The M2M (Machine-to-Machine) Revolution

By : Jim Pinto,
San Diego, CA.

The convergence of smart devices with the Internet is creating a new inflection point. Today, a whole new environment of M2M is emerging, focused on the issues of how machines communicate, how they are managed, how the data and information within them are managed. Companies that fail to exploit this next wave of the digital revolution will simply obsolete themselves.

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Check out, November 2004

The convergence of smart devices with the Internet is creating a new inflection point. Huge opportunities are developing from the convergence of device networking, wireless sensors, machine-to-machine (M2M) communication, and the Internet. Companies that fail to exploit this next wave of the digital revolution will simply obsolete themselves.

Within the next few years, literally billions of Internet-enabled microprocessors will provide digital intelligence and connectivity for almost every commercial and industrial product and appliance, extending the Internet into most aspects of our lives.

Imagine the appliances you use being Internet-enabled – your house, your washing machine, your refrigerator, your coffee-pot – all these already have the potential to be networked. Your cell phone too is Internet enabled, and you could use it to check whether your garage door is closed, or your coffee-pot is still on.

Skeptics think that this kind of "gadgetry" has few practical applications for consumers (do I really need to talk to my washing-machine?) But, it's not the consumers that initially have the most to gain from device networking — it's the businesses that support them. The manufacturer of your washing machine should be interested in its operating and usage patterns. Perhaps when it breaks down it will let them know, so that they can call pro-actively to let you know that they can provide immediate service. This may sound only slightly interesting for consumers, but for business and industrial automation applications it yields several major advantages.

Manufacturers can use their connected products to develop customer service relationships that can ultimately recreate the basis of customer management and generate new revenue streams in an information economy. They can use device-networking technology to reduce (for their customers) the hassles of product ownership, while at the same time helping their own business to reduce costs and pursue new revenue growth opportunities. Equipment and appliance networking is not only possible, it becomes essential.

Internet-connected PCs point the way

Consider what happens today with millions of on-line home and office personal computers. The ever-present dangers of newly developing species of computer viruses and spam make downloading of regular anti-virus updates a necessity – often done daily, sometimes several times per day. And the revenue model for successful companies like McAffe or Symantec is network centric.

Hundreds of millions of connected computers using Windows automatically report errors when they occur. The discovery of continually occurring new software bugs and security holes forces Microsoft to provide regular free updates via downloadable “service packs”. Doing this via physical distribution of software upgrades via conventional media is unthinkable.

What has already become commonplace with connected computers will soon emerge as an important service extension for most industrial (and high-end consumer) products and equipment. In the business and industrial environment, soon everything will be networked; not just as a cute “feature”, but as an important part of how products and equipment should be used.

The pervasive Internet

Today, most Internet usage is still human oriented – information that allows people and businesses to interact with each other. The big initial growth came with business-to-consumer (B2C) and was followed by business-to-business (B2B) interactions. With a human population of only about 6 billion, this type of Internet connection is reaching saturation.

The Internet need not be simply for connection to people – it is also an ideal way to achieve automated device connectivity on a global scale. Genuine e-commerce is built upon true, across-the-board digital automation, accomplished by enabling everyday appliances and equipment to communicate with and control each other.

The next major inflection point of Internet usage is machine-to-machine (M2M) communications. This will far surpass human communications in scope, value, and sheer numbers. Within the next few years, more machines will be connected via the Internet than humans. Eventually reaching tens of billions of connections, machines will communicate with each other, as well as with data mining and processing systems that will automate the communication and interpretation of the mass of data they gather. This will add significant value for businesses and consumers.

The term “Pervasive Internet” refers to the convergence of machine-to-machine communications, Internet connectivity, enterprise-level data-management applications, and Web-based smart services. The phenomenon arises from the connection of smart devices to the Internet, enabling fully automated global communication, data-collection and control.

