Is M2M Dead?

-May 06, 2013

At a recent Telecom Council Mobile Forum M2M Workshop, Allen Proithis, Executive Vice President, InterDigital Solutions, presented a keynote address. The Topic: M2M is DEAD—Long Live IoT!  As this is an important topic, here is a reprint of the majority of the speech, which begins with a eulogy to M2M, and continues here:


Thank you for your indulgence during my eulogy for M2M. It may appear strange to proclaim the death of an industry that is just starting to realize its potential. My point is that when you fully define the opportunity before us, the real and complete opportunity is the Internet of Things.

M2M, as defined by a SIM-based world, is certainly a large opportunity. But it dwarfs in comparison to what is the Internet of Things. Some call it the Internet of everything, but by any name it is the next massive industry opportunity in the years to come.  It represents the opportunity of connected everything, everywhere , in every way, and not just limited to cellular connectivity. And, of course, those billions of connections open the door to new opportunities, new business models, new applications, new reasons to want connectivity, just like the current generation of smartphones and the apps they run gave meaning to the connectivity we used to have simply to connect us via voice calls.

2016 M2M revenues are estimated to be approximately $23 Billion and will continue to grow at around 30% per year. $23 Billion is certainly a big number, but it is but a rounding error when looking at the Internet of Things. So just how big of an opportunity are we looking at? Let me share a few numbers. Think 50 Billion devices by 2020. It is hard to comprehend how large that is. Let me help to put this into perspective. If you activated a new IoT device every second, you would reach 50 billion in close to 1600 years. I don’t know about you, but I would not care to wait that long for the market to take off. We will address this more in a minute.

So where are we getting this idea of tens of billions of devices? It comes from a couple of companies you may have heard of that are in a great position to know more than most – Ericsson and Cisco.  Now some may suggest that since some vendors have much to gain, that you need to take these figures with a grain of salt. It’s like the old adage – never ask your barber if you need a haircut. But it does not necessarily mean that his answer is wrong.  In fact, other data suggests that this estimate could be modest.

A recent paper by the World Bank and General Electric estimate what they call the Industrial Internet is a $32 Trillion opportunity. That’s right, trillion with a “T.” That’s a lot of money, even to politicians. To quote the report, this opportunity is created by the convergence of the global industrial system with the power of advanced computing, analytics, low cost sensors and connectivity. It is the deeper meshing of the digital world with the world of machines.

A fascinating concept in this paper is the concept of 1%.  Through sensors or IoT being integrated into aviation, power, healthcare and transportation, industry can experience savings of $200Billion with just a 1% improvement. As Peter Drucker once said, what gets measured gets managed. Since the Internet of Things allows us to measure everything, it now allows us to manage everything – almost literally. Or for those things to manage themselves.

It can still be hard to wrap one’s mind around such a fundamental change in business landscape. But the technology industry has a long history of provoking those shifts. Let me turn back the clock all the way to 1982 The first CD player was sold in Japan, ET and Chariots of Fire was in theaters, and Michal Jackson’s Thriller album was released. It was also the time when AT&T ruled the earth, or at least the US market.

If you remember, AT&T voluntarily gave away its entire wireless spectrum to the baby Bells. Incredible but true. At the time there were about 75,000 subscribers worldwide, and they did this because their strategists calculated that best case, by the year 2000 there would only be one million US cellular subscribers.  The actual number was 100,000,000, and ten years later it was 300,000,000 connections. In other words, the brightest, most knowledgeable telecom people in the world underestimated the market by a factor of 100.  It is absolutely within the realm of the possible that we’re doing the same thing again.

So we can feel good about the IoT opportunity is real, but how do we achieve this vision without waiting 1600 years?

It comes down to three things – standards, platforms & intellectual property. Let’s take them one at time.

In a brand new survey from IHS, released here today at this conference, almost 90% of respondents listed standards, architecture and interoperability as the number one challenge to mass adoption.  How do we activate, let alone integrate billions of devices without standards? Would we even have a mobile industry today if devices did not have a standard way to connect to the network? In 2012 global mobile phone sales were 1.6 billion units. Imagine 30 times that number of IoT devices without standards. 

The other reason standards are essential to fuel the growth we’re expecting is that connecting so many devices is not going to be about the devices themselves, but about the ease of connecting, activating and integrating them, and then building applications that can make use of that mountain of data and the related synergies. Interoperability and the ability to engage the broader value chain, rather than a few specialized providers, are the keys to scalability. And those market dynamics are based on standards.


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