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AT&T Clinches M2M Market Lead With GE Deal

Sarah Thomas
10/9/2013
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AT&T has added an important new machine-to-machine (M2M) communications customer in General Electric. The two companies announced a strategic alliance Wednesday designed to scale up GM's burgeoning "industrial Internet." (See: AT&T Adds GE to M2M Roster.)

AT&T Inc. (NYSE: T) is providing General Electric Co. (NYSE: GE) with a complete M2M platform, including connectivity via its 3G and 4G LTE network with global SIMs, cloud services, security, and device sourcing and certification.

For GE, the partnership is designed to create a new industrial Internet, which it defines as ecosystems of connected machines -- such as electric vehicle chargers, lighting systems, and engines -- transferring data and services between one another and their human operators to create efficiencies and productivity enhancements. The company has made $290 million in revenue from its industrial Internet products this year alone.

GE clearly has high hopes for this market; it predicts that the industrial Internet will be produce $82 trillion of output, accounting for half of the global economy, by 2025. Using the big-data garnered from the M2M modules, it says it can help its customers minimize their downtown, increase productivity, lower fuel costs, and reduce emissions. It also announced Wednesday that Cisco Systems Inc. (Nasdaq: CSCO) and Intel Corp. (Nasdaq: INTC) are joining the alliance.

Morgan Mullooly, an analyst at Analysys Mason, called the deal a "hugely significant win" for AT&T. He told me he expects a tremendous number of GE M2M connections to be activated in the next two to three years, strengthening AT&T's position as the US M2M service provider with the most connections.

Right now those connections number more than 15.2 million with 1,500 different types of connected devices on its network. AT&T says it's had a 38 percent increase in M2M customers over the past year.

AT&T is also faring well in two other all-important M2M segments: the connected car and the connected home. This year, Verizon Wireless customer General Motors ended its partnership with Big Red in favor of AT&T, making it a formidable competitor to Verizon, which acquired Hughes Telematics to compete on the road. And AT&T's branded Digital Life connected home offering has expanded to reach 45 markets, with 50 planned before the year's end. (See: Verizon Spends $612M for a Future in Cars and AT&T Adds 6 More Digital Life Markets.)

— Sarah Reedy, Senior Editor, Light Reading

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Sarah Thomas
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Sarah Thomas,
User Rank: Blogger
10/10/2013 | 12:02:18 PM
Re: GSM for the win
Agreed, Mordy. The connections alone provide extra revenue beyond cellular subscriptions, but services are icing on the cake. I think that's what sets the big operators apart from M2M providers like Raco that are more focused on ubiquitious coverage and simplicity. 
Brian Keedwell
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Brian Keedwell,
User Rank: Light Beer
10/9/2013 | 7:37:17 PM
ACCORDING TO AXIOMATIC DESIGN THINKING MOBITEX SATISFIED FUNTIONAL REQUIREMENTS ALREADY IN 1990s
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Brian Keedwell
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Brian Keedwell,
User Rank: Light Beer
10/9/2013 | 6:56:00 PM
AXIOMATIC DESIGN THINKING MADE EVEN MOBITEX AN ANSWER IN THE 1990s
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MordyK
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MordyK,
User Rank: Light Sabre
10/9/2013 | 5:25:44 PM
Re: GSM for the win
Carriers are coming to the realization that due to saturation the age of getting 50 ARPU per connection is over. They are therefore looking to make up for it by finding services that can incrementaly increase per user ARPU or find services that generate large revenues per account but very little per connection. This is more akin to the API  or transaction business models rather than the traditional carrier business.
MordyK
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MordyK,
User Rank: Light Sabre
10/9/2013 | 5:21:28 PM
Re: M2M
Some forms of small cells may also be a required part of the deal in order to provide a guaranteed QoS in specific areas.
pzernik
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pzernik,
User Rank: Light Sabre
10/9/2013 | 3:29:10 PM
Re: GSM for the win
It is a big win for AT&T!  They got the pipe and GE has the sink.  Yes I expect these devices would require low-bandwidth and AT&T would only charge a few pennies per connection.  So, I would think that the business case requires very high volume to justify the high cost of maintaining a back-end system that could track such a large "fleet" of M2M devices.
Sarah Thomas
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Sarah Thomas,
User Rank: Blogger
10/9/2013 | 3:26:15 PM
Re: Rise of the Machines
Or, Evan Kirstel pointed out on Twitter, maybe we'll still be necessary to manage the machines...until they start managing us, that is.
DOShea
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DOShea,
User Rank: Blogger
10/9/2013 | 3:22:52 PM
Rise of the Machines
GE's industrial Internet sounds pretty impressive. With all of its potential uses, it should help to further prove that human beings are unnecessary and the machines can do everything perfectly well on their own.

Message sent from Dan's robot.
RitchBlasi
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RitchBlasi,
User Rank: Light Sabre
10/9/2013 | 3:13:50 PM
M2M
Yeah, talk about big data.  It's good to see after all the years talking about M2M that it is finally getting some actual traction.
Sarah Thomas
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Sarah Thomas,
User Rank: Blogger
10/9/2013 | 3:11:56 PM
Re: M2M
GE also has big plans for the data the devices produce. Wonder what role AT&T will play in analyzing it...
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