Imagine this: A patient with a history of fainting is prescribed a cardiac monitor that allows his doctor to remotely keep track of his heartbeat. In three days, the monitor detects abnormalities and the patient's doctor is immediately notified. The patient is sent to an emergency room and receives a pacemaker a day later. If he hadn't been treated, the man could have lost consciousness or even died.
Or imagine this: A couple tends to their cranberry bog on Cape Cod from the comfort of their office via a dashboard application on a remote management system. Sensors in the bog track temperatures and air, allowing the pair to know when to turn on the water pump. No more unnecessary drives or water wasted due to inaccurate weather forecasts.
Actually these aren't just futuristic scenarios for the imagination. They're real-life cases of a new technology being put to work: machine-to-machine communications. While still an emerging trend, machine-to-machine (M2M) -- and the overall Internet of Things phenomenon -- have captured the industry's attention. The two technologies shared the No. 4 spot on Gartner's 2013 Top 10 Strategic Technology Trends list. Another research firm, MarketsandMarkets, recently projected the Internet of Things and M2M communications market to grow from $44 billion in 2011 to $290 billion by 2017, representing an estimated CAGR of 30 percent from 2012 to 2017.
For solution providers, the technologies represent a way to grow their business, provided they take the right steps and forge the right partnerships.
Though the terms are often used interchangeably, Gartner, for its part, views machine-to-machine as a "component" of the broader Internet of Things. Machine-to-machine technology, according to Gartner, allows electronic devices to automatically transmit data and measurements between one another, using some combination of embedded sensors, RFID wireless communications networks, wireless LAN, generic DSL, cellular communication, or ZibBee, a wireless communication standard optimized for machine-to-machine.
The Internet of Things takes the same concept but broadens it beyond device-to-device communication. Gartner describes it as the "network of physical objects that contain embedded technology to communicate and sense or interact with their internal states or the external environment."
The smart home is a popular example for envisioning the Internet of Things. Samsung and other consumer electronics giants have gone to market with home appliances such as washing machines and ovens that users can control remotely through an application on their mobile device.
Some use cases sound even more Jetson-like: A Gainesville, Fla.-based company called ioBridge, which provides a customizable Internet of Things platform, has Internet-enabled everything from a city's storm water storage and conveyance system to the cranberry bog on Cape Cod.
Hans Scharler, co-founder of ioBridge, said he has watched the Internet of Things evolve from the world of RFID tags and object detection to the massive machine-to-machine movement sweeping the market today. As that transition took place, he said his company has garnered more and more attention, as large enterprise organizations start to look to the Internet of Things as a way to grow their businesses and to get things done more efficiently.
"The Internet of Things has hit that point where it's now, for everybody, top of mind. It's hit a new level. We have got cold calls from large companies that say, 'We want to be involved in the Internet of Things so we'd like to work with you,' " Scharler said. "They want to have it in their portfolio. It's grown to the point where people know that they need to have it."
WHAT M2M MEANS FOR THE CHANNEL
As organizations look to embrace the Internet of Things or machine-to-machine technologies, solution providers will see a number of opportunities to jump in and help with that adoption. Major vendors including Intel and IBM already are investing in machine-to-machine technologies, and the Internet of Things emerged as a major theme throughout this year's Cisco Partner Summit in Boston.
Cisco CEO John Chambers spoke to partners about the opportunities that will arise out of the Internet of Things and about just how much Cisco plans to emphasize this emerging market over the next several years.
"Three to five years out, our major move will be to become the No. 1 IT player together and we will do this [in conjunction] with partners. To do that, we believe the major transitions will be around the Internet of Things," Chambers told the more than 2,000 Cisco partners in attendance at the Partner Summit. "And we will spend a fair amount of time on how we challenge each other and look at that. But it literally, in our opinion -- and I think this number will end up being very conservative -- is a $14.4 trillion profit market for our joint customers over the next decade."
