By John Horn
We are at the forefront of creating a connected world where utility companies are able to measure the exact usage of water, transport companies are optimizing shipping routes for lowest fuel consumption and hospitals are able to monitor patients in place, at home in their own beds.
The potential applications for M2M technologies are limitless, and industry growth projections are strong – with anticipation of over 50 billion connected devices in 2020. However, these bright projections tend to overlook what must occur to produce the hardware, software, connectivity, and services to enable this massive network of connected devices.
In today’s fragmented ecosystem, users typically have to go to different companies for each segment of their M2M system, which makes it challenging and time consuming to adopt and service new technology. Through the nascent stages of this industry, large mobile network operators have been scrambling to grab up market share of connectivity – often at the cost of profitability – and have left the creation of applications to a wide array of niche companies. But as the industry continues to mature, the race for long-term control of the industry is about more than connectivity.
The next natural step for M2M is consolidation of connectivity with the other applications and tools necessary to create integrated turnkey solutions. Change is inevitable, but it does not signal the industry as a flash in the pan, but rather a space that is going through a healthy growth process. This is the way that industries grow. Consider the development of the Internet as an industry. It began with a functional idea in the late 80’s, and the connectors, or Internet service providers (ISP) such as AOL, Netscape, NetZero, and Microsoft, quickly grabbed control of the market.
In the mid 90’s, companies like Google, Amazon and eBay began to create the key enabling services and applications to make the Internet more operable. The large ISPs initially viewed these as niche markets and did not innovate with their own applications. As a result, many of them failed to innovate and grow into more of an end-to-end provider, and eventually the simple connectivity services became commoditized and were no longer needed.
The value to consumers wasn’t viewed in the connectivity services, but rather the tools that made it relevant and simplified for them. By the time Y2K rolled around, the applications that made the Internet useful began to dominate the market. Likewise, the value in M2M will be created by service enablers like RACO that are actively engaged in creating integrated solutions across multiple verticals.
Looking ahead, I expect the consolidation to continue with a focus on creating end-to-end providers who can integrate M2M into products and services with simple, low-cost solutions.