IEEE ComSocSCV and NATEA held a very successful workshop on M2M and Smart Grids at SCU on Sept 25th. Attendees heard presentations about standards for Smart Devices, open M2M platforms from AT&T and Sprint, and mitigating noise in the "connected home" network (the new end point of residential M2M connections that extends beyond "the last mile"). This article is a follow up to that well received mini-conference. Workshop presentations will be uploaded to the 2010 Meeting Archive Section of the ComSocSCV web site as speakers make them all available to us.
M2M Market Predicted to Explode in Coming Years (according to several Market Research Firms)
Infonetics Research has released a new Embedded Mobile M2M Modem Market Outlook report which is forecasting revenue from services to embedded modems in M2M applications to grow exponentially until at least 2014. Infonetics estimates that there were 87 million embedded mobile M2M connections last year. That number will reach 428 million by 2014, a compound annual growth rate (CAGR) of 38 percent in mobile M2M connections, according to the market research firm. (Note: The firm did not break out wireline M2M connections as their report focuses on the mobile M2M market)
The report provides market size, analysis, and forecasts for machine-to-machine connections and equipment by technology, region, and vertical market segments. Infonetics states that, at present, more than half of all embedded mobile connections are GSM based, but expects strong growth in W-CDMA (3G) and later, LTE connections, driven by high bandwidth M2M applications and the need for future-proofing long-life device cycles.
“From a well-established base over GSM built up over the last decade, the embedded mobile M2M market is now poised for rapid acceleration, driven by new mobile devices, applications, services and providers, combined with the availability of higher speed networks. Demand is rising for mobile M2M applications such as smart energy monitoring and intelligent traffic, backed by government policy and funding, which is helping to create a virtuous growth cycle for the embedded mobile market,” notes Richard Webb, directing analyst for mobile devices at Infonetics Research.
Here are a few highlights of Infonetics embedded M2M market research report:
- Worldwide revenue for embedded mobile modems for M2M applications is forecast to more than triple in 2010 over 2009, and to continue growing strongly through at least 2014, at a 66% compound annual growth rate (CAGR) in revenues.
- The number of connections for embedded mobile M2M applications hit 87 million in 2009 and is forecast by Infonetics Research to jump to 428 million by 2014, driven by wider availability of services, new M2M applications, and 'Connected Society' regulatory and policy initiatives.
- Over half of all embedded mobile connections are GSM based, with strong growth expected in W-CDMA and later, LTE. connections, driven by high bandwidth M2M applications and the need for future-proofing long-life device cycles.
- The Utilities/SmartGrid vertical accounts for the largest share of overall revenue for embedded mobile M2M modems, with over a quarter of total revenue in 2009. Other market segments include: Transport and Logistics, Security/Surveillance, Retail/Vending, and miscellaneous (including healthcare, environment, education and military).
The report also includes an analysis of the top embedded mobile M2M modem vendors, a market overview, growth drivers, challenges, and an overview of the industry partnerships and major service providers providing M2M services, including mobile operators (AT&T, Telenor, T-Mobile, Vodafone) and specialist M2M service providers (Kore Telematics, M2M Wireless, Jasper Wireless, MVNE).
M2M modems makers analyzed include: Ambient Devices, Cinterion, Ctek, Franklin Wireless, HP, Huawei, iControl Networks, Intel, iWOW, Motorola, Multi-Tech Systems, Nomad, Novatel Wireless, Novotech, Numerex, Quake Global, Qualcomm, Sierra Wireless, Silver Spring Networks, SIMCom Wireless, SkyWave, Sixnet, ST-Ericsson, and Telit Wireless.
And there are many more bullish M2M forecasts, such as Strategy Analytics' expectation that the global mobile M2M market will reach $57 billion by 2014. 3G networks will support circuit-switched voice and mobile broadband services for many years to come, and M2M only strengthens the business case for continued investments in 3G technologies.
Harbor Research reports that the annual number of cellular M2M connections will grow to 161 million by the end of this year, and is projected to reach 390 million in 2014. While this number seems small in comparison to 50 billion, add wireless connectivity to any “thing” and the possibilities are limitless. Imagine a “smart grid” with virtually everything connected and communicating for optimal results: meters, appliances, autos, lighting fixtures, medical monitors, retail inventory, etc. Now imagine the benefits: greater productivity, energy conservation, remote access, reduced costs, enhanced healthcare and more.
In September, Australia's Telstra announced a deal with Jasper Wireless for inclusion of subscriber information management (SIM) cards into M2M devices and their management through a Web portal. the Telstra Wireless M2M Control Centre, will be offered in conjunction with a portal for M2M device manufacturers and service providers offering a suite of services including a developer kit, troubleshooting resources and an avenue to enable developers to offer their M2M solutions to Telstra's sales channels.
Telstra expects its M2M market to grow from $300 million to $1 billion over the next four years, but cautions that it is a very fragmented business in terms of customer size and that there's a very low average revenue per user (ARPU).