Today, a whole new environment of M2M is emerging, focused on the issues of how machines communicate, how they are managed, how the data and information within them are managed, and perhaps most importantly, how the world (humans, businesses and society) can deal with them.

The M2M revolution

M2M does not arrive in the world as a distinct, perceivable product operating in a distinct, controlled environment. You don't buy it the way you buy a PC running a specific desktop OS. It arrives in a million different ways, mostly designed not to be directly perceivable by people.

Networked "embedded intelligence" is what pervasive computing and M2M are all about. The information coming from a device can be just as valuable, if not more valuable, than the device itself – for example: current location, part number, where it was purchased, when it was installed and by whom, critical specifications, diagnostics, availability of spares, replacement alternatives, repair instructions, usage patterns, and more. All this invisible machine activity makes the information about assets, costs, and liabilities vastly more visible to managers and to the decision-making process.

Glen Allmendinger of Harbor Research has a penchant for verbal images that make good sense:

    "M2M will bend the traditional linear value chain into a feedback loop through which the heartbeats of manufactured objects will continually flow back through complex business alliances that create, distribute, and service those objects."
M2M will unleash a wave of productivity and efficiencies previously unseen. When manufactured objects are continually sending field intelligence back, companies that utilize this information will be able to shed costs, explore new revenue opportunities, and solve customer problems as never before.

M2M – the OEM advantage

Automatic M2M communications on OEM equipment can provide a significant benefit to both supplier and end-user. It can lead to dramatic cost reductions and drive enhanced customer service initiatives, facilitating new and significant revenue models.

In the past, to optimize performance, or to prevent downtime, or degradation of performance, OEMs offered end-users repair, maintenance or service agreements. The ability to harvest detailed and specific information from a company’s own equipment, while it is in operation in the customer’s application and environments, brings a whole new gamut of revenue generating services and possibilities.

With effective M2M, equipment can provide information about use (or misuse) trends or single events. Machines can be networked to each other to develop statistics on operating performance, predictive diagnostics, downtime analysis and a host of related monitoring and control information. Actionable decisions can be made quickly, with clear, cost-saving advantages.

In this information-driven age, the next wave of OEM business strategy is to take advantage of equipment operating information that most end-users don’t have the knowledge or ability to collect. It puts the OEMs knowledge of the equipment into direct service of the end-user, collecting operating statistics that both can utilize.

As applications become more sophisticated, OEMs can offer their end users increasingly complex interactions with their traditionally dumb equipment assets. In many cases, the human intermediaries can be removed from the equation. Given defined and controlled parameters, equipment assets themselves can make the key decisions, providing optimum cost-effectiveness for OEM and end-user alike.

The M2M revolution will transform the way that OEM equipment is deployed. Most often, the valuable, detailed operating information is already there, sitting inside the equipment, waiting to be collected and used. Through the use of M2M, end-users and OEMs can eliminate the barriers of distance, time, and location.

New software and services opportunities

Today’s ecommerce is not much more than simple mechanisms that make certain B2C and B2B transactions are easier, somewhat more convenient. This is only a first step toward global business automation.

The goal is to network devices that are self-sensing, self-controlling, and self-optimizing automatically, without human intervention. This will represent totally new applications for information technology and telecom, which will totally subsume previous operations and interactions.

Within the next decade, M2M will drive totally new opportunities for companies and services involved in device, equipment and machine networking. Large opportunities will emerge for software companies that provide information tools to manage the vast, ongoing streams of device-generated data, and to extract meaningful business intelligence from them.

The availability of real-time, networked equipment data brings totally new meaning to the term “disintermediation”. When a company makes networked product that send real-time information, the company owns access to the product, and a primary link to the customer. Now, no third party can sell profitable services to that customer without access to the historical, diagnostic or status data coming from the networked product.

A new rule will come into force: The one with the most networked equipment wins.

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Copyright 2003 : Jim Pinto, San Diego, CA, USA