Machine-to-machine technology takes off

Although the market for machine-to-machine (M2M) technology is still in its early days, it has real potential for mass adoption with possible applications limited only by the imagination.

Although the market for machine-to-machine (M2M) technology is 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."

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