Platforms: Setting the Stage for M2M Solutions

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1 September 2010 Platforms: Setting the Stage for M2M Solutions by John Keough, Research Associate, The Bottom Line Getting an M2M solution up and running is not an easy task. M2M solution providers that leverage platforms can address both connectivity and application development needs and significantly decrease the time to market and the ease of operation of their products. Platforms: Potential for a Horizontal Play in an Industry of Verticals Historically, platform providers have been as specialized as the industries they serve. While there may be a myriad of M2M solutions and countless process models, most solutions have a common need for platforms to support hardware on a network and manage the data flow between these connected assets and the end-user. Platforms play a crucial role in the M2M life cycle, from the enablement of an asset with radios and sensors, to the provisioning and operation of an asset, to the development of a customized user-facing application. Recognizing the potential to appeal to a more diverse client pool, some platforms with a core competency in asset connectivity are beginning to expand their functionality into application integration. In addition, new partnerships and joint ventures within the M2M arena are spurring the development of more complete platform offerings. This report details the roles connectivity and application development platforms play in the M2M market, as well as the underlying trends driving the integration of the two. The Difficulties of Implementing an M2M Solution Implementing an M2M solution presents a solution provider with a litany of challenges to overcome. From a connectivity standpoint, solution providers need to get their devices enabled, provisioned and certified for use on a cellular operator s network. Solution providers also need to establish billing support early during the connectivity process. After the devices are connected, a solution provider needs to be able to communicate with these devices to gather and analyze the data stream from the devices, actively manage the deployment, and drive commands and updates down to the device level. Connectivity Hurdles: The Certification Snag Connectivity can take a number of different forms in M2M interactions. Anything from fiber, to Wi-Fi, to mesh, to RFID, to satellite or cellular connections can be effective ways to transport data, depending on the M2M solution s application. Here we focus on cellular M2M solutions. Turning a stand-alone machine or asset into part of a cellular M2M solution begins with enablement: The device must be enabled to communicate wirelessly using sensors, tags, radios, modems and other similar equipment. Older machines may have these functionalities retrofitted externally, while newer machines designed with M2M in mind may have them built into their core designs. The next step is provisioning, which requires establishing a network connection. Provisioning a device on a cellular network involves navigating a carrier s certification process. This process essentially authenticates a device to operate on a carrier s network in the same way that cellular phones are activated. In the U.S., this has historically been a long process because carriers in an effort to avoid widespread network problems are very careful about the devices they allow to access their networks. The result is a certification process that can sometimes drag on for between 12 and 18 months, an unacceptable lag time for those looking to bring M2M solutions to market. M2M innovators can ill afford their devices to spend a year or more languishing in a carrier s test labs.

2 Platforms: Setting the Stage for M2M Solutions App Development Hurdles: The Enterprise Snag In addition to challenges in getting their devices connected, M2M solution providers face common obstacles in developing M2M applications and incorporating them with existing enterprise programs. Application developers lack M2M expertise. A somewhat complex scripting protocol including expression rules, timers, threshold rules, etc. drives the lion s share of the functionality behind M2M systems. For example, a scripting protocol for an M2M solution involving the freezer storage of medical supplies could set a threshold rule so that when the temperature within a freezer reaches a certain level, the device triggers an alarm to alert the end-user. Application developers would rather focus on leveraging the data flow to create a beneficial user-facing system than concern themselves with the nuts and bolts of scripting, authentication and auditing. Large enterprises want to integrate M2M, not add it on. The efficiency benefits of M2M for enterprises are undeniable, but in order for enterprises (especially large enterprises) to fully appreciate an M2M solution, it needs to be integrated into its existing ERP, CRM or enterprise asset management programs. This integration results in fewer moving parts, less education and maintenance on the part of the enterprise s IT staff, and a wider awareness of the M2M solution within the organization. Small enterprises have scalability concerns. While fully customizable solutions are often the answer for large enterprises, they are often too expensive for smaller businesses to deploy with any scale. SMBs will lean increasingly on more affordable, off-the-shelf solutions. Platforms Ease the Way Platform is a term often bandied around in the M2M industry as a general descriptor for back-end support of an M2M solution. This report examines two types of platforms: connectivity platforms and application development platforms. There are a plethora of other specialty platforms (e.g., security platforms) that are beyond the scope of this report. Since platform offerings vary so widely, their target audience or customers can also be quite diverse. Connectivity platforms, which provide the back-end services needed to make an M2M solution functional, are often tailored to network operators who need efficient ways to hook up devices and charge for connectivity. Application development platforms, on the other hand, target the end-user of the M2M solution and provide the services needed to operate the assets after the M2M system is on-line and functional. Exhibit 1 illustrates the basic M2M needs addressed by connectivity platforms and application development platforms, as well as some functionality that is sometimes provided by both. Exhibit 1: Platforms Ease the Way to Production-Level M2M Solutions Source: Yankee Group, 2010 Enablement Provisioning Registering Monitoring Asset Reconfiguration Operations Portal Billing Updating Remote Monitoring and Configuration APIs Systems Integration Off-the-Shelf Solutions Hosting Services App Testing Services Connectivity App Development 2

