Before I begin, the very fact that M2M (which Cisco refers to as the “Internet of Everything” or IoE) is being talked about at events as prestigious and influential as the World Economic Forum brings a big smile to my face.  It shows me (and the rest of the team at Novotech) that we made a heck of a great decision in becoming focused on M2M over a decade ago! In a story by Ali Velshi from CNN (read it now), he talks about how bullish companies such as Cisco are towards the growth of the IoE. 

They reference some astounding numbers and thoughts:

  • Cisco has released a study that attaches an incredible dollar figure to where this market will go in the next 10 years.  It is estimated that the “value” (defined as how much IoE solutions can reduce on-going costs, can increase the growth of companies and how much revenue it can capture from competitors who do not embrace IoE) at an astounding $14.4 Trillion (yep, with a T, folks).
  • The theory is that a significant portion of the overall benefit will come from an ability to provide a better user experience for customers, making them more likely to increase their ARPU (average revenue per user).
  • Finally, Cisco believes that we will move from 200M users on the Internet (in 2000, which mostly consisted of PCs) to over 10B in the next 5 years.  That works out to a 24% annual growth along the time period....not too shabby.

So...how realistic are these bold predictions?

Smart homes will not be as smart as they think

I covered this one extensively in a previous blog post, but to recap, there are a lot of obstacles in the way for this to happen in order to see these numbers.  These obstacles include a lack of a common interface/protocol between different device manufacturers, the increased complexity/certifications required for many low cost device manufacturers and the lack of a common gateway to tie in all of these devices.

They were bang-on with the “how” they see companies getting “value” from M2M, just not sure “how much”

First, I have no idea how accurate the figure of $14.4T is.  As far as I know, it could be low, or it could be unbelievably high.  I do agree on two things.....there will be a lot of value created by the mass deployment of M2M/IoE solutions and I agree with their definition of what value these solutions can bring.

One great thing about M2M solutions is that there is an unusually aggressive return on investment for any company that ventures down this path.  Actually, this has played against me in trying to make some sales over the years as the ROI was TOO fast.  Companies are used to seeing payback on solutions in years.....but in the M2M field, we have seen companies recoup all of their upfront costs in weeks, so it can often sound like you are a Snake-oil salesman to some people.  Companies will see significant reductions in costs (clerical, fuel, repair, staffing), a significant uptick in growth (easier to expand into new markets, faster deployment of new products and improved margins and/or pricing). Companies that invest in M2M solutions will easily find ways to capture market share from competitors that do not by offering better levels of service and value.

The issue that I have is with the valuation.....where did this number come from?  As impressive as it sounds, the number itself has no meaning unless we can quantify it (i.e. what percentage gain for reduction in costs/increased sales was used to come up with this?) and what percentage of business do they estimate can be stolen from non-M2M deploying entities?  Without a little more detail, one truly does not know how much of this is just hype and how much of it is based in fact.

Ok....devices are connected.....but can we make money from this?

As I have written many times, there are a lot of devices that have an incredible justification to connect to the Internet.  This ranges from HVAC units to parking meters to remote pieces of rugged construction equipment.  Regardless of the cost of these units, the potential savings in operating them (and the revenue protection offered by maximizing their uptime) are astounding.  However, where is the ROI for a toaster at your home?  As a consumer, if you imagine that your new toaster has a WiFi chip inside that connected to your home gateway, would you really be in interested in paying some sort of fee for this privilege?   The real ROI would be from a company who offered servicing, but since most toasters cost less than $50, they are about as disposable as a used razor blade when they are not working.  So, the reality is that until there is a compelling ROI to do so, M2M/IoE solutions will be mostly limited to business applications, as well as some higher end consumer applications.

The exception to this rule will likely be in the Healthcare and Fitness fields.  This would include wirelessly enabling such personal health care devices as mobile blood pressure machines and having their results sent back to a hosted facility, so that they can be accessed by any medical professional who may need this information.  But again....the ROI here is not so much the device itself, but rather how the data that comes from it can be used to reduce healthcare costs and improve health (which also reduces costs in the long run).  A toaster or microwave will not possess any data that offers any similar level of return.....unless people really need to know when their crumb tray is full.

The bottom line is...

As I have said many times....I love seeing M2M (even under the Cisco name IoE) receive mass-public recognition, and I applaud the efforts of those at the World Economic Forum for talking about the field that I have called my own for this long.

As always, let Novotech know how we can help with your M2M needs, such as antenna 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).