Machine-to-Machine is agreed by all to be on a steady climb, but the obvious worry for telcos is that they'll be assigned the role of caddie - carrying the bits to where they're required, perhaps advising the apps players on how to use them, but ultimately standing to the side as the big hitters collect all the glory (and the prize money). Well it needn't be the case. M2M is natural telco territory says one consultancy. Ian Scales reports.
According to Frost & Sullivan telcos will need to diversify beyond mere connectivity if they're to trap a reasonable proportion of the value that M2M promises as the 'Internet of Things' really starts to grow.
It's the old story. Observers and telcos alike worry that both smaller and nimbler specialist new players on the one hand, and large and globally-oriented IT players (IBM, HP etc) on the other, will end up winning the high value, customer-facing positions, while at the same time commoditizing the M2M network operators to the status of mere bit-carriers. Is it going to be the Internet all over again, they ask themselves?
At present, connectivity revenue represents the overwhelmingly largest part of the pie: according to Frost & Sullivan non-connectivity revenue from M2M amounted to a mere 3.0 per cent of the total revenues in 2010 and 4.2 per cent in 2011. But the direction of travel is clear - by 2017 it will be a significant 20 per cent of the whole.
But the research firm thinks that consumer M2M applications hold the key for telcos' ambitions, being the closest to their core capabilities of providing digital lifestyle services. It sees these services being centered on small/portable consumer electronics devices such as e-readers and digital connected photo-frames and whatever devices Apple has by then discovered we didn't know we didn't have.
“2012 is expected to be a year when telcos will begin developing consumer M2M opportunities in addition to their current enterprise focus.
Companies with a strong consumer brand and deep consumer digital offering could most readily capture this approach,” says Frost & Sullivan Senior Industry Analyst, Yiru Zhong.
Zhong says that although European telcos are currently pursuing the immediate enterprise M2M opportunities in industries such as utilities, automotive, security/surveillance and healthcare, they do see market potential in consumer electronics due to wide adoption of smart connected devices. “In addition, this trend has a long growth path as more smart or connected devices become available in the future,” notes Zhong. “There is also increased uptake of consumer-grade industrial devices such as personal home wellbeing/healthcare devices and personal navigation devices.”
The report points out that, thanks to extended connectivity to these types of services there will be an accumulation of M2M data about consumer usage. Integrating this data into the telcos overall customer analytics will contribute to service deployments and customer improvements. Furthermore, the telcos attempts at making sense of M2M data will provide a solid foundation for future deployments in a smart-cities context by shaping citizen’s digital lifestyle.
A consumer’s digital footprint provides a context that also helps telcos to further enhance their other consumer offerings, such as mobile advertising and location-based services. Moreover, with the relentless push to deploy contactless payments technology, such as near field communications (NFC), telcos can further solidify their mobile financial service offerings by combining them with consumer M2M applications.
The inevitable 'however'. Telcos will have to address two issues to speed up market development. Firstly, they will need to upgrade their data analytics capabilities and data warehousing integrations. This is already being addressed though, particularly as M2M will also create significant volumes of usable data from a variety of different resources. The second obstacle is a suspicion of 'big brother' society. The telecoms industry can address this concern by always ensuring the customer’s choice and consent, it claims (something it hasn't been particularly good at up to now).
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