3 September 2010 Connectivity Platforms: Hardware Manufacturers Expand Roles To streamline the process of getting an M2M device up and running on the network, traditional hardware manufacturers like Sierra Wireless and Enfora now offer software-based connectivity platform support. These connectivity platforms can provide operators and mobile virtual network operators (MVNOs) with an avenue to manage and control the assets connected to their networks. Enfora s N4A Communications and Management software gives clients greater flexibility and control by providing remote provisioning, monitoring and reconfiguration of assets. Sierra Wireless has taken this development even further by expanding its Air Vantage platform to include an operations portal and software development tools. Margins for traditional M2M module manufacturers like Sierra Wireless and Enfora have been decreasing as they struggle to compete with Asian heavyweights like Huawei and ZTE, which are pushing huge volumes of modules into the market. By offering connectivity platforms, these module manufacturers are able to extend their involvement in an M2M solution s life cycle beyond the provisioning phase to the duration of a solution s deployment, which leads to a more long-term revenue stream. Over the past few years, however, carriers have become increasingly active in developing their own connectivity platforms, either in-house or through acquisition. Carriers already have provisioning programs in place for smartphones and cell phones, and since they are ultimately the connectivity providers, it s only a matter of time before most carriers expand their internal offerings. Verizon s Open Development Initiative (ODI) is a prime example. The operator managed to shorten the certification process to a matter of weeks and greatly expanded the number of approved devices on its network. Others including Sprint s Emerging Solutions Group and T-Mobile s M2M division are actively developing their own platforms internally. AT&T has established high-profile partnerships with platform providers Jasper Wireless and Numerex, and in Europe, Telenor and Orange have aggressively expanded their company-branded M2M services offerings. Application Development Platforms: Building the Other Side of the Gateway While connectivity platforms can drive sets of rules down to individual assets and to some extent, integrate with middleware, they do little to facilitate the development of user-facing applications. That s where application development platforms come in. They provide the back-end support that enables developers to operate assets and build applications. Essentially, they transform raw data streams into interfaces that applications can use to both glean specific device data and allow the end-user to communicate back to the device. The first set of tools that application development platforms provide are aimed at the operation of the assets themselves. This usually manifests itself in an operations portal that provides visibility into every device in an M2M deployment and allows them to be remotely configured. In order to further facilitate asset management, most application development platforms also host M2M solutions themselves in secure data centers, or in some cases, behind a client s firewall. This takes server upkeep and information security off the list of things solutions providers have to worry about, a feature of special interest to smaller solution providers that may not have enough dedicated IT resources to actively manage an M2M solution s data flow. The second main functionality that application development platforms bring to the table is they provide an easy way for M2M solution providers to build their applications. With a wide variance in M2M applications, platforms would be hard-pressed and illadvised to attempt to provide unique out-of-the-box solutions for all comers in all verticals. Instead, they provide a set of tools to make third-party application development much easier. They provide application programming interfaces (APIs) that allow developers to use common programming languages like Java and Groovy to build solutions. They also offer testing services that let developers test solutions in a simulated M2M environment, allowing them to detect problems prior to the actual device rollout. Through the use of these tools, solutions providers and system integrators can access existing enterprise applications that utilize Web services. 3

