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Rise of the Machines

While the rest of the wireless industry is focused on personalization, social networking and connected business collaboration, a small group of MVNOs are definitely not people persons and theyre proud of it. KORE Telematics, Aeris Communications and others are interested in machine-to-machine (M2M) communications, and no, it has nothing to do with the social life of robots.



M2M applications drive the hardware in this case, GTXCs shoe for tracking people.

Think automatic meter reading, fleet and asset tracking, OnStartype functionalities for smart cars, remote diagnostics, vending machine restock alerts, security video surveillance and other applications that require the automated sending and receiving of data, typically via a cellular network. The solutions are virtually unlimited: Person-tracking application service provider Global Trek Xploration Corp., for example, has embedded the Enabler IIG-AGPS wireless and location module from Enfora Inc. to create a GPS smart shoe to monitor the whereabouts of loved ones or workers. The shoe continuously tracks location and movement history; the information is relayed to a monitoring center via cellular networks using a secure Internet interface. Subscribers are able to instantly log on, or receive alerts, and pinpoint the current location of the targeted user on an interactive map. MVNO Jasper Wireless is differentiated by being a global GSM carrier, so multinational corporations can track their product lines from country to country without having to change CPE or OEM plans at every border.

In M2M, content is king, but it is content that is already owned by the customer, explains Roger Dewey, president and CEO at Telit Communications PLC, which manufactures parts for M2M CPE. They just need a way to access it remotely.

The value chain in the M2M space has many players and therefore many opportunities for a range of companies. MVNOs offer the cellular network connectivity that delivers the various applications, selling largely through application service providers that act as VARs and package the hardware, applications and connectivity together. There are also those manufacturers like Telit that make modules, or parts, that go into peripherals and CPE. ASPs, VARs and integrators can custom make hardware with these modules to deliver specific applications, which dealers, in turn, can recommend to end users along with the connectivity. Sometimes companies do many of these functions at once; Numerex, for example, is an allin- one MVNO, consultant, ASP and VAR focused on M2M.

The average ARPU for a single M2M connection is around $7 to $9 per month, according to the Yankee Group, but its volume and low overhead that makes it lucrative.



ITNs customized smartphone for conference-related M2M services.

Heres a market thats measured in single digits in North America, six to eight million devices, and its pretty much a cottage industry, says Alex Brisbourne, president and COO of MVNO KORE Telematics. But if you look at the forecasts, well have 200 million deployed in a few years were seeing a 50 percent compound annual growth rate. This is the perfect time to get into this.

The biggest immediate opportunity lies in the automotive vertical. Marcus Torchia, senior analyst at Yankee Group, says there are several applications that show promise. We all know about OnStar for emergency calling and lockouts, but simple always-on connectivity for a voice call, built in, will be something well see, he explains. Multimedia, such as downloading a movie to the screen in the backseat is another application. Also, the opportunity for providing vehicle diagnostics is a much bigger opportunity than previously thought. Heres why: if theres a recall, most modern cars run on computers that could be the source of the problem. With M2M, a carmaker can download the update to the car over the air (OTA), saving the owner from having to take the car into the shop.

The planned growth for this area is phenomenal, says Torchia. Take [MVNO] Aeris, and they have around a million connections and have a great business going. But there are 15 to 16 million cars sold every year, so thats a huge opportunity. Whoever gets on top of this is going to be very successful.

Kyoceras module can be built into remote, automatic meter-reading applications. Fleet tracking and diagnostics are popular M2M applications.
Source: Kyocera Wireless Corp.

Even before the hockey-stick growth begins, M2M can bring benefits to dealers, MVNOs, ASPs and consultants. Its an extremely sticky industry with which to be involved, due to both the customized hardware and the transformation it makes to customers operations. M2M has completely revolutionized our business, says Ivan Lazarev, president and CEO of ITN International Inc., which provides registration, exhibitor lead management and sessionattendance services to major trade shows like CTIA and 3GSM using the KORE network. We used to have PDAs and an ad-hoc WLAN, and we would scan badges and track attendance, then download it to a file and give it to the people who run the show or the exhibitors at the end of the day or week. Now that we can use the cellular network, we send that info to a centralized server and give people live access to that information via a portal in an automatic way. Thus, exhibitors can check leads from the show and follow up while still on the show floor, and conference organizers can immediately tell the success of a session and be able to tweak the program accordingly, on the fly.

While the market is dominated by MVNOs for now, dealers likely will have more opportunities from their traditional MNO partners in the future. The cellular operators are not finding the organic growth they need to continue running their business with handsets because the user base is topping out, says Torchia. With the small revenue numbers, they have been more than happy to let MVNOs make connections onto their network in this area for them. But now, the MNOs will eventually jump into this space. Its an extraordinary opportunity for dealers.

Links
Aeris Communications www.aeris.com
Global Trek Xplorations Corp. www.gtxcorp.com
ITN International Inc. www.bcard.net
Jasper Wireless www.jasperwireless.com
KORE Telematics www.koretelematics.com
Kyocera Wireless Corp. www.kyocera-wireless.com
Numerex Corp. www.nmrx.com
Telit Communications PLC www.telit.com
Yankee Group www.yankeegroup.com


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