M2M and the rise of digital lifestyles

Phil Marshall/Tolaga Research
23 Mar 2012

Digitalization and connectivity solutions are continuing to transform the way we interact and communicate, access and use information, source and experience entertainment, make purchasing decisions and conduct transactions, manage our health and homes and so on.

Digital technology and electronic communications play an increasing role in the lives of individuals - at home and at play and as consumers. At the core of this transformation are M2M solutions that are both shaping digitally oriented lifestyles and at the same time, responding to market demand for a seemingly endless array of connectivity devices, services and applications.

As the variety of M2M applications proliferate, they increasingly penetrate virtually all aspects of digital lifestyles, whether in the home or office, or on the go. Since all M2M solutions require connectivity, operators are uniquely positioned with a role in supporting solutions throughout the entire market, whether it is to deliver basic connectivity, specific customer centric solutions, or end-to-end services.

Although M2M solutions are emerging in distinct industry and market silos, they will ultimately penetrate many aspects of the digital lifestyles of consumers, whether it be in the home and office, on the go, or at the store:

- In the home and office: where a variety of solutions are being deployed including energy management, security and surveillance and healthcare applications such as ambient assisted living. Already operators are offering solutions that span energy management and security and surveillance. In the future, operators are also well positioned to support and deliver a variety of healthcare and wellbeing solutions that anticipate ageing populations and the increased use of M2M technology to support sport and other wellbeing activities.

- On the go: which encompasses a variety of M2M applications including vehicle telemetry, digital signage and healthcare applications. The digital signage solutions are displayed in public places offering a variety of advertising solutions. Healthcare and wellbeing solutions, such as those associated with cardiac care, diabetes and health and fitness have mobile network connectivity to offer wide area services while consumers are on the go.

- At the store: digital signage and wireless point-of-sale solutions enhance the shopping experience for consumers. This includes both advertising and a variety of personalized merchandizing experiences, such as virtual shopping, product recommendations and on the spot discounts that aim to optimize retail inventory levels.

The role of operators across the various M2M service categories varies depending on whether they are delivering basic connectivity services, or whether their offerings are more sophisticated in enabling customer centric capabilities, or whether they play a lead role in managing the business processes and commercial arrangements for the M2M solutions as a whole. In particular:

- Connectivity centric solutions are generally associated with M2M solutions where connectivity is only a small element of the overall offering, and other dominant ecosystems players provide the lion’s share of functionality to deliver the solution. Examples include M2M applications for chronic disease management and for the transmission and distribution network aspects of smart grid solutions.

- Customer centric solutions are normally associated with services and applications that the service provider is capable of enhancing, such as vehicle telemetry solutions where network policies can influence the delivery of targeted services. In this case it is likely that the operators would be partnering with other players that have strong industry specific brands, such as vehicle manufacturers.

- Business process centric solutions are those where operators provide end-to-end solutions under their own brand and takes a leadership role in delivering solutions into new markets. Currently operators are pursuing these types of opportunities in residential energy management and a variety of surveillance solutions.

Operators must recognize the long term role of M2M solutions in the digital lifestyle. As M2M solutions penetrate further into consumer lifestyles, operators are unique in that they can position themselves throughout the entire marketplace. Should they be successful with this positioning, they will benefit from this vantage with the ability to introduce integrated lifestyle solutions and break down the traditional silos to accelerate the long term prospects in the M2M industry.

This however does not come without its challenges, most notably the varied rate at which M2M solutions are coming to market, complex ecosystems, slim unit revenue opportunities, and regulatory and commercial constraints. To avoid these pitfalls in the M2M market, operators must:

- Take a measured approach to the M2M market that anticipates its long term prospects.

- Embrace automation and platform based solutions to enable profitability from low ARPU solutions.

- Drive standardization and standards based initiatives.

- Establish nimble internal organizational structures capable of forging partnerships amongst ecosystem players.

Phil Marshall, PhD is chief research officer of Tolaga Research, and Dianne Northfield is vice president of research. For more information visit www.tolaga.com

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