Although the market formachine-to-machine
(M2M) technologyis still in its early days,
it has real potential for mass adoption with possible applications
limited only by the imagination.
M2M is a generic term used to describe machines that are
embedded with black-box cellular modules - the technology used in
mobile phones - in order to enable them to communicate with one
another wirelessly, although this definition is starting to expand
out to include
Bluetooth communication.
According to Gartner, about 20 million such units were shipped
during 2007, mainly in the transport and
telematics
sectors, with growth rates expected to continue at about 30% to 40%
over the next few years. Nick Jones, a vice-president at Gartner,
says, "The market is pretty tiny, but prices are falling, so it is
growing fast - although from a small base."
This is despite the fact that the technology has been around for
some years because it is essentially "just a mobile phone without a
keyboard and the like. It has been possible to do for a long time,
but until the arrival of GPRS and better data networks, it was not
seen as attractive. As network capacity becomes bigger, however,
the range of applications will increase," Jones says.
Technology cost hold back growth
Another inhibitor, however, is cost. Individual radio modules
are currently between £30 and £40, but that, combined with
relatively expensive airtime fees, means that adoption is not yet
feasible in mass markets. Prices are unlikely to fall significantly
until sufficient volumes are sold and sufficient volumes are
unlikely to sell until prices drop.
Steve Reynolds, vice-chairman of industry body the Mobile Data
Association, says, "There are 354 million utility meters in the UK,
but the challenge is capital costs. The business case currently is
not stacking up, and so it is cheaper just to have someone read
them."
But if network operators were to grasp the nettle and modify
their tariffs - which is feasible because the impact on networks is
low as data is only transferred periodically - such a move could
well kick-start the market.
Until that time, however, M2M technology is likely to remain
limited to specific areas where the business case is clear. The key
sector in terms of uptake so far has been transport and telematics,
where it is mainly deployed for
vehicle tracking and monitoring. Adoption is only set to rise
still further here in the year ahead, however, because of the
probable introduction of the
Corporate Manslaughter Act.
Whereas today organisations can only be prosecuted if the head
of the firm is found to be personally responsible for the death of
an employee, the manslaughter act would mean that companies as a
whole would be subject to unlimited fines if found liable.
"It is about employer duty of care, so they will need ways to
ensure that vehicles are safe and people are not speeding or
driving unsafely. This means that we are going to see big growth in
vehicle black boxes and GPS tracking so that organisations can
monitor the situation and know where their lone workers are as it
is an easy option," Reynolds says.
Case study: Caterfood
One organisation that has already gone down this route, however,
is Caterfood. The firm is based in Paignton, Devon, and provides
next-day delivery for specialist ambient, chilled and frozen foods
to the catering trade in the South West of England.
The company, which employs about 100 staff, introduced a hosted
service from
Cybit in 2005 in order to monitor the speed at which sales
staff and drivers of its temperature-controlled delivery vehicles
were going.
It also wanted to track fleet idling time to reduce waste, but
has since reduced this problem by introducing electronic hook-up
points at its depot to power cooling systems while vehicles are
stationary. In the past, drivers used to keep engines running to do
this, which also increased wear and tear.
James Hunt, operations manager at Caterfood, explains the
rationale behind its move, "It was about health and safety and duty
of care issues towards our drivers and also about reducing costs.
It was a bit of an outlay, but with the reduction in insurance and
the knock-on effects of fuel in terms of more efficient
consumption, the system has paid for itself."
The company pays for the web-based service on a monthly
subscription basis, although it has purchased the black box vehicle
units outright. This now means that customers can call the company
to determine the estimated time of arrival for goods, which has
increased satisfaction.
In the past, finding out any necessary information had largely
been a matter of trust, but today authorised staff and management
have access to real-time data such as the hours that staff are
working and their average driving speed. This raw data tends to be
viewed a couple of times a week and is also compiled into report
format and e-mailed to the company by its supplier on a regular
basis.
