According to Telstra Australia, M2M services generate a much higher ARPU on a per megabyte basis than traditional mobile data services.
The company’s M2M services generate $3.60 of ARPU per month and use up 1.7MB of data on its network, while traditional data services generates $30.87 of ARPU and uses 104MB of capacity. Those figures mean that M2M has a monthly ARPU per megabyte of $2.12, compared with just $0.30 for traditional data, showing that M2M gives a return five to ten times greater than traditional Telstra products.
The main applications used by companies so far have been around utilising the connectivity to embed wireless into their products for their customers, such as retailers, utilities and the automotive industries.
However there remain many serious challenges to the M2M market. While 9% of Australian businesses are using M2M services the average company is still quite unfamiliar with the concepts of M2M and IoT.
Furthermore, on the technical side, standardisation of the technology (as well as the individual products) remains the most important issue that needs to be resolved. Over the last two decades the experienced certain technological problems for which proprietary solutions were developed and as a result there are literally hundreds of niche market solutions and products.
It is only now that the bigger picture of IoT starts to emerge, and it becomes clear that the real power of this concept lies in the interoperability between the various M2M applications – this, linked to data centres and analytics, shows the power of not just collecting data for the individual purpose of the application, but of linking that to other relevant data and using analytics in real time. This means that the data can be used to take immediate or preventative action to make future predictions about processes as they are evolving, and to manage situations in real time.
Because of the niche market developments there is also no clear leader or group of leaders who have sufficient market power to take industry leadership on these issues.
As we are talking, not about a specific technology but about a technological concept, we also need to take into account the larger ecosystem. At the moment it is the users (retailers, utilities, car manufacturers) who are taking the lead and obviously they are not in the best position to coordinate cross-industry developments. The electricity utilities, for example, will most likely be the largest group within the IoT community and they have a history of developing their own technologies and applications more or less in isolation.
The mobile operators are another key group in the ecosystem, but the question is whether they are the right group to, for instance, coordinate the technology behind the applications.
There has been an absence of leadership from the IT industry, which could be the glue between all of these developments, and systems integration in particular would be the key here.
The reality is that as we are talking about literally billions of sensors, devices etc that will be linked into the IoT there is a great risk of embarking on the wrong technology, and concern about this is currently hampering progress in this industry.