We make ICT strategies work

Daniel Kellmereit,

CEO, Detecon Inc.

May 2nd, 2013

M2M in the Mobile Industry

Introduction

The application of M2M technology leads to improvements in productivity, efficiency

and transparency across industries; however so far we only see a fraction of what is

possible.

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Medicine & health

Agriculture/ farming

Smart home

Connected car

Smart metering

Consumer electronics

Logistics

Public transportation ePayment

The promise of M2M

The Limited Application of M2M

– 2 –

Security Industrial Automation

Challenges

A number of challenges have slowed down a more exponential growth of m2m solutions

and the m2m market in general.

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Challenges in M2M Adoption

Regulation

Complex value chain

Cost

Technology maturity

Fragmented Solutions

Technical issues

Customized solutions

Vertical specific Complex, industry-

specific charging

Inflexible SIM/module setup

Custom devices for individual applications

Network coverage and performance

Privacy/security in certain sectors

Prolonged certification process

Roaming Regulation

Standards, architecture & interoperability,

Security and device management

High level of customization

Lack of scalability & modularity

Pricing models

standardization Multiple industries and

competitive players; Information not readily

shared or available

Factors M2M Growth Drivers

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M2M Growth

Drivers

Rise of Cloud

Falling Hardware

costs

Diverse

business

applications

Big Data/BI

Ubiquitous

network

access

Maturing provider

ecosystem

Today we are on the verge of mass market adoption across industries; this change is

fuelled by several factors like falling hardware & connectivity costs and ubiquitous

network access.

Multiple options for high-

performing wireless networks

Drop in mobile data costs

Ease of adding wireless

technology to devices

Cloud becomes a mass market

Costs for developing and delivery

of applications is reduced

significantly

Devices store more and more

information in the cloud

Drop in memory, processor & sensor prices

Growth of mobile device market

Large amounts of

unstructured data

Rise of new technology to

process and manage and

store data

Improvements in analytics

platforms Ecosystems of providers is

becoming more efficient

Packaged services

Emergence of open

platforms

Growing developer

communities

Market Opportunity

The M2M market will grow exponentially in the coming years, Building Infrastructure,

Telematics and Healthcare are expected to be the largest verticals.

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Sources: Machina Research, Detecon Research

2021 2020 2019 2018 2017 2016 2015 2014 2013 2022

600

700

500

400

300

200

100

0

USD B

8%

5%

3%

12%

3%

34%

35%

Rest (8 %)

(4) Utilities (5 %)

(6) Industrial Automation (3 %)

(3) Healthcare (12 %)

(5) Smart Cities (3 %)

(2) Telematics (34 %)

(1) Intelligent Buildings (35 %)

In 2022, Intelligent Buildings will be the biggest area for M2M applications, followed by Telematics and Healthcare.

The fastest growing area will be Telematics with a CAGR of 24%.

M2M Size and Growth Areas of Growth

Connectivity Related

Revenues

M2M Platform

Revenues

Installation Revenues

Device

Service Wrap (Revenues wrapped around connectivity)

Frame Template M2M Value Chain

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The M2M value chain is highly fragmented and complex; end-to-end solution

development requires standardization and horizontal platforms.

Chipset/SIMs Modem/Module Equipment

Application Business

Intelligence

Connectivity Device

Platform

Application

Platform

Core chipset, unique identity for each M2M device

modems & modules, provide reception capability

Customer equipment such

as smart meters or vending machine

Data connectivity, mostly provided by telecom carriers

System Integration & IT Services

Operations and business

support platform

Platform to manage and analyze data

Runs the core business processes

Planning, implementation, integration and management of solutions and add-on consulting services

Data analytics and business performance

management

BI/ Software

M2M Value Chain Hardware

Connectivity

Frame Template New Growth Areas

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Success in M2M requires the capability to profitably serve a very large number of low

traffic data subscriptions while moving beyond connectivity services.

revenue per application type

application type

M2M - mobile long tail business?

– 7 –

Cloud Computing

$55b

Business Intelligence

$13.8b Big Data

$11.7b

Leverage connectivity footprint to move into higher margin services:

Cloud Services

Business Intelligence

Big Data

by either partnering and/or building own platforms.

Possible Positioning Strategies

2015 non-connectivity services forecast

Sources: Detecon Research, IDC, GSMA

Frame Template High Margin often equals High Process Complexity

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The most attractive new services also tend to have high process complexity. Carriers

should try to leverage core competence areas to be able to compete. M

arg

ins

Customization (process complexity)

SIM/Chipsets

Biz application

Managed services

low high

low

high

Professional services IT Integration

Modem/Module

Equipment

Connectivity

Device platform

Application platform

BI

Hardware

Connectivity

BI/Software

IT services

Current carrier/alliance offerings

Future potential – extended offerings

Sources: Detecon Research

Connectivity

Verticals / Applications

M2M Devices

Middleware Platform

Standardized M2M devices

M2M Standards

M2M Standardization

While standardization efforts will accelerate market growth, the real breakthrough could

be a clearing effect on platform and device level as seen in the mobile industry.

