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Internet of Things Requires a Rethink of Business Models

While there is undoubtedly a lot of interest in machine-to-machine communication (M2M) and the Internet of Things (IoT), what we see is only what is happening on the surface. Most of the M2M activities are taking place unnoticed. For example, most newly produced electronic devices are now all M2M enabled.

Over 100 million smart meters have already been deployed by the electricity industry, with literally hundreds of millions of them in the pipeline. Healthcare is another key industry.

All new hospitals now operate large-scale M2M operations, tracking their equipment with real-time information. Most local governments have invested massively in mapping their assets; this is now being followed up by adding connectivity to these assets—whether it is streetlamps, drainage, sewerage or trees, all are in the process of becoming part of a smart city.

Big Data

A critical element for telecommunications’ future is to use the network with all of the M2M devices connected to it, in such a way that it collects the data from these devices, processes that data, and then delivers executable real-time analyses to the users of the M2M services.

This development is also known as “big data.” Unless the issue of data analytics is properly addressed, and the companies involved have at least a broad strategy in place around it, IoT and M2M in isolation will make little sense.

IoT Plus M2M

Taking this now one step further, both IoT and M2M cannot be looked at in isolation. For these technologies to be successful, the broader ecosystem needs to be considered. This includes developments in high-speed broadband (fixed and mobile), cloud computing, cybersecurity, data centres and the already mentioned data analytics.

M2M and IoT are very similar in their functionality, communication and collecting data. However, M2M refers to the interaction of two or more devices that are connected to each other. This is about machines, smartphones, and appliances.

IoT is about sensors, cyber-based physical systems, wearable systems, mobile apps, internet-based services and so on. In all reality, the terms are often used in an interchangeable way.

As the M2M and IoT technologies and their markets develop, there is now more insight into its future directions.

Key issues here include:

  • IoT and M2M will increasingly become better defined and more niche market-based features will be added along the line;
  • The broader ecosystems around these technologies will have to be changed as well. M2M and IoT are increasingly becoming more and more business concepts. And the importance of data analytics is at the core of these models;
  • There is still a lack of standards, interoperability, and industry leadership in general and this hampering some of the large-scale developments;
  • The telcos as suppliers of M2M and IoT products and services will need to look for new (telco) business models aimed at the enterprise market; and
  • Especially in relation to the promises of 5G in this market we need to differentiate between what is hype and what is reality.

By Paul Budde, Managing Director of Paul Budde Communication

Paul is also a contributor of the Paul Budde Communication blog located here.

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