M2M growth metrics: Focus on segment-discreet applications to lift everyone’s boat
(BLOG): At KORE Telematics we advocate a tempered mindset when it comes to connected devices and the connected future, says Alex Brisbourne, president and COO. We’ve been in this business too long to do otherwise.
That being said, there certainly was notable movement for M2M to the ‘mainstream’ discussion at Mobile World Congress (MWC) but, for me, it only brings into sharper relief the call to be more reflective about where we are as an industry. For example, the idea of growing to 50 billion discrete, internet-subscribed devices within any foreseeable timeframe, while a good conversation starter, is not a particularly helpful point of delineation. We instead must treat sensor volume with a degree of caution when projecting for the future.
Modern cars, for example, contain more than 30 sensor nodes on them alone. But in reality, these sensors will typically connect locally to a concentrator right on the vehicle; this is what we would define as the single ‘connected’ device that carries with it a true Internet of Things (IoT) value proposition. That concentrator is able to connect back to the dealership, for example, when it senses that the catalytic convertor is about to fail so that the local service tech can contact the car owner to make a pre-emptive appointment. Such scenarios create value for the consumer, the dealer and the auto maker.
And, in so far as the quantified value the Internet of Things has been projected to add to the economy, said by some to be nearly US$15 trillion, also needs a tempered outlook. We’re still ultimately dealing with cost displacement – efficiency, rather than dollars added to the economy; there are a couple of ways to look at it.
Let’s say you have a medical condition that requires real-time EKG monitoring for a specified timeframe. Now let’s say you get a wirelessly-enabled, non-invasive EKG monitor strapped to you so that you don’t need to be physically attending the local hospital for monitoring. You can go about your day as normal.
In this scenario, we can add up the opportunity cost of you not working, plus the cost of transportation to get to the hospital, etc. and perhaps come up with a $900 cost benefit for having been outfitted with a remote EKG. Even if you now multiply that number by ‘n’ number of similar patient scenarios, I’d be sceptical to say we’re putting real dollars back into the economy.
To put it another way, let’s say FedEx decides to put a sensor in every one of its dropboxes, which simply notifies drivers when there are no packages to pick up. This simple application allows drivers to forego having to turn left across the highway, drive through the parking lot, exit his or her cab, check the box to find nothing in it, burn half a gallon of gas doing so and, perhaps one in 10,000 times, get in an accident. That is an easy value proposition to quantify for FedEx, but again it is difficult to assign a dollar value on an ‘economic value’ model.
Over the next three to five years, the lion’s share of M2M growth will be fuelled by very specific market and segment solutions. For example, a transport company will deploy a simple application for driver tracking, which might then be layered with route planning or fuel monitoring. Bankers are enabling ATMs at trade fairs or point-of-sale transactions for remote service personnel. Medical innovators will be looking for ways to move glucose monitoring for diabetics into a remote, real-time environment. This notion of value being hyper-relevant to each market segment is important. There is not really an apt umbrella.
To that end, I believe that simplifying the complex value chain for purpose-built M2M deployments must become Job No. 1 in this industry. I absolutely agree with Jeremy Cowan’s statement in his MWC wrap-up that the “service delivery chain is considerably overcrowded.” Just consider the multiplicity of components and parties (modems, systems integrators, thin processors, certification labs, comms suppliers) that any organisation either building or deploying an M2M solution must navigate. Add on top of that installation cycles and ongoing device management over a long lifecycle, and the prospect is daunting to be sure.
On the other hand, my very strong experience repeatedly tells me that too much time is being spent trying to minimise bill of materials costs as compared to evaluating the costs of running an application over a 7-10 year lifecycle. That has got to change.
This industry is certainly growing, transforming lives and businesses in discrete, bottom-up areas. For example, consider the sheer amount of money wasted by health management organisations when patients do not take their full course of prescribed medications, but then have to be re-prescribed a short time later because the illness was not entirely defeated. If connected sensors can be easily deployed in pill bottles to remind patients when to take their medication, or to take the full course, there is plenty of money to be found there.
Ultimately, when people jump into this pond with a big splash and the pond of excitement gets emptied because nothing much sticks, that’s not helpful. That’s why we try to always look at the market through a qualitative lens taking a measured and realistic approach to the sources of value. It is an exciting, dynamic and growing market: let’s not spoil that by creating a trough of disillusionment when heady growth simply becomes great growth!
To see more thoughts and commentary about M2M market evolution from KORE, please visit the KORE blog. “We try to leave no stone unturned”