Narrowing in on the value of the M2M market

Mike Dano

Calculating the value and potential of the embedded, machine-to-machine market is difficult, to say the least. Of course, there are the requisite analyst projections to cite: Research firm ABI forecast in September that the number of global cellular M2M connections would triple to 225 million by 2014; and in a report issued that same month, research firm IDATE found the value of the cellular M2M is set to grow from $15.1 billion in 2009 to a whopping $36.9 billion by 2013. But those numbers I don't think really give a feel for what is possible within the embedded, M2M space. After all, this is a market set to grow on the back of real innovation: The gizmos and gewgaws in the M2M market, and the services tied to them, are stuff that no one has ever seen before.

It's also difficult to tabulate the M2M market via services and pricing because the nation's wireless carriers uniformly refuse to provide standard fees for M2M connections. They argue that each M2M application is slightly different, and therefore requires unique service pricing. Further, average revenue per user in most M2M scenarios is just a few dollars per month, or less, making it difficult for carriers to sell the concept to investors fattened on postpaid ARPUs in the range of $50 per month.

Indeed, there doesn't even seem to be any set business model for M2M companies or services. The space, at least today, really does have a Wild West flavor.

Thus, I think the true value of the M2M market can only be highlighted through real-world examples of what entrepreneurs are doing in this area. There's definitely some neat stuff going on in the embedded, M2M market, and I spent some of my time at last week's CTIA Wireless show in Las Vegas digging into it. Specifically, I met with executives from the M2M divisions of some of the nation's largest wireless carriers to ask one question: What are the most innovative M2M apps you've seen lately? The results I think provide a glimpse into the real worth of the space:

  • T-Mobile USA's John Horn, national director of the carrier's M2M efforts, told me about flaik, a product available from some ski resorts that lets parents track the location of the kids they send to ski school (or their own runs skied, calculated via total vertical feet).
  • Verizon Wireless' Maurice Thompson, head of the carrier's Open Development Initiative, recently discussed Saygus' Android smartphone, dubbed VPhone, which is a graduate of Verizon's ODI effort. The phone, not yet commercial, is designed to show off Saygus' video calling software via a front-facing camera.
  • Glenn Lurie, president of AT&T Mobility's emerging devices division, showed off a handful of innovative embedded devices at AT&T's press luncheon at the CTIA show. The most interesting? Vitality Glow Caps' intelligent pill cap, which uses light and sound to remind users to take their pills.
  • Finally, Sprint Nextel's Tom Nelson, group manager of the carrier's "emerging solutions" business, told me about two tracking applications that address somewhat related though very distinct market segments. First, the Little Buddy Child Tracker from Insignia (for sale at Best Buy) helps parents keep tabs on children via a GPS-enabled stick. Second, the Comfort Zone (powered by Omnilink) is available from the Alzheimer's Association and alerts family members if a person with Alzheimer's travels beyond a specific, pre-determined area.

"There's a huge opportunity," Sprint's Nelson said. "It's an interesting tipping point for the wireless industry."

I would definitely agree with that. And though I'm sure the embedded, M2M market will mature to a point where it's much more easy to tally, calculate and assess, I think it's hard not to get excited about the neat stuff coming out of this nascent but potentially explosive space.

P.S. FierceWireless will not be publishing tomorrow, April 2, due to the Good Friday holiday. We will be back in your inbox on Monday, April 5. Enjoy the weekend. --Mike