Cisco has been bullish on its Internet of Things projections, also estimating there will be a whopping 50 billion Internet-connected devices by 2020. For partners, Chambers said the rise of the Internet of Things and machine-to-machine connections will represent new opportunities to help establish these connections, and even offer remote, industry-specific services around them.
In addition to networking giants like Cisco, major service providers are also placing their bets on the Internet of Things. Verizon, for instance, is already nudging partners toward the machine-to-machine market with partner resources and programs specifically built around the technology.
Janet Schijns, vice president of medium business and channels for Verizon Enterprise Solutions, believes the channel should view the machine-to-machine movement quite simply as the next wave of computing. Solution providers who don't see it this way, or who underestimate the importance of building up an M2M practice, she said, risk becoming irrelevant.
"What [solution providers] need to do is say, 'My customers look at a computer screen or tablet screen or a smartphone screen all day long, and they use all of those devices to communicate with the data that matters to their business,' " Schijns said. "The next data that matters to their business will come from a headless device [without a screen], or a machine-to-machine device."
Schijns said the most immediate opportunity for solution providers in the M2M space is in asset tracking, one of the most common use cases for the technology today.
"There's not a single company that doesn't have an asset -- a truck, a large piece of computer equipment, a large piece of gear, a vending machine -- that they want to keep better track of," Schijns said.
Schijns gave an example of a transportation company using Verizon's Hughes telematics application to track its truck drivers, and to take drivers off the road if they are tired, seem distracted, or have been drinking. Another asset tracking example, Schijns said, is a food company using machine-to-machine applications to monitor the temperature inside its shipping compartments to make sure produce doesn't spoil while en route to a store. Customers always find that tracking assets with machine-to-machine technology saves them money, she said.
SERVICE PROVIDER PARTNERSHIPS ARE KEY
Verizon, along with other carriers such as AT&T, are emerging as major players in the machine-to-machine world, largely because cellular networks, rather than wireless or wired networks, are being used to fuel these device-to-device connections.
Dave Sallander, president of Sherlock Systems, a Buffalo Grove, Ill.-based systems builder and solution provider, said cellular networks are often preferred for M2M connections because many organizations are reluctant, for security reasons, to put certain assets or pieces of equipment on their wireless or wired networks.
Sallander cited a "smart" vending machine as an example. A vending machine may be placed in a convenience store to remotely communicate with a distribution company, letting that company know when and which items need to be restocked. It's likely, though, that the store owner may not want the vending machine connected to the store's network, through which sensitive information such as customer credit card numbers will pass.
"That convenience store might not let you tie into their network, or their Internet, because of security reasons," Sallander said. "So you could go get another Internet connection and wire to that, or just deliver a vending machine that has cellular capabilities, and all they have to do is drop it off and plug it in."
As Sherlock Systems started to embrace the M2M trend -- something Sallander said his company was able to do so quickly thanks to its DNA in the digital signage market -- it noticed its overall business model starting to change. Sallander said the increasing number of cellular contracts and data rates handled by Sherlock Systems because of clients' machine-to-machine adoption has nudged it toward a more consistent, monthly revenue model.
"[Machine-to-machine] demands a bit more sophisticated billing system for resellers," said Sallander, who noted that nearly 70 percent of all equipment shipped by Sherlock Systems today has machine-to-machine capabilities. "Before, maybe [we] billed for a project on an annual basis, but many times now we are billing on a monthly basis based on the usage and data from all these connections."
Steve Pazol, vice president and Entrepreneur in Residence at Qualcomm, and formerly the president of machine-to-machine specialist nPhase, agreed that cellular connections play a major role in enabling M2M connections.
Pazol's company nPhase -- which he founded in 2003 after a 14-year run at solution provider Professional Consulting Services -- was jointly bought by Verizon and Qualcomm, and then bought out completely by Verizon in January 2012.
According to Pazol, cellular networks and carriers such as Verizon have emerged as key players within the M2M market simply because many customers view cellular connections as being more flexible, and often more reliable, than wireless ones.
