Demand for machine to-machine (M2M) communications has been rejuvenated by the global push for smart cities and intelligent metering, but there are still barriers to cross before the technology can realize its potential, say industry observers.
Defined as the relaying and receipt of data between machines in the absence of human involvement and intervention, M2M has traditionally been applied in the field of telematics and security. Embedded within each of the M2M devices is a SIM card to enable communication between other similar machines.
Over the last two to three years, the cellular M2M industry has begun to also embrace connected consumer electronics devices such as Amazon's Kindle, noted Sam Lucero, practice director for M2M connectivity at ABI Research.
M2M is also used to define the term, "Internet of Things", along with other technologies such as radio frequency identification and wireless sensor networking, he added in an e-mail.
According to Scottsdale, Ariz.-based Lucero, telematics, smart energy, security and remote monitoring are now the largest verticals globally, while healthcare is the fastest growing.
Foong King Yew, research vice president at Gartner, concurred: "The promising ones are smart grids, smart cities, transport and logistics, telematics, retail and healthcare."
The technology has increasingly attracted the interest of communications service providers (CSPs) globally, Foong said in an e-mail, explaining that this is due to the ubiquity of wireless coverage and falling cost of wireless module.
In addition, due to greater pressure on CSPs to find new revenue opportunities, partnerships and ecosystems for M2M services are also emerging, he noted.
Potential yet to be realized
The outlook for the global M2M market remains rosy. Berg Insight in 2008 predicted that global mobile network connections used for M2M communications will reach 186 million in 2012, with more than half dedicated to vehicle telematics.
In December last year, the analyst firm estimated that the number of cellular network connections worldwide used for M2M communication will grow at a compound annual growth rate (CAGR) of 32 percent between 2010 and 2015, reaching 294.1 million connections by the end of the forecast period.
However, the promise of M2M has not yet been achieved, and in fact, is "nowhere near" its potential, pointed out Dhana Suthumpun, general manager of IBM Asean's communications sector.
M2M, he said, has the potential to result in a smarter and more interconnected planet through "providing needed information or big data". But its growth opportunity is hindered by the lack of standards established by major industry players, as well as the lack of a common platform to support M2M applications.
Suthumpun noted: "What could change the acceptance of M2M as an overall solution that works for adjacent industries is a tighter, smaller set of standards, and a common platform."
He added that aside from standardization, security and privacy--given the amount of data--are further challenges that need to be overcome.
Kelvin Chan, industry analyst for M2M connectivity at ABI Research in Singapore, also pointed to complexity as a barrier to M2M adoption. "M2M deployments are complex and entail various stakeholders, therefore, it can be a daunting experience for enterprise clients looking into deploying M2M technologies and applications."
Complexity also affects costs, making M2M projects expensive to implement, Chan said. He noted that prices of cellular modules are still not cost effective for certain verticals, such as smart metering where the reading of meter data is "a low-bandwidth affair".
Another factor to consider, especially within Asia, is the transition of cellular technology from 2G, 3G and LTE (Long Term Evolution), he added. "Such issues require careful thought as most verticals in M2M are deployed over a long period of time," said Chan.
Asian growth in M2M
At least one M2M player is optimistic about the growth potential in the Asia-Pacific region. Swedish vendor, Telenor Connexion, last week announced plans to expand its headcount in Japan and Malaysia to meet the growing demand for M2M services in the region. As part of the expansion, a sales lead has been appointed to pursue business opportunities specifically in Southeast Asia.
Gwenn Bjornstad Larsson, Telenor Connexion's chief marketing officer, told ZDNet Asia on the sidelines of last week's CommunicAsia tradeshow that the company is targeting multinational corporations that are expanding to this region, as well as Asian businesses that place a premium on quality and reliability on M2M services.
Thomas Strandin, Telenor Connexion's Asia-Pacific head of sales, noted that roaming charges today vary across the different Southeast Asian markets, making the pricing for fleet management, for example, unpredictable.
Due to the company's roaming agreements with virtually all of Asia and the world--450 in total--Telenor Connexion has the flexibility to offer one price to customers, Strandin said. Its parent Telenor Group has stakes in various operators in the region including DTAC in Thailand, DiGi in Malaysia and Grameenphone in Bangladesh.
Additionally, Bjornstad Larsson said Telenor Connexion's experience with implementing the first smart metering project in Europe with energy player, Fortum, will benefit smart grid initiatives in Asia. That project, implemented since 2006 in Sweden, involved 850,000 units of intelligent electricity meters.
IBM's Suthumpun added that bandwidth in Asia, as with other parts of the world, is now more readily available and, therefore, "prompting the adoption and use of smartphones as integral gateways for applications".
At the same time, he said, governmental bodies are also looking at M2M as a key element in the crafting of technology policies to create smarter cities. In China, for instance, IBM is seeing M2M technology being used to pave the way for healthcare and remote diagnosis, he added.