable in the hypercompetitive telecommunications market.
To learn more about the exciting possibilities of M2M capabilities, please click here.