"If assets are mobile or transportable, [cellular] is the way you want to do it," Pazol said. "Even assets that aren't [mobile], the flexibility is better, and the cost has gotten to a point where the economics are just a no-brainer this point."
CONNECTING THE DOTS
Solution providers in the machine-to-machine market need to build more than partnerships with service providers. They need to construct a broad and diverse ecosystem of technology partners to succeed.
Bob Mellema, president of Digital Highway (DH) Wireless Solutions, a Battle Creek, Mich.-based solution provider and systems integrator specializing in cellular machine-to-machine, said having an in-depth understanding of cellular communications technology is key to assessing M2M applications. But to create a truly end-to-end machine-to-machine solution for clients, Mellema considers two other key technologies -- applications and hardware -- must-haves in his company's portfolio. And these technologies aren't necessarily going to come just from massive industry players such as IBM, Cisco or Intel. This is where small and midsize businesses can excel with value-added services.
"There are three legs to this stool," Mellema said. "The first leg of almost every M2M opportunity will be a modem/router device. The second leg will be our carrier partners providing a sensible and effective rate plan that will normally get activated on the device before it is shipped. The third leg is usually some type of business solution or application that is either defined previous to our engagement with the project or is determined while we are putting the configuration together. The end goal is to deliver the right solutions that the customer can plug-and-play with minimal effort in a timely manner."
DH Wireless Solutions partners with a number of machine-to-machine application providers, including Axeda, a maker of applications for fleet management, smart grids, and asset tracking, along with Track Star, which makes AVSL GPS software for tracking fleets in industries ranging from law enforcement to utilities to public works. On the hardware side, DH Wireless Solutions partners with smaller vendors specific to the M2M space, including Multi-Tech Systems, a manufacturer of external and embedded modems.
Sherlock Systems' Sallander also stressed the importance of piecing together different hardware, application and networking solutions when delivering an M2M solution to customers.
"[Machine-to-machine] certainly taken us into a business model where what we sell is part of a larger solution versus selling a computer that sits on somebody's desk," Sallander said. "It's realizing that what we do is more mission-critical. It needs to work."
In addition to being able to piece together different machine-to-machine technologies -- and establishing the partnerships that make this puzzle-piecing possible -- solution providers with expertise related to vertical markets such as government, health care or retail are particularly poised for growth in the M2M space, said Qualcomm's Pazol.
"There's a huge opportunity [in M2M] for resellers or ISVs who have vertical expertise or good coverage in a geography," Pazol said.
Verizon's Schijns agreed, noting that vertical markets are emerging as major adopters of machine-to-machine solutions.
"Verticals with assets that move and fit that mold -- like transportation, distribution and so on -- and then services verticals, so anybody who is deploying human assets or physical assets to do services, is going to be an early adopter [of machine-to-machine technology]," Schijns said.
Verizon, which already offers partner road shows specific to M2M, plans on rolling out vertical-focused machine-to-machine training for partners later this year, Schijns said.
Mellema of DH Wireless Solutions, which is a Verizon partner, agreed that vertical markets such as government and even law enforcement are showing an increased interest in machine-to-machine technologies.
Mellema said a good example of M2M technologies being used in the state and local government space are programs that utilize remote drug testing solutions that involve IP cameras that can capture in-home drug test results. This remote monitoring allows those convicted of drug- or alcohol-related crimes to stay on house arrest rather than be put in jail. The ROI is huge for this type of application, Mellema said, with one of the counties it's being used in saving between hundreds of thousands and millions of dollars a year.
"You're going to see a lot of this in government spaces," Mellema said.
Verizon's Schijns agreed.
"Open up your ears and your eyes and listen to your customers -- I believe [solution providers] would find that many of their customers are already thinking about [machine-to-machine] or need to think about it," Schijns said. "Hopefully this will drive them to join a partner program, get the education, start to attend industry events, and to get good at this before the wave hits the shore. There are going to be 10 billion connections by 2020. The time to get in is now."
PUBLISHED JUNE 10, 2013