2 Hyper Connectivity: Billions of Connected Devices in 2020 “There will be no limit on the number of connections as part of the mobile grid. Everything has the potential to be connected .. Call it the 100 percent ceiling.”– CEO Verizon
4 Cellular M2M Communications - Market Forecasts M2M connections on cellular networks in North America to approach million in These figures do not include laptops, netbooks, notebooks and tablets, which would be in tens of millions as well(around 50 million) .Source: Frost & Sullivan.
5 Key Market Realities in M2M (Past , Present and the Future) Market AdoptionService & SupportRequirementsARPUBandwidth Consumption3G/4G UsageMediumHighLowSource: Frost & Sullivan.
6 Senior Industry Analyst, Frost & Sullivan ConclusionsExceptional growth expected in the global M2M communications market.Virtually all segments of the value chain need to work hard to maximize the M2M opportunity.Ease of deployment ,and ease of management of existing implantations will be the key to achieving long-term success in this market.Frost & Sullivan believes that eventually, both direct connections and revenues from M2M could become larger than traditional mobile phone business in several regions of the world, including North America – this could take years.Vikrant GandhiSenior Industry Analyst, Frost & Sullivan
8 About Compass Intelligence Compass Intelligence, a global consulting and market analytics firm, specializes in segment and vertical market intelligence for the high-tech and telecom industries; and offers clients a tailored research experience through excellent customer support. Compass Intelligence provides subscriptions and research reports, insight videos, forecasts, competitive analysis, market data and expert recommendations on multiple markets.Find us on http://www.compassintelligence.com or follow us on Twitter(www.twitter.com/CompassIntel).
9 If M2M was a Baseball Game, What inning are we in? A couple years ago, I got a call from a reporter from the San Antonio Express News. Evidently the sports reporter was filling in for the technology reporter when he asked:
11 Why?Lack of ubiquitous wireless…lack of high speed for things like videoLack of standardsCompetition instead of coopetitionNo innovation centers
12 Market or Revenue Growth Cost Reduction Why deploy M2M?There are only 2 reasons to deploy m2m….to make money or to save money!Market or Revenue Growth Cost Reduction
13 How big is the market opportunity? As an industry, we’re still determining the TAM.
14 Quotes“Soon, there will be more than one trillion connected devices…” IBM TV Commercial“…there will be 50 Billion connected devices by 2020.” Hans Vestberg, CEO of Ericsson“In this model, there is literally no limit on the number of connections that can be part of the mobile grid: cars, appliances, buildings, roads, sensors, medical monitors and someday even inventories on supermarket shelves. All of these have the potential to become inherently intelligent — perpetually connected nodes on the mobile web.” Ivan Seidenberg, CEO of Verizon“When you look at the numbers between M2M and social networking companies, LinkedIn counts as its market every professional on the planet; that’s 1 billion people. Facebook is a little bit more ambitious, it counts as a potential customer over 2 billion internet users and counting. But if you look at M2M, we have a market which consists of over 7 trillion machines…” Dale Calder, Founder of Axeda“Once you embed it [wireless M2M application] in a business process, for example, customers are probably not going to rip you [out] when your annual contract is up.” Danny Bowman, Sprint Nextel CorpWe as an industry are still trying to figure out a TAM for the market….15 billion, 50 billion, 1 trillion, 17 trillion…..Some of the largest companies aren’t sureThe value of the network is proportional to the square of the number of users of a network. Metcalf’s LawAll value is created from the use of the network. A connected device, by itself is useless.
15 U.S. Next-Generation M2M and Connected Device Application Market Share, 2011 U.S. Next-Generation M2M and Connected Device Vertical Market Share, 2011Total M2M connections in the United States are expected to increase from 27.8 million in 2010 to 87 million in 2015.Domestic growth in the next-generation M2M and connected device market has been fueled by a combination of more intelligent hardware, improved software, and ubiquitous mobile networks. Compass Intelligence provides M2M market segmentation and trending analysis on nine (9) vertical markets, and five (5) sizes of business.
