Subject: [NEXTEL-1] Beware the machine-to-machine hype

From: NEXTEL-1
Date: Tue, 06 Jul 2004 21:43:51 -0400

Wireless/Mobile
Totally Unplugged

Beware the machine-to-machine hype
By Ira Brodsky
Network World

07/05/04

Industry analysts tout the number of things destined to be networked:
cars, utility meters, vending machines and other devices. Estimates
range from tens of billions to more than 1 trillion potential
machine-to-
machine nodes. Research firm E-principles even predicts the number
of things connected to mobile phone networks will exceed the number
of people connected to those networks by 2010.

 (See
http://www.m2mfocus.com/cellular_m2m_to_overtake_cellphone_subscribers.htm)

Did these folks sleep through the Internet bubble?

There are many reasons to be optimistic about machine-to-machine market
growth. More and more products include built-in intelligence. Mobile
phone
services are becoming ubiquitous, making it increasingly possible to
connect remote and/or mobile sensors, switches, machines and displays to
networks. Low-cost radio modems, wireless service rate plans scaled to
bandwidth consumption and the emergence of powerful Internet-based tools
also are driving growth.

But there are significant obstacles, too. The current wireless
machine-to-machine market is quite modest: Only about 6 million radio
modems were shipped for use in machine-to-machine applications during
2003.
Contrast this to Nokia's estimate that roughly 600 million mobile phones
will be sold this year.

The wireless machine-to-machine market is highly fragmented. The
applications - ranging from monitoring heart patients to tracking truck
trailers - are much too diverse for generic products. Most products
still
require a great deal of customization. Growth varies widely from one
market
to the next.

For the number of machine-to-machine devices on mobile phone networks to
surpass the number of handsets on mobile phone networks by 2010, the
number
of wireless machine-to-machine devices sold per year must exceed the
number
of handsets sold per year. But even assuming wireless machine-to-machine
device sales grow geometrically while handset sales remain flat, the
number
of wireless machine-to-machine devices sold annually won't even begin to
exceed the number of handsets sold annually until 2010.

The problem with many forecasts is they place too much emphasis on the
total available market and not enough on poorly understood growth
inhibitors. It's easy to assume people will spend an extra $5 per month
to
enjoy theoretical benefits, but much harder to get them to pull the
money
out of their wallets.

I have no doubt wireless machine-to-machine will succeed. But the
machine-to-machine market is still in its infancy. Based on experience
in
emerging technology markets, we can expect machine-to-machine to grow
nicely in select vertical segments, but fail to overcome inertia in
others.

Eventually, the industry will develop machine-to-machine solutions that
satisfy the needs of broad market segments. But counting 1 trillion
things
that could be connected to networks, and predicting that today's tiny
wireless machine-to-machine market will be tomorrow's behemoth, won't
help
us get there.

Brodsky is president of Datacomm Research, a Chesterfield, Mo.,
consultancy. Reach him at [email-masked]

http://www.nwfusion.com/columnists/2004/070504brodsky.html?fsrc=rss-columns

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