A Hot Future For M2M

A market report from IDATE says machine-to-machine (M2M) communication is headed for big-dollar growth in the years to come.

The company claims the market for machine-to-machine communications could surpass $270 billion by 2010. The French tech research firm released a market report that said new technology building blocks will speed adoption of machine-to-machine (M2M) communications, leading to a 49 percent annual growth rate.

Mature technologies are already boosting this market, according to IDATE: Standardization of data-capture technologies has led to a drop in hardware costs, while SMS and GPRS, with always-on connections and packet-based billing, have turned the tide by making wireless connections feasible and cost-effective.

On Thursday, Royal Philips Electronics and Texas Instruments (TI) said they would work together to test interoperation of their products and their conformance to the EPC Gen 2 standard. Gen 2 is the newest and most advanced of the RFID specifications for UHF band communications centered around 900MHz.

Emerging technologies, including Web services, XML data schemas and RFID, will have a major impact on the market’s future growth, IDATE said.

RFID provides new sources of data — and insight — to companies, especially for supply chain and warehouse operations. Short-range network technologies like Zigbee will complement cellular or dial-up connections to the Internet, providing low-cost data collection.

To date, the industries most advanced in M2M deployments are transportation, which uses the technology for fleet management; public utilities and telematics, where it’s used for security; emergency services; and navigation. These early deployments offer tangible ROI, IDATE said, while regulations and retailers’ mandates are helping to jump-start the business.

IDATE said the hardware manufacturers and systems integrators will benefit the most, while mobile network operators could be looking at 6 percent of their revenues coming from M2M traffic in the next five years.

Because mobile operators haven’t focused attention on M2M — and they often provide only spotty coverage — IDATE said systems integrators and vendors often use paging networks or mobile virtual network operators that specialize in providing connectivity for M2M. To see that 6 percent revenue, network operators need to adapt their sales and operations strategies.

“The most highly involved operators are offering technological platforms or vertical packages,” wrote Vincent Bonneau, the report’s lead author.

On Tuesday, Microsoft Europe, Middle East and Africa announced a partnership with BT to provide an RFID managed service to the retail sector.

The new offering combines BT’s RFID data-management and systems-integration capabilities with Microsoft’s data capture and analysis to provide item-level RFID tagging and data capture for retailers.

Retailer Marks & Spencer, which had been working with BT in trials of tagging clothing in the supply chain, is the first customer. Marks & Spencer said it would extend the trial to around 50 stores by spring 2006. The service will be delivered as a Microsoft .NET application on Windows Server 2003 and SQL Server 2000.

In a research note, IT analyst firm Ovum pointed out that while the Marks & Spencer project remains in pilot, “Microsoft is a highly influential vendor, and its involvement in this market can only speed things along.”

IDATE’s Bonneau wrote that such projects are key to building a thriving M2M ecosystem that will eventually include new ways to reach consumers.

“The M2M market will get a major boost when RFID smart tags begin to equip individual products [such as groceries and consumer electronics] in shops and advertisements, leading in the future to new consumer marketing applications.”