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Capturing a share of the M2M market How can Australian companies participate in this growth sector


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Title: Capturing a share of the M2M market How can Australian companies participate in this growth sector

Capturing a share of the M2M market How can
Australian companies participate in this growth
Presented by Daryl Chambers April 2004
  • What is M2M?
  • Who are the main players in Australia?
  • Australian market status
  • The M2M Developer market
  • Key markets in Australia
  • Business models for the M2M market
  • QA

What is M2M
  • M2M is short for machine-to-machine
  • Wireless M2M relates to the connection of
    machines to other machines or people wirelessly
  • Wireless connectivity can be by cellular, radio,
    satellite or any other wireless means
  • Here I cover cellular M2M communications

Who are the main players
  • Operators
  • In GSM/GPRS Optus/Vodafone/Telstra
  • In CDMA / 1x / EV-DO Telstra / Hutchison
  • Cellular M2M Hardware vendors
  • Main GSM suppliers include SonyEricsson, Wavecom,
  • In CDMA - Maxon and Kyocera
  • Developers
  • There are over 500 developers in Australia who
    develop applications to connect wirelessly
    to/from machines
  • Almost all are developers not end-customers for
    the applications
  • End customers
  • Typically these are the commercial users of M2M

Key Enablers
  • Packet data over cellular
  • Either GPRS or CDMA 1x
  • Allows always-on connection
  • Has created a direct competitor to many fixed
    wire services
  • Airtime tariffs
  • Packet data cost for M2M applications has fallen
    to levels far below fixed line
  • Mobile M2M - SIM card, monthly connection and
    1M/byte of data for 5-10 per month
  • Fixed M2M - 20 just for a fixed phone line
  • M2M typically is a low bandwidth user (up to 1
    m/byte per month)
  • GPRS/1x provides low cost airtime for M2M
  • Hardware costs are falling
  • GPRS module cost dropped from US100 in 2002 to
  • Module is typically 25-50 of a hardware

Status of Australian M2M Market
  • M2M market has been in existence since 1996/7
  • Growth rates typically at 100 per year (from low
  • Typical developers have been small cottage
    industry companies building specific
    applications for customers
  • Market is now emerging into the mainstream
  • In 2004 many developers are selling 000s of
  • Export orders are starting to come in for some
  • Large end-customers are moving to commercial
  • Some operators strongly support the segment to
    win data traffic

M2M Australian Growth
Is this growth real?
  • Forecasters predict continued double or triple
    digit growth over the next 4-8 years
  • Many forecasters expect global M2M user numbers
    to exceed that of phone users worldwide within
    this decade 
  • Nowadays there is much talk of B2B and B2C
    applications, but the key Internet relationship
    of the future will be the M2M relationship from
    machine to machine.
  • Dr Volker Jung President BITKOM, the German
    Association for IT,T New Media
  • Previous CEO of Nokia recently stated a belief
    that cellular M2M connections would outweigh
    voice connections before the end of this decade,
    by a factor of 8!

Opportunities for Australia
  • M2M market is still in an emergent phase, locally
    and internationally
  • Australian developers are at forefront in some
    application areas
  • There is a growing understanding among customers
    of the benefits of wireless
  • Cost
  • Convenience
  • Often better performance/ reliability
  • Some of the largest global opportunities are in
    Asia where developers are behind Australia

  • We have talked about the M2M market status, now
    lets look at the Developer market

The M2M Developer Market
  • Typical module characteristics
  • General development guidelines
  • Typical development lead times
  • Key markets in Australia

Typical M2M Modules
  • Modules need to be fully integrated into the
    developers application and are useless
  • Some Key Features
  • Small size
  • Multi-band
  • Able to send and receive data by packet data,
  • Can handle voice and fax calls
  • GPS interoperability
  • Broad operating temperature range
  • Some also include
  • Embedded TCP/IP stack
  • Embedded controller for hosting applications
  • Additional PINs for I/Os

Typical M2M Modems
  • Modems are really modules with a simple
    application to make them into a modem that can
    connect externally to a hardware application to
    wirelessly enable it
  • Some Key Features
  • Multi- band
  • Instant and cost effective solution with
  • RS232 serial modem or USB modem or ethernet
  • Standard connectors for power, antenna, phone
  • Integral SIM card reader
  • Support data, fax, SMS and voice and packet data
  • Easy to integrate

Some General Development Guidelines
  • Which M2M product should a developer work with?
  • Several factors to consider before selecting the
    M2M product to develop with including
  • Time to market
  • Installed base of applications to be converted to
  • Volume
  • TCP/IP
  • Price
  • Temperature Range

Development Guidelines what to use?
  • Time to market
  • Where time to market is critical to the developer
    consider developing with an external modems
  • Pick a modem/module with in-built TCP/IP
  • Installed Base
  • If developer has installed application base to be
    converted to GPRS/1x (e.g. today uses wire-line
    or private radio) consider external modem
    connected to existing hardware
  • Volume
  • Where application sales volume exceeds 500 per
    year then consider developing integrated product
    with embedded module
  • Cheaper hardware cost
  • Higher development costs
  • Longer lead times

Development environment
  • AT commands
  • Cellular M2M modules and modems are just another
    type of modem
  • Use standard AT commands
  • Manufacturers have created unique sub-sets of
    vendor specific commands to access various
  • Developers run their applications in almost all
    popular programming languages including
  • .NET
  • Windows CE
  • Linux
  • ANSI C
  • Manufacturers have developed software coding
    tools to simplify application development for
    devices with on-board embedded memory
  • Examples include M2mpower, MUSE

Typical development cycle Company with an M2M
business idea
  • Entering market for the first time
  • Estimated Development Time to Commercial Sales
  • 8 12 months

Typical development cycle Company with existing
M2M business using fixed or other wireless systems
  • Already develop fixed line M2M applications
  • Estimated Development Time to Commercial Sales
  • 5-8 months

Key markets
  • Security
  • POS
  • Telematics/tracking
  • Utilities
  • Remote telemetry

Security Monitoring
  • 5-6 companies provide hardware and central
    monitoring station equipment/software for GSM
    based wireless monitoring
  • Often used as a back-up to fixed line monitoring
  • Also used where fixed lines are not convenient
    such as ATM machines, remote locations
  • Push in 2004 by several suppliers to roll-out a
    GPRS based always on monitored service to
    compete with fixed line monitoring
  • Could open the entire market to wireless
  • Current volumes (Aust/NZ) estimated at 1000/month
  • Expected to grow to 5000/month with GPRS launch
  • New opportunity with CDMA for video monitoring

  • SCSI launches its DirectWireless network and
    Guardcell at the Security Show on 28 April, 2004.
  • The DirectWireless network is a Virtual Private
    Network operating within the Optus GSM/GPRS
    network, dedicated to high security alarm
  • DirectWireless Guardcell will facilitate wireless
    alarm monitoring to AS2201.5-1992 Class 4 and 5
    for alarm transmission services
  • Benefits
  • Cost
  • Coverage versus Securitel
  • Harder to corrupt and better redundancy options
  • May be first in world to deliver true GPRS
    security monitoring

Five POS opportunities
  • Cellular EFTPOS models
  • E.g. Keycorp and Akyman
  • Fixed but wireless EFTPOS terminals connected to
  • E.g. Keycorp, Akyman
  • Opportunities to connect older fixed EFTPOS units
    from ISDN/PSTN to wireless
  • E.g. Keycorp, Hypercom, Braintree, Fox
  • Connect existing fixed line ATM transaction
    terminals to a GPRS network
  • E.g. Braintree, Akyman
  • Increase in provision of information through POS
    information and loyalty programs
  • E.g. S4, Fox Technology
  • Current volumes (Aust/NZ) estimated at 500/month
    but expected to grow to 2-4000 /month in 2004

  • Braintree Communications has trialed its wireless
    EFTPOS gateway with the Commonwealth Bank and
    retail customers using GPRS connection
  • Uses Braintree's GPRS terminal adaptor to send
    EFTPOS transactions from existing EFTPOS
    terminals over GPRS network into the CBA's host
  • Converts EFTPOS transaction from fixed wire to
    mobile networks giving the combined benefits of
  • Much cheaper tariffing without the monthly line
  • Greater mobility
  • Easier terminal fleet management
  • Expected roll-out to be in the 000s per quarter

Telematics and vehicle/asset tracking
  • Many developers work with cellular M2M to track
  • Over 20 developers in Australia/NZ
  • Some are replacing old proprietary radio systems
    as CDMA and GPRS have better coverage and cheaper
    and better featured
  • Expected to grow to 2000/month in 2004
  • One specific area is embedded systems in vehicles
  • Services provided include report of accidents,
    support to drivers (e.g. to unlock car) and to
    offer value-added services
  • Current volumes (Aust/NZ) estimated at 600/month
  • Market is expected to grow to 2000/month with
    GPRS and increased uptake by insurers
  • Several major car brands are providing this as a
    feature in high end vehicles

  • Holden sells a telematics solution as a standard
    add-on accessory when ordering a new car,
  • Emergency service support
  • Providing content to assist the driver
  • On-board assistance 24 hours, 365 days of the
  • System uses GPS and GPRS to provide advanced
    satellite car monitoring
  • Uses include
  • If you lock your keys in your car Holden Assist
    can unlock your car remotely
  • If your battery is low the car notifies Holden
    Assist who will contact you
  • In an emergency, press the red SOS button to
    contact the National Emergency Response Centre
  • In the event of a crash, if an airbag has been
    deployed, the system will automatically contact
    the NERC.
  • If you need roadside assistance, press the
    "Holden Assist" button
  • If your car is stolen Holden Assist can locate
    and track your stolen car

Utility monitoring
  • This was the first M2M segment to take off in
  • Uses GSM wireless to monitor electricity, gas,
  • Use for control/billing to larger industrial
  • Gives real time usage and billing
  • Use for monitoring of utility networks to ensure
    smooth operation
  • E.g. sewerage stations, power sub-stations, power
  • Installed base estimated at around 50 000 users
  • Sales volumes (Aust/NZ) estimated at
  • Expect to grow to 2-4000/month in 2004
  • GPRS services are rolled out
  • Lower cost
  • Better reporting

  • Energy Intellect (Ei) have developed a two-way
    communications platform linking energy suppliers
    with customer sites
  • Their advanced utility and commercial/industrial
    AMR devices add immediate value to any smart
    meter application.
  • The platform provides real-time, two-way
    communications enabling energy suppliers to
    maintain connectivity with customers, offer new
    services and work collaboratively to manage
    customer load
  • Ei has a range of GPRS wireless remote
    communications devices, which provide
  • for any commercial/industrial AMR
  • or load control requirements

Remote telemetry
  • Covers a cross section of applications including
  • Vending Machine monitoring
  • Weather stations
  • Small unmanned airports
  • Farms and irrigation
  • Rail lines and roads (including road
  • Gas tank monitoring
  • Children's rides in shopping malls
  • Newspaper sales stands
  • Current volumes (Aust/NZ) estimated at
  • Expected to grow to 2000/month in 2004/5
  • Already 100 developers working in this area on
    targeted applications

Coca - Cola Vending Machines
  • Coca-Cola have over 60,000 vending machines
    wirelessly connected primarily in New Zealand,
    Australia, U.S.
  • Based on technology from a small NZ company,
    Harvest, which has now been acquired by CCA
  • Provides intelligent vending technology and data
    management support to The Coca-Cola Company
  • Monitoring of vending machines (vandalism, power,
  • Sales monitoring
  • Support for distribution (route planning)

Business models for the M2M market
  • ASP opportunities
  • Enabling technologies
  • Export opportunities

ASP Model
  • Developer bundles in hardware, services, airtime
    in one fixed charge per period
  • Brands the service, not the components
  • Takes responsibility for end-to-end process
  • Can add margin without price visibility (e.g.
    airtime tariff becomes meaningless)
  • Areas where this has started
  • Security monitoring companies offering wireless
    security bundles
  • Vehicle tracking companies offering the response
    centre servcie bundled with the hardware
  • Vending machine operator offering support
    services to machine owners

Enabling Technologies
  • The cellular operators have a number of tools to
    support for wireless services
  • Premium SMS is a micro-payment mechanism
  • E.g. 1.50 for a soft drink, 0.50 for a local
    surf report
  • Location Based Services can be generated from
    cell ID (and from GPS) and provided to users
  • Wholesale and Aggregation tariffs
  • Blockers
  • Operators take too large a slice of pie
  • Not worth using premium SMS as they take 25-50
    of revenue
  • Too expensive for fleets to contemplate using
    operator based LBS when access costs are in line
    with SMS
  • Aggregation and wholesale is still in infancy in
    M2M market

Thank - you
Glossary of Terms
  • GSM Global System for Mobiles
  • GPRS - General Packet Radio Service
  • CDMA Code Division Multiple Access
  • 1x Packet data over CDMA
  • M2M Machine-to-machine
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