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9/9/11. 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.

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Presentation on theme: "9/9/11. 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."— Presentation transcript:

1 9/9/11

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

3 Wireless Connected Devices Ecosystem Feature Phones Smartphones Mobile Computers Tablets M2M Notebooks Netbooks Air Cards Consumer Electronics Transportation & Telematics Financial Services & Retail Healthcare /Wellness Smart Grid, Utilities, Industrial Security & Home/Building Automation Others eReaders Connected Display, Navigation, Gaming Vehicle Convenience, Safety, & Diagnostics GPS & Fleet Tracking POS Terminal Solutions Vending Machines, ATM, Kiosks Wireless Patient Monitoring Patient Care & Scheduling Smart Metering, Smart Grid, Utility Routers Remote Telemetry, SCADA Intrusion Detection & Safety Systems Remote Surveillance, Access Control, Building Automation Business Apps Miscellaneous Systems MiFi Source: Frost & Sullivan.

4 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). Cellular M2M Communications - Market Forecasts Source: Frost & Sullivan.

5 MediumHighLow Market Adoption Service & Support Requirements ARPU Bandwidth Consumption 3G/4G Usage Key Market Realities in M2M (Past, Present and the Future) Source: Frost & Sullivan.

6 Exceptional 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. Conclusions Vikrant Gandhi Senior Industry Analyst, Frost & Sullivan

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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 or follow us on Twitter(www.twitter.com/CompassIntel).http://www.compassintelligence.comTwitterwww.twitter.com/CompassIntel

9 If M2M was a Baseball Game, What inning are we in?

10 Spring Training!

11 Why?

12 Why deploy M2M? Market or Revenue Growth Cost Reduction

13 How big is the market opportunity?

14 Soon, there will be more than one trillion connected devices… IBM TV Commercial …there will be 50 Billion connected devices by 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; thats 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 Corp Quotes

15 U.S. Next-Generation M2M and Connected Device Application Market Share, 2011 U.S. Next-Generation M2M and Connected Device Vertical Market Share, 2011

16 Roads and Vehicles: 4M miles of roads, 254M vehicles, 11.8M heavy trucks and busses Rail: 140,000 miles of railroad tracks and 1.4M rail cars Air: 5,200 airports including 5 of the 25 largest in terms of air freight and 13 of the top 25 in terms of passenger traffic Pipeline: 1.7M miles of gas and oil pipelines Waterways: 25,000 miles of navigable waterways Shipping Containers: 14.8M TEUs globally. (At any time, over 1/4 could be in the United States or inbound to the United States.) Focusing on Transportation and Logistics

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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 organisations – Some interesting customer wins Why now? – Economies of scale, especially in the market for M2M hardware – Increasing 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 scale – More realism from operators - more acceptance of partnership/wholesale role Main obstacle to growth – Absence 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 verticals – Value chain is complex and fragmented – Lack of standardization – The lack of a new revenue model - M2M has looked like a small market for operators – Need for partnerships - MNOs lack network coverage. What is driving change now: – Corporate customer focus within mobile operators – Falling costs as scale grows – Regulation, particularly in some verticals – Consumer electronics companies are interested – New delivery and commercial models – Operators are recognizing that there is value in M2M – its not (just) about ARPU, its about margin. – Device management has become mainstream – The size of the market opportunity Operators 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 chain Hardware customisation & testing Hardware manufacture Integration of M2M solution Applications development Device provisioning & support Applications support Billing & reporting The M2M value chain Consulting/sales Customer care Customer Connectivity Connectivity monitoring & support Operator core positioning

21 Key decision areas for operators B2B M2M approach Revenue model Coverage B2B2C Horizontal End-to-endConnectivity Revenue share Wholesale Segments Local Global Centralised Decentralised Outsource DIY Applications Vertical Organisation Platform Decision point M2M issue Partnering will be essential, even for core services

22 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. What is M2M? - Key Horizontal Applications Remote sensors/monitoring Vehicle telematics Track and trace Narrow definition: Based on lack of user interface retail relationship for operator E-reader Smart metering/grid Broad definition: based on lack of Digital picture frame Connected camera Satellite navigation device 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 arrived – The market has developed in a fragmented way – it is not one opportunity, but a collection of opportunities Learn from other operators experience – Operators have a much more realistic appreciation of their own position in the M2M value chain than in the past You must partner to profit – Partner for the M2M platform, at least in the early days – Partner for applications development – you will need to foster M2M application ecosystems – You must build robust and friendly partnerships with complementary providers as the M2M market matures and wider opportunities grow Provide an organisational focus for M2M – Link to the enterprise business unit – the majority of early leads will come from business customers, even if applications are B2C – Opportunities will span fixed and mobile – Build a core of dedicated expertise for M2M, but use and train the enterprise sales team and channels Focus on obvious first verticals – these are not country-specific – Logistics & fleet management – Vehicle telematics Local regional opportunities will exist – Process monitoring in manufacturing – Utilities – linked to regulation – Retail - POS – Healthcare Mike Sapien - Ovum (760)

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25 Who We Are Why We Are Relevant to M2M Industry Impact

26 The 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 ~ Insurers AMERICAS EMEA ASIA

27 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 NA 700+ members Today, in the Americas, Europe, the Middle East and Africa (EMEA),and Asia, TAPAs membership is at its highest ever level – and growing every month. The Associations 700+ members include many of the worlds 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 ASIA IIS (Incident Information Service) Benchmark Studies

29 Cargo Theft: Low Incidence, High Impact Events 2010: The volume of cargo theft is consistent with 2009, but value per loss continues to increase dramatically The 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, DFW Trends in 2010: – Televisions are the most sought after electronics products – Pharmaceutical theft rates equal to 2009, yet value of shipments sharply rising – Multi-load theft incidents becoming more common SHIFTS IN FOCUS

30 9/9/11


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