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Sources: Detecon, European Telecommunications Standards Institute (ETSI)

Log

istics,

Tra

nsp

ort

eH

ealth

Utilit

ies,

S

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rid

Ve

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Me

dic

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eq

uip

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Sm

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Connec-tivity

Connec-tivity

Connec-tivity

M2M Platform

M2M Platform

M2M Platform

Log

istics,

Tra

nsp

ort

eH

ealth

Utilit

ies,

S

ma

rt G

rid

M2M platform

Horizontal scaling across platform, architecture, application frameworks global

communication standards

Current – Vertical Standardization

Future – Horizontal and Vertical Standardization

hundreds

few

hundreds

few

Connectivity Connec-

tivity

Vehic

les

Medic

al

equip

ment

Sm

art

m

ete

rs

Developer community

Carriers - Way Forward

While standardization initiatives are ongoing, Carriers should not wait and continue to

orchestrate vertical and horizontal solutions through partnerships for platform building.

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Sources: Detecon Research

Standardization efforts will accomplish limited all-encompassing

set of M2M standards

Carriers may miss the boat if waiting for standards; consumer needs will

drive market forward

Carrier Best Practices

SI Strategy

Delivery Hardware

Horizontal

Partnerships

Vertical

Partnerships

Carriers should orchestrate partnerships and develop managed

services capabilities

Orchestrate vertical partnerships to develop level of expertise in key verticals and offer both packaged reseller and partner- provided application

Enhance vertical offerings through a developer community

Orchestrate partnerships across value chains provide device management and application platforms

Horizontal solutions should feature pre-integration of common business platforms (such as SAP)

Transform from utility capacity-based model to managed services model with end-to-end responsibility

Ensure global coverage through global roaming arrangements and common service levels

Develop SI expertise; provide application and solution development, integration, and deployment

Position in-house integration department as a central component of the M2M offering

Position as an end-to-end solutions provider

Offer supplementary consulting services with specialized partners on strategy, business case, application roadmap and the development of reference architectures

Implement rapid device certification process, customer support and developer module kits

Provide support services such as helpdesk, warranty management, device refresh and reporting

High ROI Use Cases

Expensive assets with high utilization and high cost of downtime provide some of the

most profitable business cases today, as the industry matures, we will see very different

use-cases.

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Sources: Detecon Research

Use case UK Rail Use case Rolls Royce

Situation In UK, train leasing contracts based on a metric of train

movement (decoupled from the number of physical trains) Opportunity for leasing company: Maximize train utilization

time Solution: Collect live data with cellular M2M from instruments on the

trains to bring trains in for maintenance on an as-needed or predictive basis, rather than on a schedule

Benefit: Improved operational efficiency Reduced number of trains needed– lower CAPEX/OPEX)

Situation: Aircraft downtime is very expensive Many maintenance issues come up on short-term basis Solution: Collect live data from the jet engine with satellite-based

technology to schedule maintenance on a predictive basis Remote real-time detection and diagnostics of engine

failures

Benefit: Improved operational efficiency Real-time engine data for instant countermeasures Improved safety through remote diagnostics

M2M in Automotive

The automotive industry can leverage M2M technologies in multiple ways, therefore we

currently see a number of large strategic initiatives in this field.

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Components & Features:

M2M SIM

Telematic Box

Provides:

In Car Wifi & OTT Services

Remote Car Diagnostics

eCall

Car (Driver)

Components & Features:

CRM with Customer M2M Integration

Stock Management M2M supported

Provides:

Remote Car Diagnostics

Marketing & Sales Support

Real Time Inventory Management

Workshop

Diagnosis Data

Car & Driver Profile

• Prevention [Trigger: Low Battery] • Planned Maintenance (Calendar Integration) • Marketing & Sales Campaigns [Trigger: Car Profile]

M2M

M2M

BI

BI

Low Battery Life

Route in GPS System

Meetings (Outlook)

Unstructured Data Structured Data

Components & Features

CRM with Customer M2M Integration

Provides:

Proposal for Car Renewal

Campaigns

Dealer

Push Message: Caution – Black ice in approx. 25 miles.

1

Sources: Detecon Research

1

Case for Big Data

2

BI

3

Proposal for Car Renewal based on Driver Profile

3

Low Battery Alert Change Battery before Travelling

3

Contact Information

DETECON, Inc. 33 New Montgomery 20th Floor San Francisco, CA 94105 U.S.A. Phone: +1 (415) 904-7919 Email: info-usa@detecon.com

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