Smart strategies will help mobile network operators carve out a profitable role in a machine-to-machine environment
Imagine being able to remotely switch on your air conditioner using your mobile phone before you reach home, or your refrigerator checking the level of milk and sending a request to your nearest grocery store for auto-replenishment and paying for it via your mobile. In case of an intrusion in your home or office, the cameras can switch on automatically and will stream live images on your smartphone and the nearest police station. You can even switch off the ignition of your car using your mobile, in case it is stolen, and locate and get it picked up safely with the help of the local police.
These are no longer scenes from a sci-fi movie but very close to becoming a reality-thanks to machine-to-machine (M2M) technology, which enables modules embedded in devices and objects to intelligently exchange information in real time over wireless networks and backend platforms to enhance an all pervasive digital lifestyle. India's next wireless communications revolution after mobile phones will be M2M, which, in a world of such emerging pervasive connectivity, can help turn these dreams into reality. Telcos will now have an avenue to better utilize their data networks and move up the value chain to provide end-to-end M2M managed services, while product companies can create additional value and drive differentiation in the market by enabling this M2M ecosystem. This also provides an exciting opportunity for the country's mobile network operators (MNOs) to build new businesses beyond traditional mobile services.
India's 3G and recently launched 4G networks, which are designed to handle large volumes of data, will form the backbone of M2M communication in the future and facilitate its accelerated adoption. For the CDMA operators, this provides an additional avenue to monetize their declining investments by routing most of their M2M data traffic to that network.
However, MNOs are faced with many questions before they take the plunge-when and how much do they invest to start their M2M initiatives and how much incubation time should they factor into their business cases. They need to decide on what strategic partnerships do they need to evolve to be able to play a significant role in the M2M value chain rather than being marginalized as just a SIM provider. Most importantly, which M2M services can they bet on to create the best monetization model for their business?
The Indian M2M market is still at a nascent stage, but it is expected to grow rapidly. According to 6Wresearch, a global market research and consulting firm specializing in emerging markets, India's M2M market is expected to touch US$98.38 million by 2016 at a compound annual growth rate of 33.81 percent from 2011. Cellular M2M modules will account for over 42 percent of the market by 2016. Globally, more than two billion M2M devices are up and running around the world already and 12.5 billion devices will be connected in this way by 2020, according to Machina Research, a technology research firm focused on the emerging opportunities associated with new forms of connected device.
Encouraged by these numbers, MNOs are putting strategies in place to straddle the entire emerging M2M value chain and realize new revenue opportunities. For instance, they are exploring partnerships with hardware providers to provide modules with built-in internet connectivity and offering data plans specifically for products with such embedded devices. Some global MNOs already predict they will soon have a large base of subscribers that are not humans.
The opportunities do not end there. At the device level, MNOs can capitalize on the systems integration and application management needs of companies deploying M2M solutions. As the growth of M2M communication reaches critical mass, monetization opportunities will expand much faster in the area of analytics - using transactional data to deliver actionable insights. With the ability to remotely manage devices, M2M can act as a catalyst for change in verticals such as health care, education, agriculture, energy and banking.
MNOs can play a pivotal role in ushering in the M2M revolution since they play a critical role in filtering, moving and acting upon the relevant data and becoming a single point of contact to the end customer. MNOs have the closest relationship with their customers in this value chain and can provide bundled offerings comprising relevant applications, devices and connectivity. While MNOs will help drive adoption, success lies in the speed with which companies incorporate M2M technology into their business processes and models. For MNOs, therefore, the first step in evaluating the emerging opportunities is to understand how the technology impacts their enterprise clients. We believe the following five trends will drive M2M adoption in India: