Telit claims almost 100 m2mAIR customers, dismisses MNO competition

Telit’s launch of m2mAIR in July was seen as an ambitious and potentially risky move into value-added services by a company whose previous business had been largely restricted to the sale of M2M modules. But Telit says the number of m2mAIR customers is already approaching 100 and growing fast, with about 300 companies piloting the service.

Speaking to M2M Zone, Dan Amir, the head of m2mAIR, was upbeat about the performance of the division over its first few months in the market.

Telit’s launch of m2mAIR in July was seen as an ambitious and potentially risky move into value-added services by a company whose previous business had been largely restricted to the sale of M2M modules. But Telit says the number of m2mAIR customers is already approaching 100 and growing fast, with about 300 companies piloting the service.

Speaking to M2M Zone, Dan Amir, the head of m2mAIR, was upbeat about the performance of the division over its first few months in the market.

In its half-yearly earnings release, shortly after the launch of m2mAIR, Telit (Rome, Italy) claimed to have initiated pilots with some 130 customers, representing an annual market of more than 1 million annual subscriptions, and said that a number of pilot customers had already become “full-fledged commercial customers”.

The figure of about 400 customers now using either a full commercial service or pilot equates to about 8% of Telit’s overall customer numbers, but the company has yet to begin offering the service outside Europe.

Intended to provide Telit with a recurring source of income on top of module sales, m2mAIR could increase revenue per unit by a factor of between five and ten, according to Amir’s reckoning.

Telit does not provide details of module shipments, but it reported revenue of $98.6 million for the six months ending in September, up 21.6% on sales during the same period in 2011.

Nevertheless, citing analyst research that suggests 100 million M2M modules will be shipped in 2013, and claiming a market share of about 30% in Europe and 20% globally, Amir says the prospects are bright if Telit can bundle value-added services and connectivity with just 20% of its modules.

According to Amir, a particular strength of m2mAIR is the use of Telefonica (Madrid, Spain) as a connectivity provider.

“Telefonica is a huge operator that has established probably the best service delivery platform [SDP] in the world with Jasper Wireless,” he says.

Indeed, Jasper Wireless (Mountain View, USA) – which has signed deals with a number of Tier 1 operators – recently topped a ranking of SDP vendors compiled by analyst firm ABI Research.

Even so, questions have been raised about Telit’s dependency on just one provider, focused largely on Europe and Latin America, when it comes to the global expansion of m2mAIR.

Amir says the relationship is not an exclusive one, and that Telit may look to establish similar arrangements in other parts of the world, although he insists the company would not sign up to anything that conflicted with the Telefonica deal.

“That’s not the way we do business,” he says.

In any case, he points out, many mobile network operators (MNOs) are realizing they cannot address every market in the world and forming M2M alliances, which is working to Telit’s advantage.

Telefonica is already a member of one such alliance with KPN (The Hague, Netherlands), NTT DoCoMo (Tokyo, Japan), Rogers (Toronto, Canada), SingTel (Singapore), Telstra (Melbourne, Australia) and VimpelCom (Amsterdam, Netherlands).

Although some MNOs are also trying to play a bigger role in M2M, Amir is fairly dismissive of their ability to compete with m2mAIR.

“In our business, MNOs have a very good understanding of networks but very little understanding at the level of the customer application, and 99% of problems that M2M customers face are related to the application,” he says.

He also argues that “Telit has the best distribution channel for connectivity and value-added services in M2M”.

“I don’t think that leading global connectivity providers, like Vodafone [Newbury, UK] and Orange [Paris, France], have the distribution channels to market that we have, and distribution is one of the main challenges in this industry,” he says.