16 Focusing on Transportation and Logistics Roads and Vehicles: 4M miles of roads, 254M vehicles, 11.8M heavy trucks and bussesRail: 140,000 miles of railroad tracks and 1.4M rail carsAir: 5,200 airports including 5 of the 25 largest in terms of air freight and 13 of the top 25 in terms of passenger trafficPipeline: 1.7M miles of gas and oil pipelinesWaterways: 25,000 miles of navigable waterwaysShipping Containers: 14.8M TEUs globally. (At any time, over 1/4 could be in the United States or inbound to the United States.)The United States has the largest freight transportation system in the world, an extensive physicalnetwork of infrastructure and entities that provide transportation services: (numbers)The U.S. transportation network serves more than 300 million people and 7.5 million businessestablishments across 3.8 million square miles of land.We are the largest importer of goods from around the world and 3rd largest exporter.$16Trillion with a T worth of goods were exported globally last year. (the US is #3)
18 Why now? Operator interest in M2M intensifies Many telecoms operators are seriously looking at the M2M opportunity (again)A stream of recent announcements, particularly partnerships and new organisationsSome interesting customer winsWhy now?Economies of scale, especially in the market for M2M hardwareIncreasing importance of connectivity in consumer electronics devices, and the advent of ‘cloud’Availability of device management software, which has become an integral part of M2M platforms and makes it possible for solutions to be deployed on an industrial scaleMore realism from operators - more acceptance of partnership/wholesale roleMain obstacle to growthAbsence of an agreed architectural framework for M2M - some limited progress towards this from smaller players
19 M2M – poised for growth? M2M market has been slow to deliver to date: Lack of scale - specialized industrial applications in narrow industry verticalsValue chain is complex and fragmentedLack of standardizationThe lack of a new revenue model - M2M has looked like a small market for operatorsNeed for partnerships - MNOs’ lack network coverage.What is driving change now:Corporate customer focus within mobile operatorsFalling costs as scale growsRegulation, particularly in some verticalsConsumer electronics companies are interestedNew delivery and commercial modelsOperators are recognizing that there is value in M2M – it’s not (just) about ARPU, it’s about margin.Device management has become mainstreamThe size of the market opportunityOperators do not want to miss out on a potentially huge opportunity, which some see as many times the size of the current (personal) mobility market.
20 The role for the operator in the M2M value chain B2B value chainHardware manufactureHardware customisation & testingDevice provisioning & supportConnectivityConnectivity monitoring & supportBilling & reportingApplications developmentApplications supportIntegration of M2M solutionConsulting/salesCustomer careCustomerOperator core positioningThe M2M value chain
21 Key decision areas for operators B2BM2M approachRevenue modelCoverageB2B2CHorizontalEnd-to-endConnectivityRevenue shareWholesaleSegmentsLocalGlobalCentralisedDecentralisedOutsourceDIYApplicationsVerticalOrganisationPlatformDecision pointM2M issuePartnering will be essential, even for core services
22 What is M2M? - Key Horizontal Applications Strict definition: communication where a remote machine is monitored and/or controlled by a central server.Broad definition: the extension of connectivity to consumer electronics products, particularly where the role of the network operator in providing this connectivity is not apparent to the end user, and where the provider of the consumer device presents itself as the service provider.Remote sensors/monitoringVehicle telematicsTrack and traceNarrow definition:Based on lack ofuser interfaceretail relationship for operatorE-readerSmart metering/gridBroad definition: based on lack ofDigitalpicture frameConnected cameraSatellite navigationdevice“White Label Network Devices”** Where the overall proposition presents the connectivity as an attribute of the device rather than as a service provided by a network operator.
