Machines look set to fill the gap for telecoms operators when the saturation point for mobile phones is reached. Already, the mobile phone market in many countries is purely for replacement and upgrades as almost all the population already has one and sometimes two mobiles.
This is leading to many of the operators looking at wireless connectivity of machines as the next big market. Known as machine-to-machine, or M2M, this is a market that could exceed $90bn within four years with some 800 million connected devices, according to Macario Namie, the senior director of product marketing at Jasper Wireless, which provides the platform, applications and design services needed to connect and manage such devices worldwide.
“It is a revenue generator for the operators,” he told Suite 101.
Recent research from Juniper Research is not quite as optimistic, predicting the number of mobile connected M2M and embedded devices to rise to almost 412 million globally by 2014. And according to a research report from the analyst firm Berg Insight, 1.4% of the mobile network connections worldwide were used for wireless M2M communications at the end of 2009. The shares in the EU and the US were 2.4 and 4.3%, respectively.
How it works
An example of how it works is shown be a leading manufacturer of photocopying machines that has devices installed in its copiers that can connect with the mobile phone network. This means they can see remotely how much each copier is being used and when they are in need of servicing and repair.
“They wanted complete control over their network of connected copiers,” said Namie. “And they wanted it in one place.”
This is also changing the model of the way mobile phone companies operate in that the manufacturers of the connected devices are themselves effectively becoming the service provider in that the users won’t deal with the mobile phone operators at all. It also increases the pressure to automate a lot of the billing and servicing processes because the revenue per device is nothing like as high.
“There has to be a dramatic shift in the costs in servicing this business, and that has to be done with automation,” said Namie. “So they need a new set of technologies and a new way to do business. Operators are realising that the requirements for servicing this market are very different from servicing a traditional handset market. They need services that are flexible and they have to relinquish some of their control to the original equipment manufacturers.”
Operator movement
Already some operators are moving in this direction. AT&T, for example, has created an energy devices division, as has Vodafone. Orange has set up an industrial end-to-end centre to study the market and Telenor has set up a division to service this market.
“This is an enormous market opportunity,” said Namie. “Any operator with a penetration rate for consumer handsets reaching saturation point has to look at this or miss out on tremendous revenue opportunities.”
Some operators have already dipped their toes into this water and others are likely to follow suit, but those who do not could suffer as profits from their core markets continue to decline.
Steve Rogerson - Steve Rogerson is a UK-based writer specialising in television, technology, sports and beer.
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