"This provides transparency throughout the company and means
that management can act if there is a specific problem or if habits
change," Hunt says.
The biggest challenge in introducing the new system, however,
was related to change management. "You have to make things
transparent so that everyone knows what you are doing and why. This
means that you have to give everyone a chance to talk and you have
to highlight the benefits to them so that they do not feel like you
are just checking up on them," he says.
Other sectors that are expected to show increasing levels of
interest in M2M technology in the near future, meanwhile, include
retail and leisure. Potential use cases here are mobile
point-of-sales terminals or vending and gaming machines, which
could send alerts if equipment was faulty to save regular,
unnecessary visits from service engineers.
Jones says, "It is early days now, but the market is growing and
anyone with physical equipment, especially if it is expensive, will
start thinking about it. It is one of those areas with a lot of
potential and the only limiting factor is the imagination."
A key driver will be what Jones calls "the green IT thing and
the environment". Possible applications include
energy-usage monitoring and demand management, which includes
the remote control of heating and lighting in areas where it is not
possible to run
Ethernet cabling.
Case study:Newsquest Media Group
One company that has gone down a slightly different route is the
Newsquest Media Group. Its Lancashire Telegraph newspaper sales
team conducted a four-month trial of M2M technology starting last
June and the organisation has since
signed a group-wide contract with Comtech to provide it with
digital display systems.
During the trial, the 15-inch mixed LED and LCD displays were
hung above or placed next to tills in two large town centre
retailers and a range of smaller newsagents to show on-screen
advertising and news stories as well as ticker-tape-style headlines
running across the top.
Participating stores were provided with two free adverts out of
a potential 10 slots. In future, they will be offered a percentage
of the profits. Customers were charged between £10 and £15 per
advert per week.
Ben Leach, the Telegraph's regional sales manager, explains the
rationale, "We were going after smaller local businesses that would
maybe want to target people in the local area but would not
necessarily advertise in the newspaper itself. So we made the
adverts quite cost-effective as we see it as an additional revenue
stream and an opportunity to drive new revenues to a new
audience."
Although Newsquest has now purchased the display boards
outright, it pays its supplier a per-unit service charge each month
and also a fee to use the online back-end system, which is hosted.
All that members of the existing sales team have to do is send the
high-definition PDF adverts to the individual screens and define
time settings.
The organisation is also currently working with Trade-wind to
develop chrome and perspex newspaper stands into which the display
units will sit and the aim is to roll these out during the first
half of the year.
"This gives us an additional revenue stream and an opportunity
to brand and market our own products and stories in a way that we
have not done before. It also associates us with new technology and
innovation, which is great," Leach says.
Nonetheless, for organisations preferring to introduce such
technology in-house rather than as a hosted service, there are
certain difficulties. "This tends to push the IT department more
towards real-time data collection and monitoring rather than batch.
So it may have to rethink its IT infrastructure, while the business
may have to deal with more data than it knows what to do with, and
that can involve business process change," Jones says.
Depending on the application chosen, such an approach may also
involve integrating new data sources, perhaps from third-party
collection agencies, into existing systems.
"This all plays well into
service-oriented architecture (SOA) models, particularly if
someone is collecting data for you and you are accessing the
service or getting information from external sources as you will
need a nice interface between systems. So that says to me SOA and
event-driven architectures to handle real-time communication with
machines," Jones says.
Despite this, it will be some time before the market truly takes
off. Although some organisations are starting to invest in pilot
projects to test use cases, the sector is still a fragmented and
immature one, dominated mainly by small specialist players.
As Reynolds says, "I do not expect to see much adoption in the
short term, but things will go more mass-market in the medium term
by, say, 2012 or so. The market potential is phenomenal because, if
you think, the world population is 6.6 billion now and, if each
individual has 10 machines, you are talking about 66 billion
devices that could be mobilised. But there are big challenges and
they still have to be addressed."