Verizon & Qualcomm Aim for M2M Bigtime

The CDMA operator and inventor create a machine-to-machine venture that will take the market beyond niche status and likely bolster CDMA revenues

Dan Jones, Mobile Editor

July 28, 2009

3 Min Read
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Verizon Wireless and Qualcomm Inc. (Nasdaq: QCOM) have joined forces to create a machine-to-machine (M2M) venture that could help drive CDMA revenues for both companies for years to come.

The firms announced the worldwide joint venture this morning in San Diego. The venture doesn't even have a name yet, and the companies haven't revealed what the financial worth of the unit is. The basic concept, however, is to combine Qualcomm's long-running M2M business with Verizon's open device certification know-how and pool network and technology resources. (See Verizon Wireless, Qualcomm Announce JV, Qualcomm Snaps Up M2M Firm, Telematics on Track, and Verizon Wireless: Rise of the Machines.)

Machine-to-machine network communications is about the business of tracking all types of assets without human intervention: This could involve anything from managing trucking fleets to monitoring grain silos or medical equipment.

Qualcomm and Verizon say that the joint venture was formed now because the companies believe that M2M will become less specialist and more mainstream in the next few years. The new outfit's president, Steve Pazol, who previously served as VP of global smart services at Qualcomm, notes that some analysts expect that there will be more than 85 million M2M connections around the world by 2012.

“This is no longer a niche… It's well beyond any individual handset, no matter how smart; it's about being connected anywhere, anytime," said Verizon's VP of open development, Tony Lewis, at the press conference.

The pair intend to work together to make it easy for third-parties to develop and deploy devices, applications, and services over Verizon's open CDMA and upcoming Long Term Evolution (LTE) networks. The intention is to remove the network complexities involved with M2M services.

"We are not declining any device on the Verizon network," said Lewis.

The companies will target many different types of customers and applications, including:

  • Enterprises

  • Utilities

  • Hospitals and other medical sites

  • Fleet management

  • "Smart grids"

  • Consumer and "smart home" applications

Neither Verizon nor Qualcomm made explicit reference to how the venture might affect their CDMA revenues in the future. A comment from Qualcomm's Pazol, however, made it clear how M2M might help to bolster CMDA traffic even as consumer services move to faster LTE networks, because machine applications don't tend to need huge data pipes for their automated updates.

"A John Deere tractor, out in the field for 20 years, it's not going to send out a lot of data, but it's not going to churn," noted Pazol at the conference.

That's part of the promise of M2M for Verizon -- slow and steady repeat revenues on its older network for years to come, while Qualcomm gets royalties for the CDMA silicon used in the devices and money for developing M2M applications.

Verizon is by no means the only carrier to have noticed the appeal of M2M. AT&T Inc. (NYSE: T) and Vodafone Group plc (NYSE: VOD) have both stepped up efforts to let machine talk to machine over their networks recently. (See Vodafone Goes M2M and AT&T Does M2M.)

— Dan Jones, Site Editor, Unstrung

About the Author

Dan Jones

Mobile Editor

Dan is to hats what Will.I.Am is to ridiculous eyewear. Fedora, trilby, tam-o-shanter -- all have graced the Jones pate during his career as the go-to purveyor of mobile essentials.

But hey, Dan is so much more than 4G maps and state-of-the-art headgear. Before joining the Light Reading team in 2002 he was an award-winning cult hit on Broadway (with four 'Toni' awards, two 'Emma' gongs and a 'Brian' to his name) with his one-man show, "Dan Sings the Show Tunes."

His perfectly crafted blogs, falling under the "Jonestown" banner, have been compared to the works of Chekhov. But only by Dan.

He lives in Brooklyn with cats.

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