Now that we have nearly finished connecting everyone and are serious about connecting everything, the analysts are in full ‘prediction’ mode. How big the M2M market will be in two, five or fifteen years time is a weekly debate. But since the eco-system is still evolving it is impossible to guess. Predictions vary from billions of devices and dollars to trillions of devices and dollars. Conclusion: it is big.
Before the guessing games get any more out of hand it is worth thinking about the business models that will emerge. Many have spent many hours doing this, but here is another perspective:
1) The number of machines in the world that it makes sense to connect in some way vastly outnumbers the number of people on the planet.
2) If these machines and their function had an equal value then the model would simply be one of scale.
3) Value, like beauty, is in the eye of the beholder. It may be of some value to have a million connections beeping occasionally to tell someone or something that they are still working, it is quite another to tell a home owner that there has been a break-in.
4) Is BMW or Ford a service provider, MVNO or simply a car manufacturer looking after their customers?
Conclusion: the M2M market will mirror the telecoms market as it has developed over the last twenty years. Soon, in fact, we will not use the term ‘M2M’, it will dissolve into the fabric of ‘how we do things’. Generally this invisibility takes 10 years, but bear in mind we are some years into the process already.
The telecoms model that evolved over the last twenty years essentially looks like this: most people who use phones, use them for very simple things – talking and possibly texting. Less people use their phones for other things, messaging perhaps, or emailing. A tiny group of people use their phones as mini-computers.
A huge market will quickly develop in connecting cars and trucks, components and plant, heaters and coolers. The value to the people whose responsibility it is to maintain these pieces that run their eco-systems is governed purely by how much time it will save them, how much money it will save them against how much money it will cost them.
On the other hand, the value added services end of the market will develop very differently. It already is – and is not generally referred to as ‘the M2M’ market. The Connected Home is now a target for everyone from cable companies to mobile operators, consumer electronics companies, interior designers, alarm makers and electricians. The value to a home owner of knowing that all is well, that the heating has been turned up remotely on account of the sudden cold; that the children are currently 200 metres from the house and the lock override will automatically de-activate in 20 seconds; that only a minor (light bulb broke) alarm happened during the day and that the oven is warming up is hugely comforting and therefore valuable. And when the evening comes and a father can smile and give up control of the remote knowing that he can watch what he wants to on one device, while the rest of the family are watching what they want on others, is also hugely attractive. This customer will pay for M2M connectivity – except he will not think of it as ‘M2M’ and he will pay a premium because it is more valuable to him than connecting a thermometer in a factory.
The only problem will be caused by our amazing ability to take things for granted. Once houses have all these comforts and security features, we will come to expect them of our new houses and we will not want to pay extra for them.
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