Jürgen Hase, Vice President M2M Competence Center, Deutsche Telekom AG
M2M: Fragmented market with enormous growth potential
Online marketplaces unite the M2M market
Few markets, if any, have as much growth potential as the market for machine-to-machine (M2M) solutions at present. Yet at the same time few if any industries are as fragmented as the M2M market. Worldwide online marketplaces in which providers and users connect could be the solution.
Machine-to-Machine communication is slightly misleading as a concept, dating back, as it does, to a time when industrial machines first communicated with one another. Today, M2M is much, much more. Established cycle hire schemes in many European cities will soon be joined by automated car hire services that are based on the same principle. The major carmakers are currently testing schemes of this kind in pilot projects. In future, customers may book a car ad hoc by smartphone and drive off a few seconds later. M2M modules will relay vehicle data such as maintenance intervals or the current battery status of battery-powered vehicles automatically to a central server. That is why, instead of M2M, experts increasingly refer to the Internet of things and forecast rapid growth for this market in the years ahead.
According to the OECD, five billion M2M devices exist already and their number is set to rise to 50 billion by 2020. A study by management consultants Mummert Consulting works on the assumption that the international market for M2M technologies will increase by a third in 2013 already. Over the next three years each carmaker alone is expected to incorporate about two million M3M modules in its vehicles.
M2M opens up new lines of business for companies
At present, however, the market is very fragmented. Areas of use are very extensive, ranging from healthcare via logistics to the energy market. Here and there the technology has already made headway into real niches and is opening up entirely new opportunities for companies. A start-up in Berlin, for example, is speeding up order processes for pizza and other delivery services by means of specially developed M2M devices. These devices help catering companies boost their sales. Their customers can simply order online and take delivery of their freshly prepared favourite food even faster.
After much discussion in recent years about the possible uses of M2M, many fully developed solutions are currently in the starting blocks waiting only to be “discovered.”
Take the energy market, for example. Thanks to solar power and other renewables, many municipalities generate more electricity than they consume and feed this surplus production into the grid. The problem is that if too much electricity is fed back into the grid the grid becomes unstable and threatens to collapse. To prevent situations of this kind from arising, regional network operators must in the case of overproduction be penalised severely and made to pay fines of up to several thousand pounds.
The solution is quite simple. M2M modules, deployed at transformers in transformer stations, measure constantly how much electricity is fed back into the grid. In the event of overproduction they automatically cut off the feed and restore the network stability that is required. As a result the M2M solution will save a number of municipalities tens of thousands of pounds per year.
Innovative M2M start-ups go unheeded
There are many examples of M2M solutions of this kind the capital investment costs of which are recouped fast, generating continuous cost savings. All over the world there is a growing demand for suitable M2M solutions to help entire industries become more efficient and achieve better process workflows. These solutions are often the result of work by smaller companies or previously unknown start-ups.
The problem here is that a majority of these innovative enterprises lack opportunities of gaining a hearing in the market and setting up a worldwide sales team would be too cost-intensive. Situations of this kind are typical of industries that are still in their early days and have enormous potential. Yet in M2M – and especially in M2M – time is running out for the users. Healthcare, for example, faces enormous cost pressure that is set to increase as a consequence of demographic trends in the decades ahead. Previously little-known manufacturers offer solutions that will cut costs and improve the quality of supply at the same time.
E-commerce platforms for M2M technology
Special e-commerce solutions that are independent of manufacturers and globally positioned offer a solution for the strongly fragmented yet at the same time fast growing M2M market. Internet portals on which M2M products can be bought and sold already exist but frequently represent only a certain industry or the product line of a singe manufacturer. On the recently launched e-commerce platform M2M Marketplace, in contrast, manufacturers and developers from a wide range of industries – industries ranging from automotive to logistics or security technologies – gain an opportunity to market their products.
To boost the dynamics of the M2M market, cross-manufacturer platforms of this kind should not be limited just to M2M hardware solutions but should also provide a sales platform for software and mobile apps. Companies ranging from established manufacturers of healthcare solutions to start-ups that are keen to market an M2M invention for the automotive market are enabled by an international online marketplace to find a point of contact for M2M developers and providers and their M2M technologies.
Sought and found
The descriptive text provided on the website along with a photo or maybe an explanatory video is important to enable products to be found. It should contain all of the keywords that characterise the solution. The platform must also offer an opportunity to state the solution’s precise technical specifications. One opportunity is for the platform operator to provide predefined check boxes with details of an M2M software solution’s data protocol or the power performance of an M2M hardware solution. These detailed specifications would make it easier for potential clients to compare products.
To help M2M providers to keep their solutions up to date, it should be possible to list products on the e-commerce platform with a starting date and a “sell-by” date in the online shop. When planning a product update, providers would thereby be able to make all the necessary information available online, specifying the publication date in advance.
Online marketplaces offer entirely new sales opportunities for established M2M providers. In the past the Urmet Group, for example, which specialises in M2M products, has only offered its products for sale directly. The company’s sales manager, Peter Hoyer, has for years travelled around the world presenting building services automation or security technology solutions to potential customers personally. The Italian company has lately taken to offering a large number of products for sale in the M2M Marketplace. At one fell swoop this online sales channel has provided companies like Urmet with an opportunity to draw attention to their products all over the world – and prospective customers have a central point of contact in their quest for the right M2M solution to their problem or problems.
Hints on how to provide the right information in an online M2M marketplace:
- The title of the descriptive text should be a product name and not a product number.
- The descriptive text must outline the product’s specific benefits and include all of the keywords that apply to the solution. That makes it easier for Internet search engines to find products.
- Examples of uses to which the M2M solution is put should be stated.
- Technical features such as hardware requirements or weight should be explained.
- High-quality product photos or maybe a product video should be provided.
- Prospective buyers should be able to see details availability and minimum order quantities in the online shop.
About the Author:
Jürgen Hase, Vice President M2M Competence Center, Deutsche Telekom AG
Jürgen Hase joined Deutsche Telekom AG in 2011 to head the M2M Competence Center. Within Deutsche Telekom he is responsible for the international M2M business. Jürgen has worked more than 20 years in the telecommunications industry and in the M2M sector. He is also Chairman of the M2M alliance.