Think tanks predict enormous boom in machine to machine comms

Ignoring the threat of Skynet and the inevitable Judgement Day it brings about, a report from the Economist Intelligence Unit (EIU) is predicting that Machine to Machine (M2M) communication is approaching a tipping point.

The EIU’s opinion is that M2M communication will offer a way to drastically change the way in which critical services are delivered over the next ten years, touching on topics from healthcare, to transport, to energy. The barriers in the way, according to the EIU, are the technical complexities involved and “regulatory hurdles” that act as a blockade for the next wave of innovation in M2M.

Although the market forecasts are varied, the EIU said, they all agree that there is an enormous opportunity for growth. The more optimistic analysts are putting the amount of connected devices as high as 50 billion by the time 2020 rolls round. This compares to 1 billion in 2010. Others are marking in potential revenues of up to $948 billion by 2020, up from $121 billion in 2010. 

Established technologies will continue to scale to smaller sizes and cut down on costs – so M2M, the EIU predicts, will be driven largely by sensors, microprocessors, and wireless technologies that, once enormously expensive, now cost relatively little. 

The EIU pointed to a Yankee Group forecast which said that markets intent on cutting costs will see some of the largest growth in M2M applications. Think: energy, automotive, healthcare, retail, and manufacturing, which are already using M2M based technology. Companies that are looking for efficiencies in, say, automatic fleet tracking, will contribute heavily to investing in M2M communications.

In the report, sponsored by SAP, the EIU said that the industry faces a number of complex challenges. Telcos will need to develop their own business models, it said, while firms must innovate in a range of sectors if the many sceptics are to be convinced.

Although a “complex ecosystem” does benefit certain providers at the moment, ultimately, this will need to take a simpler approach if widespread adoption is going to be realised sooner rather than later. This will include providers agreeing on standards, along with developing their own open protocols and building network technology which is able to survive deployment times over a long period of time. 

Citing Ovum and Vodafone, the EIU detailed the complex route to market for M2M when working with the supply chain. British Gas, for example, is rolling out smart meters, but with the deployment comes working with a long list of partner companies – from manufacturers to telco providers to data management. According to the EIU, utilities operators are lobbying energy regulators like Ofgem to create centralised systems. 

Governments will have to look at freeing up spectrum and “consider streamlining regulations” if they want to boost innovation, the EIU said. For their part, customers will need to be convinced that M2M applications are robust in terms of privacy and security, which is likely going to mean a plethora of trials from businesses to gauge customer feedback, and to learn their boundaries.