As part of ZE’s continuing commitment to stay abreast of new Information System trends, Yi-Jeng recently attended Wavefront’s mPower M2M conference, Feb 7, 2012. The goal of this conference was to explore how wireless technology is revolutionizing machine to machine (M2M) communications beyond smartphones, and the impact of this growing trend in an increasingly machine-crowded world.

Robin Duke-Woolley, a speaker and CEO of the consulting firm Beecham Research Ltd., described the M2M market segments in great detail, mostly focusing on industrial M2M usages. Here’s my ultra-brief overview of his presentation, and what I think is the most important M2M take-away message from this conference.

First, the Overview: The M2M market is crowded as well as fragmented. Traditional IT, Security and Public Safety, Retail, Energy, Transportation, Industrial Applications, Health IT, Home and Consumer, Buildings, are just some of the discrete M2M segments. Informally however, M2M markets can be classified broadly into three categories:

  • Aftermarket Segment: Businesses found that wireless business data acquisition was cheaper than traditional methods. Robin termed this the ‘F150 truck method’ of gathering data. For example, a ‘brick-and-mortar’ company with a hundred geographically distributed soft-drink vending machines could use small wireless datas device to collect soft-drink usage in real-time. This would let them know not only when to fill up, but more importantly, to better anticipate changes in consumer taste. This segment is already quite developed.
  • Regulation Mandated Segment: Government driven initiatives (or legislations) that create M2M demand deserve its own category. The European eCall program was created with the mandate of bringing rapid aid to motorists involved in traffic accidents. The centerpiece is a GPS-enabled, wireless black box capable of dialing emergency numbers during an accident, which is to be installed on every future car made for the EU. This segment is only starting to gain steam, as governments begin to understand the possibilities of M2M.
  • OEM/Assembly Line Stage: Eventually, as M2M gets cheaper, gains wider consumer adoption, the bulk of these devices will be incorporated at the production stage. Early adopter Rolls Royce now incorporates wireless M2M devices into each jet engine they produce, enabling the transmission of engine data via mobile and satellite networks to central data warehouses. Caterpillar Construction now equips new additions to their fleet with M2M sensors that allows for accurate accounting of construction vehicle activities in the field. This segment has not reached full scale adoption yet.

 

 

 

 

 

Left: The Rolls-Royce’s Trent XWB powerplant, which powers the Airbus A350. (Rolls-Royce website)
Right: The Caterpillar Double Shield Tunnel Boring Machine designed for excavating rock with fractured zones. (Caterpillar website)

The Take-Away: M2M allows a degree of data acquisition not previously practical. This enables previously ‘dumb’ unconnected device to deliver data cheaply to central servers. Here at ZE, we collect commodity and financial data through 700+ processors from hundreds of data sources (http://www.ze.com/data-coverage.htm). Our customers routinely gain market insight based on our data and analytical expertise. Our stake in the M2M world is the plethora of data that will be generated by M2M devices, necessitating better ways of making sense of it all. We think that M2M data powered world would move towards a service heavy business model.

To take a page from previous M2M OEM examples, Rolls Royce already designs and sells jet engines. With the M2M telemetry they collect, why not roll out engine maintenance services for airlines? Caterpillar currently sell construction vehicles. With their M2M integrated vehicles, why not set up a pay-per-use system for customers unwilling (or unable) to maintain a full construction fleet? In both cases, the biggest selling point is to lower the entry barriers for consumers looking to buy but unwilling to fork out lots of capital immediately.

Since most manufacturing hubs have relocated to China over the last decade, North American companies have been fighting to move up the value chain and away from manufacturing. In their dogged pursuit of ‘value added services’, companies are eschewing quick, one-time, capital-intensive transactions in favor of long term, lucrative, service-based revenue. And if M2M can deliver, and aid this transition cheaply enough (admittedly a big if), then the M2M future as Robin envisions, may come to fruition after all.