An overview of how analysts and carriers segment M2M and potential new business models

1. Exploring Verticals, Market Sizes and Business Models
Presented by:
Victoria Romero-Gomez, Product Marketing Manager
Recursion Software
vgomez@recursionsw.com
www.linkedin.com/in/victoriaromerogomez
@vickyrgomez @recursionsw
The Pervasive M2M Market OpportunityThe Pervasive M2M Market Opportunity

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Pictorial of the M2M Verticals
Source:

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How Carriers Segment M2M
ATMPoint‐of‐sale/ATMFinancial Services
Communicating appliances
InfotainmentVideo game handhelds
Photo frames
Cameras
Connected Consumer ElectronicsConnected TVs
Security
Smart HomeAll Consumer devices (aka Emerging Devices)Home automation
Dynamic Digital SignageTelematics
Emerging OpportunitiesRemote monitoring
Emergency ServicesWireless routingIndustrial
Automation and controlAutomation and control
VendingVending
SecuritySecurity
Public TransportFleet managementTransportation
Utility MeteringSmart grids; Automated meter readingUtilities
TelemedicineHealthcare
Telematics and Fleet ManagementAsset trackingAsset Tracking
SprintAT&TVerizon (joint venture nPhase)
ENTERPRISECONSUMER
Indicates similar segment
Color code=
Source: Carrier websites

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M2M Venue Market Sizes

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M2M Market Size by Device Class
M2M device shipments
could reach 430 million
units by 2013

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M2M Challenges &
Opportunities/New Revenue
 Wireless Data Revenue: Up 22% Y/Y on track so far to meet estimate of $54B 2010.
Data usage growth rate (CAGR) of over 25% per year through 2014.
 “Connected device” (branded M2M) for AT&T and Verizon outpaced postpaid subs in
Q2 2010. Operators are fiercely competing in prepaid, enterprise, connected devices,
and M2M segments. Connected devices are now 7% of AT&T’s subscription base.
 1H 2010, the average US consumer was consuming ~230 MB/mo up 50% in 6 months,
indicative of a pending wireless data tsunami.
 Wireless connectivity for M2M devices is the first step. Software and content that
“follows me” whatever I go on whatever device, using whatever telco or wifi network
available is the next step.
 Consumer apps dominate the app stores, while enterprise deployments are not easily
tracked or are custom solutions. App store prices falling and/or free apps becoming
norm.
Source: Chetan Sharma Consulting

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 Anywhere content
access
 More app selection
 Better performance
 Avoid data-caps
Time for a New Pervasive M2M App
Value Chain
 Extend app to more
devices= differentiation
 Offer new revenue
opportunities
 Lower development
cost
 Reduce exclusivity of
apps for differentiation
 Easier platform
management
 Supply more, unique
on-deck apps
User/Subscriber
Communications
 Reduce traffic across
entire network
 Reduce app exclusivity
 Substitute data-cap with
new service revenue
Network
Hardware/
Software
OEM
Be like Apple: Profit from every link in the app value chain
Developers/ Enterprise
Potential Revenue
Potential Revenue
Infrastructure/Systems
Operator
Potential Revenue

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Win Developer Hearts & Minds
Solve problems with current Developer‐OEM app store model:
 Connectivity and Access: Community and social tools, like instant messaging (IM) and project sharing,
allowing developers to interact, would transform a transactional and static environment into a sticky,
dynamic, growing community. The developer‐minded application store must be a hub of collaborative
testing and development, rather than a mere distribution channel.
 Personalization: Using network enablers (location, presence), customer information (purchase history,
usage history, etc.), user identity support, and behavior analytics. This will both driver better targeted
content and marketing opportunities for developers (e.g. demographic or behavioral marketing)
 Purchase Convenience: Through pre‐existing billing and payment enablement, buyer authentication and
payment authorization (namely, access to operator billing systems). The ability to complete a sale with
the fewest number of clicks cannot be overstated.
 Distribution and Reach: Access to a large mobile customer base across multiple devices. On‐portal
storefront placement, catalog control, secure delivery and digital content locker support.
 Multi‐platform Support: Remove developers need to make platform decisions by cross‐platform support.
 Operational Support: Extending robust operational systems and processes as services to the developer
community, e.g., CRM‐as‐a‐service, testing services, etc.
This is truly an evolution from app store to true ecosystem!

