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The Future of M2M: Embedded Connectivity

| December 19, 2011


Per Simonsen CEO Telenor ConnexionAuthor: Per Simonsen,
CEO Telenor Connexion –

When asked my opinion on the future of M2M, it’s always a pleasure sharing my insight as it is such a broad subject, and one can choose many angles.   It is generally accepted that there will be an increase in the number of products shipped in the coming years with embedded connectivity, and the OEMs will move to fitting connectivity into their production lines, rather than using after market solutions.  Apart from the increased number of embedded devices, we are predicting the biggest growth is in the automotive vertical – driven very heavily by the eCall initiative.  We also predict seeing substantial growth in the smart metering industry due to many countries starting to mandate the use of energy saving smart grid solutions.  Assets of all shapes and sizes will start to be monitored all over the globe.  Today we see high price tagged items such as excavators and construction equipment being monitored, but the trend is spreading towards people and pets too.  The predicted growth in M2M is driving a considerable number of companies around the world to scramble to find a way to enter this market and ride the wave of growth.  I am confident that Telenor will be part of that wave.

In addition to the M2M market growth, we are also seeing the internationalization of connected solutions in almost every vertical industry – although multi-national fleet management systems using wireless connectivity have been around for years!  One of the industries we see an unexpected amount of growth in is Insurance Telematics.  A good example of a success story in internationalization is with one of our customers, Octo Telematics. Octo Telematics launched a “pay as you drive” insurance solution based on feeding back information about the driver (i.e. frequency of use, where someone is driving, driving behavior, etc.) to insurance companies in Italy (Italy was one of the first markets to actively use “pay as you drive” insurance schemes).  During the mid 2000s, Octo Telematics took on the entire European market with its insurance solution with great success, and during 2008 turned to using a “Multi-national” SIM from Telenor Connexion.  In 2011, they launched the same service using our connectivity offering in the USA.  The point is that M2M solutions many times start out local, but grow into global solutions as they are standardized.  This is why it is so important to design a solution for international use from the beginning.  Telenor Connexion likes to help our customers with this type of forward thinking and our experience in multiple verticals allows us to do that.

Another area of focus as it relates to the future of M2M, is the growth of shared connectivity and data management platforms.  By selling our proprietary connectivity platform to Ericsson in 2011, we took the first step in being part of a shared connectivity platform community (the platform was designed and dedicated exclusively for M2M connectivity in 2008, as we realized early on that M2M services should not be delivered from a standard Telco platform.)  I believe it is also necessary to see consolidation and shared platforms more prevalent in the area of data management.  Many, if not most, OEMs or tier 1 players are developing and operating their own data management systems for M2M applications. This is a costly undertaking, and generates very high development costs when new functionality is needed.   There is definitely an opportunity for a data management solution to be shared between multiple companies developing M2M solutions – independent of the vertical that needs to be supported.  Telenor has their own initiative underway in this area through a company called Telenor Objects, and we see a long list of other players trying to grab this area of the value chain too.  Telenor Objects and Telenor Connexion are now working closely together to find opportunities where it makes sense to purchase data management as a service, rather than build it from the ground up.

From a more inward perspective, Telenor Connexion sees that we must move slowly beyond just offering premium connectivity and business consulting to our customers with business and life critical M2M applications – and find ways to promote the value of our M2M services beyond pure data delivery (we dislike when M2M is presented as being only about selling Mbits, as our offering is so much more than that.)  We will soon offer our customers’ data and device management options – as well as higher security levels when desired for the transfer of data.  The ability to protect the integrity of the data is especially important in the automotive and eHealth verticals.  We have had many automotive OEMs and tier 1 players come to us to understand how to improve the security on an end-to-end basis of their M2M application. Some of the capability we need will be delivered from the Ericsson Connectivity platform, some from a shared data management platform, and in some cases by working with specific vertical or application partners.  We believe that in the future the market will differentiate between suppliers based on their strong capabilities, not based solely on price per Kbytes.  This is why we will continue to maintain our proactive M2M team and grow our capabilities for high level support in the future.

In summary, I see the future of M2M success for Telenor being based on combining connectivity and data management, with the world’s highest level of security and technical support.  This will bring value to the M2M chain that goes way beyond ARPU.


About the Author:

Per Simonsen, CEO Telenor Connexion
Per Simonsen has been in the telecom industry for 20 years most of the time within the Telenor Group. He has held a number of leading positions and been instrumental in the international expansion of Telenor since 1995. Prior to taking on the position as CEO at Telenor Connexion in February 2009, he served as Senior VP and Head of Group Strategy at Telenor Group. Per Simonsen holds a Master in International Economics and Management from SDA Bocconi in Milan.

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