Keeping a Lid on M2M Connectivity Costs – Why it Calls for a New Way of Thinking

The recent report, “The total cost of ownership for embedded mobile devices” , conducted by research organisation, Analysys Mason for the GSM Association (GSMA) examines the total cost of ownership (TCO) of embedded mobile and machine-to-machine (M2M) devices. It finds that ‘a major cost element is the management infrastructure to provision, configure and manage the device on the network.’

Interestingly, the report estimates the cost of the communications module is only between 1% and 14% of the TCO, depending on the application. It also highlights that for many low-traffic devices (e.g. automatic meter readers, automotive theft/e-call systems), design and provisioning can account for over 85% of the TCO.

This underlines the importance of finding innovative new ways of managing devices that keep costs to a minimum but also support the business agility that operators will need to be successful in this rapidly growing marketplace.

The potential is clear. According to independent wireless analyst firm, Berg Insight, the number of cellular network connections worldwide used for M2M communication is set to grow from 47.7 million in 2008 to 187 million by 2014. Other research organisations are projecting similar growth patterns.

Yet if wireless operators are to take full advantage, they need to appreciate that this is a unique opportunity – the connectivity requirements of M2M devices and applications are completely different to those of traditional mobile phones and mobile data devices. New business models and supporting IT models will be required.

For example, many M2M devices are infrequent transmitters – this means they need to connect to the wireless network a few times a day, week or month, will often connect for a short time, and may only send small amounts of data. Treating these devices the same way as mobile phones – which are mostly always-on, sending and receiving data frequently and spontaneously – is inefficient and ineffective.
Instead, to capitalise on this new market opportunity, operators will need to reinvent themselves and completely rethink their business strategy. The M2M market is after all quite different from their primary focus over the last decade: retailing handsets from their own stores.

So how can operators take advantage of the opportunity while also keeping costs under tight control? Specialised M2M infrastructure will be key, bringing new approaches to provisioning M2M devices. Without it, operators run the risk of adversely impacting the economics of M2M business models.
Instead, operators need to deploy a M2M platform that adapts to varying requirements for managing and communicating with M2M devices.

In certain cases, operators have already established M2M management and application platforms, together with an ecosystem of partners, resellers and integrators. These platforms naturally leverage the existing wireless network but have specialised M2M devices and gateways, and a M2M management platform responsible for asset management, diagnostics, billing, device management and a customer web portal.

At Evolving Systems, we see the next phase as the emergence of intelligent controller solutions, now beginning to come on stream, which are capable of complementing these platforms, integrating to the network using standard protocols, and enhancing any existing management platform with a dedicated solution for intermittent transmitters.

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