Posts Tagged 'M2M'

Where will the Internet go next?

I once read a book called Futurize your Enterprise back at the turn of the decade. At the time, it was seen as very ‘far out’ in it’s thinking, as it demonstrated the way the Internet may be used in future times. For example it displayed a future where everyone had their own domain and their own website. This site would not only display personal contact details for the user, but would also display their vital statistics, medical history, possessions and geneological history. The thinking behind this was that everyone was connected, and if for example, I had an accident when holidaying in Alaska, a local GP would be able to bring up my medical history at the touch of a button. Bearing in mind this was published just after the dot-com crisis, this seemed fanciful. However fast forward a number of years to a time where we are a lot more aware and protective of our privacy and you can see the issues that this concept had. Saying that, one of the other main concepts from the book was the fact that machines would use the internet more than humans, to commmunicate with each other. An example being that a fridge would order milk from the local supermarket when it sensed you were running out.

With the advent of mobile broadband and in particular LTE, this is not very far off. Machine to Machine (or M2M to add yet another acronym into the mix) communication is a technology that many see as the next logical step in the evolution of the Internet. And personally, I feel it offers many exciting prospects for entrepreneurs and integrators alike for the future. Carl-Henric Svanberg, the ex Ericsson Chief made the prediction that within the next 5-10 years, there could be as many as 50 billion sim cards embedded into ‘intelligent devices’. And where he says ‘intelligent devices’, he means items as mundane as doors and fridges. Others such as Juniper research predict that by 2014, there will be almost 412million M2M mobile subscriptions. Of course there are already a number of applications that connect to the internet. Fridges come with Ethernet ports allowing you to browse the Internet when choosing what flavour juice to have in the morning. However the main distinctive factor will be in the take-up of a universal language for machines to adopt when communicating with each other.

The fascination of this is the business model behind it, and the challenges it presents to network operators. Firstly for service providers, it offers a compelling way to cover the decreasing revnue from voice services, as these are increasinlgy delivered by IP. Secondly it means that service providers need not concentrate on selling services and bundles to ‘humans’ in a bid to increase ARPU. Whereas for many, there has come a natural saturation point as to the affiliated services you can bundle with connectivity, as to appeal to a mass market, you can only charge so much for a bundled package. Personally I don’t think M2M will change this markedly. Instead it will focus on areas within businesses that can be enhanced with remote support, as the potential number of devices that can be woven together is endless. This fits in nicely as companies look to cut costs by deploying a remote working environment as opposed to having physical branches.

Secondly the affect on network operators will be huge. One only needs to look at the issues O2 faced with the mass take-up of the IPhone. Personally although LTE will help the end user, it will not help the operators, as they will be tasked with delivering more bandwidth (and more expectation) to their subscriber base. One possible method to help this could be in mast sharing. Vodafone and O2 have done this in the past. Tom Alexander, CEO of Orange mentioned this was also a driver for the UK merger between Orange and T-Mobile. However a more compelling method would be the use of fixed line DSL, Ethernet and Fibre to backhaul mobile bandwidth as opposed to the legacy routes taken currently. In this respect, O2 owning thier own network (through BE) puts them in the enviable position of potentially being closest to delivering this ideal.

The future of the internet is a subject many more learned people than myself have spent time debating. A common theme is that we will move away from having a standard interface to the internet (being the browser) and instead will be able to interact through many different appliances. Also there will be a marked rise in traffic between machines. As always though, the main challenges to overcome will be how to facilitate this. Hopefully the launch of the Cisco’s CSR-3 will help to rectify that in the future.

How businesses evolve

It’s useful to understand how over the recent years, big businesses have reinvented themselves. I was reading an article recently on the departing Ericsson CEO Carl-Henric Svanberg, which gave an insightful account of the issues facing Ericsson after the dot-com bubble had burst. His model solely focused around consolidation, whilst others in their market either spread themselves extremely thin in looking for new markets to expand into (see Marconi) or acquired rivals to try and quickly expand (see Alcatel-Lucent). What Carl-Henric Svanberg did with Ericsson was to really consolidate, concentrate on their core business of building networks and inevitably cut costs. This worked, and he now leaves Ericsson today in the healthy position of having 40% of all mobile calls made on their network. I think a lot of companies get excited by the profits and market share available to them when they look outside of their domain. 2 large enterprises who are having mixed results are Google and Cisco. Although Google is still king of search, it’s increasingly more lucrative and more prestigious projects such as Google Books are starting to sap resources from it’s search empire. This has had the effect on competitors like Bing taking more market share.

It was also interesting to see how emerging technologies helped to spur growth in the ailing company. Although a large proportion of their spending is still attributed to legacy networks, opportunities increasingly present themselves to expand into so-called next generation networks. 3G networks are fast becoming their bread and butter, with customers such as Three (3) and T-Mobile in the UK having Ericsson infrastructure to power their data networks. Moving forward, with the advance of M2M, Carl-Henric Svanberg thinks that there is the potential for roughly   sim cards to be embedded into devices as seemingly mundane as fridges, microwaves and washing machines. This is where he envisages Ericsson’s next market shift. There’s no doubting the strength of the mobile data market. Whether it hits a natural saturation period or whether advance such as LTE will help it break through it’s glass ceiling are anyone’s guess. However one thing is certain. Due to the requirement for people to be connected on the move, this is definitely a market that will be key for a long time.


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