Fastest M2M Growth: fleet, security, asset management

M2M application providers today must move “at the speed of the Internet” to thrive in an ever-changing market

Once a largely overlooked sector of wireless, the machine-to-machine (M2M) market is fast becoming the darling of the wireless world, and a wide variety of new M2M applications are beginning to emerge. 

In fact, a recent study from Pyramid Research (Cambridge, Mass., U.S.A.) titled, “The Machine-to-Machine Market: A high-growth opportunity for MNOs,” predicts that the volume of cellular M2M subscriptions will increase almost fourfold between 2010 and 2016, from 72 million to 282 million.

This growth is in large part because of lower device and connectivity costs. M2M pricing has finally come down to a level where mass market applications – for which users often expect to pay $7 or less – can be supported.

But the question remains: What are the most promising M2M applications? And what tools do providers of M2M applications need to succeed?

In the next few years, RACO Wireless (Cincinnati, Ohio, U.S.A.) expects to see the most growth in three key M2M verticals: fleet management/telematics, security and asset management.

Fleet Management: Lower Cost = Better ROI
Fleet management was one of the first successful verticals in the M2M field, thanks to the ability of fleet management applications to deliver solid cost savings through greater efficiency. Some fleet management application providers could charge their customers $40 per month per vehicle or more – and still guarantee them a solid return on investment (ROI).

One RACO Wireless partner saves one of its large fleet customers around $30 million per year through reduced self-insured claims in vehicle damage, personal injury and worker’s compensation.

With costs dropping rapidly in the M2M world, ROI is improving rapidly – which means the fleet management market is exploding. According to the analyst firm Berg Insight (Gothenburg, Sweden), the number of fleet management systems deployed in commercial vehicle fleets in North America is growing at a compound annual growth rate (CAGR) of 12.6%– and will reach 3.8 million by 2015.

Berg Insight expects the Latin American fleet management market to grow at a CAGR of 20.6%, reaching 2.3 million in 2015, and the European market to grow at a CAGR of 20.7%, reaching 5.0 million by 2015.

Today, not only can smaller fleets – with 10 vehicles or even less – implement these solutions and get a solid ROI, exciting new applications are emerging within this vertical such as insurance. One business model, referred to as “insurance telematics,” allows insurance companies to base their premiums on data that shows how a driver actually operates his or her vehicle. As of June of this year, usage-based auto insurance (UBI) programs had been implemented in every state except Hawaii, according to the global professional services firm Towers Watson.

Security: It’s Not Your Father’s Alarm System
Another M2M vertical that’s experiencing strong growth is the security market. Today, security is migrating from a wireline model to a wireless model. Twenty years ago, security systems were supported by wireline connectivity. But within the next two years, RACO Wireless expects 100% of security devices deployed to support wireless connectivity.

This is allowing for new applications to be developed almost daily. For instance, consumers can now receive text messages sent from their security systems to their wireless devices that tell them when their children get home from school. They can engage their home security alarm remotely. Or they can check the footage captured by their wireless-enabled security camera from their mobile phones.

With an HSDPA+ modem, wireless security systems can support speeds up to 2 Mbps, which is more than sufficient for video – thus opening up even more solution development.

Asset Management: Tracking All That’s Important
In the past, “asset management” meant tracking items. Today, it means a whole lot more. The concept of “asset management” has been expanded to include the monitoring of the most important asset of all: those you love. And that field is growing – fast.

Many applications being developed in this space support the “aging in place” movement, which allows older people to remain in their homes for as long as possible. These applications are used to monitor the well-being of older individuals or others who have special needs – and send an alert if there might be a problem. Given that one out of every five individuals in the United States is expected to be 65 or older by 2035 , this market will likely continue to grow quickly in coming years.

In the more traditional segment of the asset management world, one application that delivers a solid ROI is something called “cold chain monitoring.” Thanks to M2M monitoring tools, shipments of materials that need to remain cold no longer get rejected at a dock simply because, for instance, the dock supervisor believes the food looks like it has been thawed and refrozen.

Instead, when faced with a possible rejection at the dock, a driver transporting temperature-sensitive materials can use an M2M cold chain monitoring application to prove that the items were kept at the appropriate temperature while in transit. Simply eliminating the rejection of one refrigerated truck can save a company tens of thousands of dollars.

The Challenge: Moving at the Speed of the Internet
As we say at RACO Wireless, the M2M market today is moving “at the speed of the Internet.” The growth in the M2M market has come at a cost to some companies, which failed to keep up as new applications entered the market and thus did not survive.

Thanks to advancements such as the emergence of low-cost location-based technologies and faster data speeds, new M2M applications are becoming available almost daily. And innovation is key to survival.

Those companies that want to compete must be able to bring new applications to market quickly – and to manage their customer accounts in near real-time. For instance, when a new competitor enters the market offering a better product, application providers need to be able to launch an improved version of their own product in days, not months.

They need to be able to upgrade customers to a new rate plan with a few pushes of a button. They need to be able to monitor customer usage patterns – and see immediately if a customer is no longer using their product in the same way. They need to be able to proactively see when their devices are malfunctioning and fix the problem before their customers even notice.

In the fast-changing and fast-growing M2M world, you need the right tools to adapt at the speed of the Internet. Armed with these tools, savvy companies are not only surviving, but thriving in the fast-growing world of M2M.

John Horn joined RACO Wireless as president in May after serving as a leader at T-Mobile for more than nine years. He started T-Mobile’s M2M Channel and during the last six years, he has focused specifically on the carrier’s go-to-market strategy, helping them earn recognition as the market leader for M2M services.

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