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Smart‐Client (Pervasive)
 P2P Edge Platforms (ex. Voyager)
What is the Best App
Architecture?
Thin Client‐Server (Centralized) vs.
 Mobile Web (HTML, JavaScript)
 Mobile Enterprise solutions (ex. Sybase,
WebSphere)
Client enters data,
each click sends
data to server
Server hosts all
services and content,
acting as a gateway. It
receives requests and
data, performs filtering
or transactions and
sends output back to
client(s) if shared
Each client has server
intelligence and capabilities.
Client displayed data.
Process repeats for each
click or transaction.
High bandwidth use
Bidirectional
communication
Intelligent client and
server processes
autonomously until a
request to share is
made.
Clients can be
faceless, such as
sensors, and use
any language or OS
Content or messaging is
sent P2P/Group
(guaranteed messaging)
Description: This model uses mature technologies, such as
HTML and JavaScript or an enterprise platform
pull only
Bandwidth
Efficiency
Description: This model uses mature technologies in a new
way, by creating intelligent clients that act as servers,
hosting and sharing data remotely on the device
Every click= data
Process/host
data at edge

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The Pervasive Smart‐Client
Value Proposition
Improved Infrastructure
 Offloads processing to the device, resulting
in faster, more efficient networks (30x
faster than web services)
 Preserves LTE or 4G capacity for M2M
explosion and data‐intensive content like
video
 Offers a horizontal platform and
architecture for all M2M initiatives and
increases cross‐selling opportunities
 Shifts infrastructure cap ex towards new
revenue generating services
 Embedded/Mobile‐ready
New Business Models
 Introduces new business models, lessens price
pressure, dependency on data‐caps, and may
provide alternative strategy around net‐
neutrality
 Deliver more targeted advertising by capturing
customer behavior end‐to‐end

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The Pervasive Smart‐Client Value
Proposition
Cost/Revenue
 Does not require new hardware or OS, but
has negligible changes to the existing
mobile app dev process (code to API)
 Less competition for developers, better
share of developer revenue split
User Experience
 Device agnostic: eBooks, TV, PC,
embedded, sensors, etc., and “follow‐me”
content capability
 Returns control from hardware to the
service providers, perceived value by
subscribers
 Adds stickiness to subscriber base through
content access on more devices, shifting
perceived customer value and revenue
away from the app developer.
 Conserves bandwidth for better user
experience
 Avoids dreaded data‐caps opens up new
service revenue

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Potential New Business Models
Developer‐Centric
 Sell product to entire developer community
 Alternatively, open product and launch own app store
based on M2M devices, not platform
 Build Enterprise solutions though integration partners
Service/Infrastructure‐Centric
(Traditional):
 Bundle platform to networks as a package with
infrastructure solution
 Offers new subscription services (per person, per
device), while lessens reliance on data caps
 Offer professional services or partner with
integrators for enterprise apps
Operator‐Centric:
 White label Network app stores or subscription to
content “locker”
 Offer developer revenue split and access to more
devices
 Create incentives for developers to build data
efficient apps (reduces infrastructure cost)
Customer‐Centric
 Apps shared among peers, viral marketing,
crowd‐sourced content
 Completely ad‐based platform or Person‐to‐
Person virtual currency (influencers)
 Get Jar meets Social Network
Multiple revenue streams from
multiple sources

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Summary
 Pervasive platform is a service delivery platform that
adds value and collects revenue throughout entire
mobile ecosystem
 There are sufficient control/standards to establish an
any‐device content distribution network
 Incentivizes developers to conserve bandwidth
 Spans consumer market into lucrative enterprise
applications and sensor networks
 Legacy interop to tie into multiple systems and
hardware