23 Summary Operators recognise there is a significant opportunity in M2M M2M's time might finally have arrivedThe market has developed in a fragmented way – it is not one opportunity, but a collection of opportunitiesLearn from other operators’ experienceOperators have a much more realistic appreciation of their own position in the M2M value chain than in the pastYou must partner to profitPartner for the M2M platform, at least in the early daysPartner for applications development – you will need to foster M2M application ecosystemsYou must build robust and friendly partnerships with complementary providers as the M2M market matures and wider opportunities growProvide an organisational focus for M2MLink to the enterprise business unit – the majority of early leads will come from business customers, even if applications are B2COpportunities will span fixed and mobileBuild a core of dedicated expertise for M2M, but use and train the enterprise sales team and channelsFocus on obvious first verticals – these are not country-specificLogistics & fleet managementVehicle telematicsLocal regional opportunities will existProcess monitoring in manufacturingUtilities – linked to regulationRetail - POSHealthcareMike Sapien - Ovum(760)
25 Who We AreWhy We Are Relevant to M2MIndustry Impact
26 Manufacturers ~ Carriers ~ Insurers TAPA: Who We AreThe Transported Asset Protection Association (TAPA) represents businesses fighting back against cargo crime that want to use real-time intelligence and the latest preventative measures to protect goods in the supply chain.Manufacturers ~ Carriers ~ InsurersAMERICASEMEAASIA
27 We Are:Abbott Laboratories ADT AFC Worldwide Express, Inc. Air and Ground World Transport Allianz Global Corp & Specialty Alterra E&S (formerly Max Speciality Ins.) Amerifreight, Inc. Amgen, Inc Aon Risk Services APL Logistics, Ltd. Applied Materials Associated Global Systems Astellas Avnet, Inc. Best Buy, Inc. Brightpoint, North America Bristol-Meyers Squibb Cargo Screening Solutions Challenger Freight Systems, Inc. Crane Worldwide Chubb Insurance CVS/Pharmacy CEVA Logistics Chartis Insurance Dell, Inc. DHL Express Americas DW Morgan Eastman Kodak Eli Lilly Expeditors International Falvey Cargo Underwriting Flextronics International FM Global Cargo Insurance Co Freight Logistics, Inc. FreightWatch International, USA Genzyme Corporation Glaxo Smith Kline Hewlett-Packard High Tech Cargo Insurance Program (Insurance Associates of the Southwest) Intel Corporation International Business Machines (IBM) Johnson & Johnson Kingston Technology Kraft Foods Kuehne & Nagel LoJack SCI Marsh Risk & Insurance Services Max Specialty Insurance Co. McCabe Associates Microsoft Corporation MillerCoors Motorola, Inc Motorola Solutions National Air Cargo National Retail Services New Breed Logistics Nike Nippon Express USA, Inc. NNR Global Logistics USA, Inc Ocasa Logistics Solutions, Inc. Pfizer OHL Purolator USA OnAsset Intelligence Performance Team Panalpina Inc. Purdue Pharma Technologies Quantum Corporation Research In Motion (RIM) R&L Carriers Relcor Samsung Telecommunications Sandisk International Sanofi-Aventis Sanofi-Pasteur Seagate Technology Sealock Security Systems, Inc. Shasko Global Logistics Smith & Associates Sony Electronics, Inc Spansion Speedmark Transportation Starr Marine Agency, Inc. Synnex Corp. Tech Data Corporation Travelers Tyden Brooks (formerly EJ Brooks Company) UPS Watson Pharmaceuticals Willis of New York, Inc. Xerox Corporation Yusen Air & Sea Service (USA) Inc. Zurich Services NAToday, in the Americas, Europe, the Middle East and Africa (EMEA),and Asia, TAPA’s membership is at its highest ever level – and growing every month. The Association’s 700+ members include many of the world’s leading consumer product brands as well as their logistics and transport providers with combined annual sales of over US$900 billion, law enforcement agencies (LEA),insurers and other trade associations.
28 Relevance to M2M TAPA Global Standards Freight Security Requirements (FSR – revised in 2011)Truck Security Requirements (TSR – due 2012)Parking Standards (Europe only)Air Cargo Standards (TACSS – EMEA and ASIAIIS (Incident Information Service)Benchmark Studies
29 Cargo Theft: Low Incidence, High Impact Events Industry ImpactCargo Theft: Low Incidence, High Impact Events2010: The volume of cargo theft is consistent with 2009, but value per loss continues to increase dramaticallyThe average value per loss increased by 69%Extreme high value thefts are occurring more frequently:$76 million warehouse theft, Enfield, Connecticut (pharmaceuticals)$37 million full truckload loss, Carlisle, Pennsylvania (pharmaceuticals)$10 million electronics warehouse theft, DFWTrends in 2010:Televisions are the most sought after electronics productsPharmaceutical theft rates equal to 2009, yet value of shipments sharply risingMulti-load theft incidents becoming more commonAssessing General RoutingRequiring Checks of DocumentationDifferent Government Agencies for Different CasesFromRisk Assessments Per Individual ShipmentChecking for Fraudulent Documents and ID’sOne platform for interacting with multiple agenciesToSHIFTS IN FOCUS