4 Platforms: Setting the Stage for M2M Solutions Although application development platforms are more in the business of easing the construction of M2M solutions, rather than actually building them, most of these players do offer some out-of-the-box solutions that solve common enterprise problems. Enterprises often share the same needs for basic fleet management, inventory tracking and remote monitoring services, and application development platforms have developed lightweight, ready-to-use solutions that fit the bill and require minimal implementation effort on the part of the solution provider. A good example of an application development platform is Axeda. Over the past two years, Axeda which offers a cloud-based platform-as-a-service (PaaS) solution has grown from providing fixed-line remote monitoring and service applications with cloud storage functionality to including wireless M2M applications. Axeda s platform covers basic asset management (i.e., swapping out broken assets), stores the data flow from the assets and provides a powerful scripting engine and developer kit to make working with the M2M system protocol easier. Axeda s platform can handle data streams from devices with different encoding and protocol technologies and create a universal stream, so user applications are essentially blind to the different technologies. Axeda estimates its platform handles 90 percent of the work that goes into establishing an M2M solution, allowing developers and system integrators to focus on developing the user interface and integrating the M2M system with an enterprise s existing infrastructure. To further ease application implementation, Axeda has established a developer connection Web site fully loaded with articles, tutorials and forums. Combining Capabilities: Platforms Begin to Consolidate Connectivity and application development platform providers have effectively identified pain points in the M2M ecosystem and made significant progress in addressing them. The next challenge for M2M solution providers is in choosing a platform that provides adequate support in both the connectivity and application development spheres. Platforms are beginning to consolidate because of the expansion of service offerings from traditional hardware manufacturers, increased carrier involvement and the appeal of an all-inclusive platform system to M2M solution providers. Currently, we see two main types of complete solutions: the one-stop shop with heavy carrier involvement and partnershipbased offerings. The One-Stop Shop: nphase A joint venture between Verizon Wireless and Qualcomm, nphase is the most complete one-stop-shop solution to date. Its platform acts as both a connectivity and application development platform, plus it offers embedded customer service software that helps send device feedback to customer service, a feature that is especially valuable to CRM systems. From an operations perspective, nphase has the advantage of tapping into Verizon s large sales channel and baking its services into the cost of connecting with Verizon s network. This simple pricing model is much easier for M2M clients to digest than paying for connectivity and platform services separately. Although nphase supports assets on other networks (most notably Vodafone s, which owns a 45 percent share of Verizon Wireless), it may struggle to maintain a network-neutral appearance due to its high-profile relationship with Verizon. The Partnership Route The majority of players offering end-to-end solutions combining the functions of both connectivity and application development platforms are doing so through partnerships. The advantage of partnering for a complete solution is that the result is usually both hardware- and network-agnostic. For example, Axeda has done a great job of building partnerships to satisfy all the platform needs of its users. Its partnership with Enfora provides enabling, provisioning and billing, while its relationships with Sprint, Telenor, KORE Telematics and Wyless establish sources of connectivity. Finally, Axeda s partnerships with well-known system integrators Deloitte and Oracle provide support for implementing the M2M solution within an enterprise s infrastructure. Such an end-to-end solution provides benefits to all parties without sacrificing hardware and network flexibility. The downside is there are a lot of moving parts, plus there is the potential for functionality overlap between partners, which could cause confusion. It also requires paying multiple parties separately for connectivity and platform support. 4

5 September 2010 Conclusions and Recommendations Platforms fulfill a crucial role in both implementing and operating an M2M system. Platform providers should continue to increase software support for M2M systems and work toward creating simpler end-to-end solutions. They should look to continually add more features that will help them become a more integral part of an M2M solution s life cycle, resulting in a steadier revenue stream. With uncertain futures for several module manufacturers and a clear need for increased business application support, platforms that are hardware-agnostic and integration-friendly will find the most traction in future markets. With that in mind, we recommend: Connectivity platforms should look to partner. Connectivity platforms should aim to provide solutions for players traditionally further up the M2M value chain. Enfora s partnerships with Axeda and large systems integrators like IBM and HP help provide customers with access to a more complete solution while still retaining flexibility. Application development platforms should target SMBs with off-the-shelf applications. As M2M momentum picks up steam, SMBs with simple remote monitoring or asset tracking needs will eschew pricey custom builds for less complex, readyto-use services. App development platforms that can offer such packaged capabilities will be best positioned in the M2M market. M2M solutions providers should consider the long term when choosing a platform. Although swift time to market is important in the M2M arena, solution providers should place a premium on selecting a platform that meshes best with existing and expected enterprise infrastructure over the entire course of the solution s deployment. Operators should leave the door open for third-party players. Although most major carriers are busy developing their own platforms internally, they should also consider providing network connectivity for third-party application development platforms. Playing the dumb pipe for niche thirdparty platforms can help carriers generate revenue from clients demanding a high level of customization, without having to invest in the development process. 5

6 Yankee Group the global connectivity experts The people of Yankee Group are the global connectivity experts the leading source of insight and counsel trusted by builders, operators and users of connectivity solutions for 40 years. We are uniquely focused on the evolution of Anywhere, and chart the pace of technology change and its effect on networks, consumers and enterprises. For more information, visit Yankee Group s Link products and services provide clients the insight, analysis and tools to navigate the global connectivity revolution. Research Data Interaction Consulting Events Leverage qualitative research to make informed business decisions today and plan for the future. Gain quantitative insight into current markets and new opportunities via monitors, surveys and forecasts. Connect with analysts to gain deeper insight into research and trends. Get in-depth analysis and actionable recommendations tailored to your needs. Access world-class events live and online with industry leaders and Yankee Group experts. John Keough, Research Associate John Keough is a research associate on Yankee Group s Anywhere Enterprise team. His areas of expertise include enterprise mobility and mobile applications, with a specific focus on M2M communications. Headquar ters Copyright Yankee Group Research, Inc. Yankee Group published this content for the sole use of Yankee Group subscribers. It may not be duplicated, reproduced or retransmitted in whole or in part without the express permission of Yankee Group, One Liberty Square, 7 th Floor, Boston, MA All rights reserved. All opinions and estimates herein constitute our judgment as of this date and are subject to change without notice. Corporate One Liberty Square 7th Floor BOSTON, MASSACHUSETTS phone fax European 56 Russell Square LONDON WC1B 4HP UNITED KINGDOM phone fax