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Managed Platforms Spring Telcos Into M2M

Heavy Lifting Analyst Notes
Heavy Lifting Analyst Notes
Heavy Lifting Analyst Notes
3/29/2013

Every operator with ambitions to grow its share of the global ICT market has been looking at the possibility for the machine-to-machine (M2M) market to deliver new revenues. Forecasts for the global number of M2M connections show astounding growth potential. Predictions suggest that billions of connected devices are likely to be deployed by companies in all industry sectors over the course of the next decade. Companies and governments are expected to link consumer devices, industrial and medical equipment, transport networks, sensor networks, power networks and valuable assets, all with a view to either driving cost out of operations or creating new and valuable services.

These devices will all need connectivity, giving telecom operators a foothold in the M2M market. Whatever happens, operators will see some revenue. However, the traffic revenue generated per device is likely to be low, as most individual sensors and devices will generate very small volumes, or infrequent bursts, of data. For this reason, telcos are looking at what they can deliver alongside the connectivity to add value for those deploying M2M infrastructures and to increase their overall share of the market. Typically the connectivity is worth only around 10 percent of the overall value of the connected application, so there is plenty of potential for them to exploit.

Operators are climbing the value chain by providing M2M solutions. They are seeking to support the creation of M2M systems requiring access to telecom networks in multiple countries. They are providing platforms to enable streamlined and automated management and configuration of devices and connectivity. They are introducing portals enabling customer self-service, and nurturing developer-friendly environments so that third parties can create their own M2M applications. They are exposing billing systems so that M2M services can be resold or monetized by those developers. Telcos are also nurturing relationships with specialist M2M service providers in specific vertical market sectors to improve the breadth and depth of the services they can offer.

But it is not easy to achieve profitably. Operators must strip costs out and automate systems that must deliver bespoke solutions for individual M2M customers. They need to change the types of support they offer, and introduce much more flexible rating, charging and billing processes. This all requires the purchase or development of new technologies -- as telcos' traditional systems were not designed to provide services in this way -- and technology providers have emerged to fill the gap. The most successful among these so far have been those offering managed M2M platforms -- typically hosted, cloud-based platforms that offer many of the infrastructure elements that telcos need to put in place.

Companies active in this market include Aeris Communications Inc., Alcatel-Lucent, Axeda Corp., Cumulocity, Cisco Systems Inc., Ericsson AB, ILS Technology and Jasper Wireless Inc.. They offer operators a swift route to market, but few can cover the entire suite of systems that are needed, and inevitably the operator must share some of the value with the provider of the managed M2M platform. Meanwhile rivals, such as KORE Telematics, are emerging, offering operators an alternative in-house, self-managed option and the potential to cut out the middle man. Others, such as Hewlett-Packard Co., offer both.

The question facing all of these companies is: Will operators go for a hosted quick fix and then migrate to an in-house self-managed platform once they have learned how to build, sell and operate M2M solutions? Or will managed M2M platform providers consolidate their early market lead and persuade operators that managed cloud solutions are the best option for the long-term? This question is considered by the latest Heavy Reading Insider, "Managed M2M Platforms: Quick Fix vs. Long-Term Solution." In addition, this report evaluates the key market trends and compares the managed M2M solutions available to telcos.

— Simon Sherrington, Analyst, Heavy Reading Insider


Managed M2M Platforms: Quick Fix vs. Long-Term Solution, a 28-page report, is available as part of an annual subscription (12 monthly issues) to Heavy Reading Insider, priced at $1,595. This report is available for $900. To subscribe, please visit: www.heavyreading.com/insider.

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