In the book, "Blue Ocean Strategy", the authors highlighted the success story of the bus company, NABI. NABI used a unique method of selling what was a higher initial cost bus to municipalities, one that allowed them to become very successful. NABI's approach was to produce a bus that would be more expensive as an initial purchase, but due to its unique use of certain materials (namely lower cost fibre-glass), they were able to offer their customers a much lower cost of ownership over the life of a bus (which is typically up to 12 years). By using lighter weight materials (which were also rust-proof), they were able to reduce the cost of maintaining the bus, as well as reducing the cost of fuel. When municipalities factored in the higher initial purchase price with the much lower cost of on-going usage, they were able to easily see that it was less expensive to use NABI's buses, despite their overall higher upfront costs.
The same is often true in the world of cellular modems. Many of the larger players in this space are in fact some of the most expensive ones as well. The reason for their popularity is that for the most part, many of them offer a much lower cost of ownership.
Here's business case rationale:
Longer lasting modems = less replacement
Some of the more rugged modems in the M2M space can last up to 10 years (or more) with little or no maintenance work involved. This compares to many lower cost modems that tend to have an in-field life of 3 years or less. It is not unusual to see lower cost modems replaced as often as 3X in the same application before a more rugged box has to be replaced. Factoring this in, it often justifies the purchase of a higher price modem on projects where there is a long-life asset to be connected to, such as power meter that is expected to be in the field for 15 years or more.
Downtime costs money
What is the cost to your business when you lose connectivity to a key device? How does it affect your revenue, your worker productivity, your ability to process transactions and how does it hurt your customer service and your brand? Depending on the application, the cost to your business can be hundreds/thousands of dollars in as little as an hour (in some extreme cases, such as oil wells, it is many times this). As well, in many situations where modems are unable to connect to the cellular network, the fix can be as simple as a power-cycle of the modem. With many of the lower cost modems (although, they are getting better at this every day), there is little that the modem can do to either initiate the reboot to fix the issue or allow this to be done over the air. In many of the premium modems, there are ways to allow the modems to monitor the health of the connection (if the modem detects that there is an issue in connection to the cellular network, it will automatically reboot first the cellular module and then the entire modem to regain connection) and there are usually ways to use SMS messaging to restart the modem if that fails.
Modems CAN be expensive to maintain
In many industries, there may be certain security requirements that require frequent updates to the firmware of the modem (such as in the medical and Payment industries). As well, many devices have frequent firmware updates to allow the users to gain access to new features on the product. Regardless of the reason, most lower cost modems do not have an easy way to update all of the device's firmware or settings at the same time, and force the administrator to update one by one. When you are working with hundreds of modems, this may not be an option.
Most of the higher-grade modems offer an Enterprise grade method of doing "mass updates" for firmware upgrades and setting changes. So, you can update the server address on 10,000 units with a few clicks of a button on the management server.
In some business cases, it may make sense to consider a lower cost modem. This includes deployments where the connectivity may not be as vital, and there is local staff to contact in the event that the modem does not respond / becomes disconnected from the network. There may also be an extreme sensitivity to upfront capital costs on particular projects (although, there are always OPEX solutions.....just ask us!) However, for many customers, when you factor in the cost of replacing hardware more frequently, the on-going cost of maintenance (especially on larger deployments) and the incredible cost of downtime to your business, the business case towards spending a little more upfront for a premium modem becomes easier to justify.
As always, let Novotech know how we can help with your M2M needs, such as modem selection. You can visit our web page @ www.novotech.com. As well, feel free to reach out to me directly ....larry(@)novotech.com. You can also follow us on Twitter (@NovotechM2M) and you can follow me personally as well (@LBNovotechM2M).