Vodafone Predicts SMB Growth For M2M

Steve McCaskill is editor of TechWeekEurope and ChannelBiz. He joined as a reporter in 2011 and covers all areas of IT, with a particular interest in telecommunications, mobile and networking, along with sports technology.

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Vodafone believes more businesses will begin to use M2M for external processes in 2014, not just internal

The rate of adoption of Machine-to-Machine (M2M) technology by SMBs is set to reach the same levels as large corporations by 2016, according to Vodafone, which predicts the falling cost of components, the spread of 4G and the externalisation of the technology will make it more attractive.

The British-based operator made the predictions in its second annual M2M Adoption Barometer, which asked 600 executives across all industries about their views on M2M, the adoption of which has increased by more than 80 percent in the past year.

Currently, 29 percent of large companies are adopting M2M compared to just 18 percent of smaller businesses. By 2016, Vodafone predicts these rates will be 58 percent and 54 percent respectively, as SMBs seek to innovate, automate and improve their productivity.

Industry adoption rates

Vodafone 4G TaxiThe automotive industry is the most mature of all M2M industries, with demand for services such as infotainment and remote maintenance fuelling adoption rates of 28 percent, while regulated sectors like energy and utilities are also growing thanks to smart meter regulations.

Healthcare was also cited as a major area of growth, with Erik Brenneis, director of M2M at Vodafone, stating the company’s belief that 57 percent of healthcare and life science firms will have adopted M2M by 2016 not only for use in monitoring health conditions but also for patient support.

“I think healthcare has had its breakthrough,” he says. But of all industries, consumer electronics (CE) is the area of biggest growth, thanks to the arrival of devices such as Smart TVs and games consoles.

Adoption rates in CE have now reached 29 percent but Brenneis believes expectations are “too optimistic,” as there isn’t a clear business model for many products, especially white goods like washing machines. He says the Amazon Kindle is a good example of a single use, embedded SIM device, while he also cited a possible pay-per-use model being debated by printer manufacturers.

Externalisation of M2M

One of the main drivers of growth Vodafone expects to see is the transition from M2M being used for internal projects to external projects. According to Phil Skipper, head of B2B business development, initial deployments were focussed on making processes more efficient, but as businesses now have the infrastructure in place, they are becoming more comfortable with using M2M to generate more revenue.

An example of this would be how the automotive industry was initially required to include certain M2M features for security and safety, but is now looking to use this equipment to collect data for services that benefit drivers and dealers.

“M2M is really coming of age now as businesses are confident of taking it outside,” says Skipper, who adds that businesses need to ask themselves: “How can you do more with the connectivity and how do you get people to recognise the value?”

Predictions for 2014

Erik Brenneis VodafoneRetail and transport are other areas where Vodafone expects externalisation to occur, but not manufacturing, where most processes are internal. The need to do something with the data that is being collected rather than just storing it is one of Vodafone’s predictions for the coming year as businesses being to make the most of the systems they have built.

The operator believes that manufacturing and automotive will continue to outperform existing expectations as the momentum is already there.

“It’s not a coincidence we’ve decided to make our big investment in automotive,” says Brenneis, referring to Vodafone’s pending takeover of connected car technology firm Cobra.

Brenneis adds that the advent of 4G will improve the return on investment for businesses as it will remove the need to build expensive fixed line and wireless networks. He claims the most expensive part of a CCTV camera is the cabling and installation.

Security issues

Finally, Vodafone believes security will become even more important and suggests that certain standards will be established within the next 12 months. Vodafone says its own network is secure as no one has ever cracked its encryption despite tens of thousands of attempts each month.

“The main reason to have a physical SIM card is the physical security it offers,” says Brenneis. “It is very dangerous to allow someone to change this over the air.”

However he admits there will remain some barriers to adoption and is adamant that “complete net neutrality is not the right thing” when it comes to M2M. He explains that if a sensor detects a car accident, this message must be prioritised to ensure that appropriate action is taken.

“We are requesting regulators to make the rules that allow us to deliver the services in a way that is needed,” he says.

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