Comments and Caveats on Accomodating the Huge Increase in M2M Connections
1. Perry LaForge, Executive Director of CDMA Developement Group provided his thoughts on the exploding M2M market in a recent RCR Wireless commentary titled: M2M: Driving exponential growth in connections
"The nature of personal communication has changed dramatically in the past few years. Instead of placing quick phone calls, users tend to send text messages via instant message or a text message. M2M solutions have long specialized in this kind of communication. The devices that have traditionally taken advantage of 2G and 3G cellular networks have done so with short-bursts of data, such as weekly power meter readings or hourly position-location pings from a fleet of freight trucks.
Now we're seeing a new wave of “connections,” where the lines between personal and machine communications are blurring. E-readers, music players and even washing machines are examples of consumer devices that are being equipped with 3G capabilities to connect to the web and interact with other machines. Some of these devices emit short data transmissions, some download larger files and others remain “always on,” constantly communicating with the network. From that perspective, the average utility meter, e-reader or garbage truck could be categorized as an M2M device. These machines are constantly signaling the cellular network, checking for updates to download or upload files, books and location information, for example."
2. L.M. Ericsson has predicted that there will be 50 billion connections by 2020. These connections will utilize a broad range of fixed and wireless technologies, including cable, DSL, satellite, Bluetooth, Wi-Fi, 2G, 3G and 4G. In a September 16th presentation at the GSA Global Expo in Santa Clara, CA, Ericsson's Arpit Joshipura (a frequent IEEE ComSocSCV speaker/panelist) showed a very interesting graph of connected devices worldwide:
Ericsson sees several key verticals in the firm's 50B connected devices vision by 2020. They include: automotive, health, utilities, government, and others. The connectivity challenge is for the network to provide a managed and uniform point of access to data over any network and from any device or equipment.
Arpit asked the audience, "With a 1000X data traffic growth forecast by 2020, where will the industry find a capacity increase of a factor 1000?" His answer was that several technology improvements would be needed in broadband wireless networks
- HSPA and LTE vs. WCDMA gives a factor 10
- More allocated spectrum gives a factor 5
- Spectral efficiency improvements from 1 bps/Hz to 2 bps/Hz gives a factor 2
- ~3 times smaller cell radius (i.e. pico cells) gives a factor 10
In total 10*5*2*10 = 1000 times the capacity we have now in 3G wireless networks
Note: Arpit's entire presentation can be viewed at http://www.gsaglobal.org/expo/2010/attendees/docs/20100916_expo_keynote03.pdf
Network Enhancements Needed for M2M Communications
With this huge number of connections, M2M applications will enable network operators to more fully utilize their 3G/4G network data capabilities, increase revenues and enjoy reduced churn rates. Yet there are several pre-requisites, in addtion to the 1000X increase in aggregate wireless network capacity, before we can realize the explosive growth foreseen for M2M applications. One area of particular concern is responsibility and maintenance of M2M end points within the home or office.
For example, there might be many meters, monitors, Set Top Boxes, DVRs, and other consumer electronic devices with IP addresses within customer premises or mounted on walls. The telco or utility providing service to these may have to trouble shoot a sophisticated home network. In that case, the "last mile" will no longer be the demarcation point between the telco and the customer. Rather the telco or utility may also have to be responsible for maintaining the connected home network or devices within the home. Ericsson's Joshipura wrote that this one is too close to call. He said, " It will be different business models based on geography. There are Telcos who are trusted by consumers to be single point of contact for connected home. However once standard based implementation of these devices come through (with DLNA, IMS, SIP, 3GPP, Wi-Fi and bluetooth, then it becomes a simpler issue for the user and they may choose to buy best of breed. "
Several important network upgrades and enhancements will also be necessary for M2M communications to reach the lofty forecasts referenced in this article:
- With the proliferation of smart devices, we'll need rapid uptake of the long promised IPv6 to ensure sufficient address space for all the new devices/ gadgets. Telco networks will have to make a huge conversion from IPv4 to IPv6.
- We'll need telco M2M management platforms that can quickly provision, authenticate and manage millions of very short M2M connections.
- Those M2M platforms must be able to work over a variety of sub-networks and interconnected networks- mobile, fixed wireless/wireline and private. For example, the same M2M application might run over a mobile wireless network, fixed broadband wireless network, fixed wireline network, or private network.
- The Network Operations Center (NOC) will have to be significantly upgraded to support and trouble shoot many more connections over a variety of networks. The NOC may perform a variety of mission critical back end functions for M2M communications,
- In many cases, the applications may be network resident (e.g. run on a network resident server), so open network platforms and APIs will also be needed.
What we're not sure of is whether the rosey forecasts for the M2M market will be realized if some, but not all of the aforementioned network enhancements are made. If not, there will be a lot of customer resentment which will likely slow market acceptance and growth (e.g. PG &E's troubles with "smart meters" that were to use wireless networks to send back electricity usage data, but had all sorts of problems which resulted in many customer complaints). Let's watch and wait at least three years to see if everything comes together and M2M communications realizes the growth that the market research firms are now forecasting.