Flying home from the CTIA 2010 show in San Francisco… considering the state of the M2M market as represented at the show … three words popped to my mind:
Given the weighty nature of each of these topics, I plan to tackle each one in turn. So let’s start with the first, CHOICE.
As I walked around CTIA, I saw example after example of solutions that were being presented to the market that would lock a customer into a technology direction for the lifetime of their product. Think about this: you build your M2M solution, launch it to the market, and successfully commercialize it - only to discover that your M2M solution supplier decides to raise the prices on the modules your solution depends on. You want to switch to another supplier (to at least feign a competitive environment) but your sales rep knows that you have no real option or CHOICE – you are stuck! You cannot move to a different module because you have built your entire product on the module company’s solutions. To make a change, you must restart your M2M initiative and orphan the first generation of products in the market – OUCH!
An M2M application is comprised of many elements, which leads me to my 2nd word: CONFUSION. At the bottom layer are the chips, modules, and boxes that are used to take information from the physical asset and transmit it. The next layer up represents the carriers who move the data from the real world to the cloud. (The carriers provide a function called service management - at the service management layer modems are provisioned and billing is managed). And finally, at the top of the chain is the application layer where the final solution is developed and deployed. Where do you start? Is there a vendor that has a holistic view?
Many consumers fall into the trap of starting their M2M initiatives from the chip (module) up versus from the application down. As a consumer, I want to minimize my long-term costs and maximize my leverage. A vendor, on the other hand, wants to lock you into their solution. In M2M there is a mad rush to provide full stack solutions that eliminate your choice. (For example: Module vendors (i.e.: Sierra Wireless) would like you to build your solutions totally on their stack because your switching costs would be much, much higher should you want to take advantage of the latest offerings from a competitor such as Telit.)
At the end of the day, in order for a consumer to be able to future proof their M2M initiatives they must be free to change chips, modules, and even carriers should a better solution or lower cost option become available without disruption to the underlying M2M application. As a consumer, your most strategic investment is at the application layer. It would be a real bummer to need to re-write your entire solution just to change chip vendors because your current supplier is out of touch with current market dynamics.
In order to avoid this ‘lock-in’ trap, you must focus on a top down approach that enables 100% flexibility. Will your application and business process changes be fully insulated from hardware and airtime charges? Can your application support every carrier and hardware manufacturer - simultaneously if needed? If you think about it, even the biggest carriers are regional … The top carriers in the US are different from those in Europe or China … The right module for the US may be different in Europe … The right chip today may be different tomorrow. The only way to insulate yourself from these market dynamics is to leverage an M2M platform that takes a holistic approach and does not play in an exclusive layer of the stack (i.e. module only). This holistic – or application layer approach - is the only way to make sure that you have a vendor whose interests are aligned with yours – a vendor who wants to make sure that you find the best technical solution for your program at the lowest costs.
Yet, with all of this, my third word TRACTION was in full evidence at the show. Not only were there many hardware, software, and carriers showing their M2M wares – but one of the world’s largest companies - FORD - was proudly showing off their very own connected product – their cars. You know the M2M market is a breath away from the big time when this happens…
I often spend time in New Hampshire on family vacations. One of the things that always struck me when you travel to New Hampshire is their license plate – proudly displaying the slogan: “Live Free or Die”.
I always thought when viewing this license plate that most people probably don’t really appreciate its full meaning - unless they have lived in a situation where their freedom was compromised. My big fear coming out of the CTIA show is that many of you will give away your ability to CHOOSE your technology partners in the future – so my hope is that you develop a real understanding of this phrase!
Think before you act! FUTURE PROOF your M2M initiative and avoid giving up your most valuable long term asset – the ability to CHOOSE.