The m2m market in the economic downturn - Robin Duke Woolley

M2M in the Downturn

April 7, 2009

Robin Duke-WoolleyCEO, Beecham Research Ltd.

Boston I London l Bonn l Milan

Copyright © 2009 by Beecham Research Ltd. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means -- electronic, mechanical, photocopying, recording, or otherwise -- without the permission of Beecham Research Ltd.

Internet of Things & M2M Help Drive Speed/Flexibility into Decision-Making: Adding Value in Downturn throughout Value Chain

Definition• Networked products connected in an eco-system of: content, technologies, smart devices, infrastructure

and services• Smart devices know: who you are, where you are, your content preferences, and best medium to deliver

content• Connectivity occurs across: on-board systems, device-to-device, & device-to-web• Innovation is driven by leveraging the eco-system to deliver value to user via new capabilities … driving

new business models for both products and services

Benefits• Differentiated product to market:

Revenue growth via higher market share and/or price premiumIncreased profits via higher margin value-added extensions

1. Connected Products Solution

Pay per use

Huge Capital Investment for Hospitals, Medical Clinics

Replaced by Pay Per Use by product manufacturer

Result: Scanning used regularly for medical diagnosis

Manufacturer takes over risk

Monitors everything remotely

Detailed cost and use analysis to maintain business case

New business models:Creating Service pull – superseding technology push

MRI scanner as a totally outsourced solution: Hardware-as-a-Service

Definition• Wireless sensors (RFID, Smart Dust) monitor events and conditions• Sensors are in components, inventory, machinery, and locations• Sensors show identity, location tracking, shock, temperature, and tampering• Sensing is conducted across procurement, warehousing, manufacturing, and delivery

Benefits• Real-time visibility into part locations, status, quality, and environmental conditions• Improved supply chain reliability and productivity• Security enhanced by constant monitoring

2. Supply Chain Solutions: Integrating M2M into the Business Model

• Installed GPS-enabled logistics system to link delivery trucks to central control center

• Stage trucks and dispatch/re-route dynamically based on up to the minute customer needs

Benefits:Grew customer satisfaction and revenue:

–Reduced delivery window by >85%–15% sales growth

Cost savings:–Delivery trucks cut by 35%–Projected $100M savings in OpEx

Sensor Intensive Supply Chain Example: Cemex Cement Delivery

Definition• Monitoring devices collect valuable information• Devices are connected to the network and monitored centrally• Diagnostics and preventive and predictive maintenance are conducted remotely• Field technicians are dispatched automatically with the right solution• Engineers learn from actual product and customer behavior

Benefits• Value-added service revenue• Higher services margins• Lower warranty costs

• Lower service operations costs• Shorter time to resolution• Higher customer satisfaction

3. Device Monitoring Solutions

Eliminate damage to the magnet

Reduce downtime

Reduce loss of revenue

Avoid rescheduling patient appointments

Example: Air Products KeepCOLD® Services

Three Categories of M2M Applications - Examples

After-Market Applications

Regulatory

Line Fit/OEM• Service led• Medium/High Volume• All sectors• Embedded networking• Low cost per unit

• Regulation led• Medium/High Volume during install• Specific sectors/applications• Embedded networking• Low cost per unit

• Application led • Low/Medium volume per application• All sectors • Add-on networking: retrofit • Medium/High cost per unit Vending

Toll Collect

Meter Reading

eCall

OnStar/ Telematics

HandheldTracking

Pumps

VineyardMonitoring

Car Wash

M2M Application Categories

Time

After-market ApplicationsNetwork add-on“Low hanging fruit”High CostLow Volume

RegulatoryEmbedded networkSpecific productsLow CostHigh Volume

OEM-based Embedded network Across all venuesLow CostHigh Volume

Connections

Impact of Current Economic Climate

After-Market Applications

Regulatory

Line Fit• Some products substantially affected by downturn:

• Projects delayed• New house starts down• Car sales down 15-50%

• BUT, some are investing in downturn for longer term competitive advantage

• Govt. initiatives less affected • Regulatory less affected, eg Energy sector

• Less affected – installed base• eg Commercial Security, 3G • Individual apps affected, eg Fleet/Freight, Containers, Commercial Shipping, Industrial (raw material) • Opportunities for operational cost savings

Vending

Toll Collect

Meter Reading

eCall

OnStar/ Telematics

HandheldTracking

Pumps

VineyardMonitoring

Car Wash

M2M Landscape – Service Sectors, Applications and Devices

Infrastructure Comfort &Convenience

• Office• Education• Retail• Hospitality• Healthcare• Airports• Stadiums

Commercial /Institutional

Public Infrastructure

Emergency Services

• Equip. & personnel- Water treatment- Building environ.- General environ.- Surveillance

• Equip. &personnel- Police, - Fire- Regulatory

Tracking

• Human• Animal• Food/Health• Packaging• Baggage• Postal

Equipment Enterprise

IT/Data CenterOfficePrivate Nets

Public

• Services• E-Commerce• Data Centers• Mobile Carriers• Fixed Carriers• ISPs

Supply/ Demand

Oil/Gas

Rigs• Derricks• Well Heads• Pipelines• Pumps

Awareness & Safety

Security/AlertsFire SafetyEnviron. SafetyElderlyChildrenPower Protection

• Wiring• Network Access• Energy Mgmt

Buildings Consumer& Home

Industrial Healthcare &Life Science

Energy Retail Transportation

• Super-Markets• ShoppingCenters• Single site• Distribn.Centers

Stores Hospitality

• Fuel Stations• Gaming•Bowling• Cinemas• Discos• Special events

• Hotels• Restaurants• Bars• Cafes• Clubs

Specialty

Distribution

• Pipelines• Mat’l Handling• Conveyance

• Consumer • Commercial• Construction• Off-Hiway

Vehicles

• Air• Rail• Marine

ResourceAutomation

Converting/Discrete

Fluid/Processes

• Mining• Irrigation• Agricultural• Woodland

• Metals • Paper• Rubber/Plastics• Metalworking• Electronics• Assembly/Test

• Petro-Chemical• Hydro Carbons• Food/Bev•

• Implants

• Home MonitoringSystems

• Hospital Room• ER • Mobile POC• Clinic• Labs• Doctor Office

• DrugDiscovery

• Labs • Diagnostics

Internet of Things

ResearchCare In Vivo/Home

Alternative

• Process

• Clean Room

• Campus

Industrial Non-Vehicular

Devices: TVs, Power Systems, Dishwashers, Lighting,Washer/Dryers, Meters, Lights, Alarms, etc.

Devices: Pumps, Valves, Vats, Conveyors, Pipelines, Motors, Drives, Converting, Fabrication, Assembly/Packaging, Vessels/Tanks, etc.

Devices: Turbines, Windmills, UPS, Batteries, Generators, Meters, Drills, Fuel Cells, etc.

Devices: Servers, Storage, PCs Routers, Switches, PBXs, etc.

IT & Networks

Surveillance

• Radar/Satellite• Environmental • Military Security• Unmanned • Fixed

Devices: Cars, Ambulances, Fire, Breakdown, Lone Worker, Homeland Security, Environment Monitor, etc.

• Weapons• Vehicles• Ships• Aircraft• Gear

Devices: Tanks, Fighter Jets, Battlefield Comms, Jeeps, etc..

• Solar• Wind• Co-Generation• Electrochemical

• Tolls• Navigation• Traffic Mgmt

Trans Systems

• Power Gen • Trans & Dist• Low Voltage• Power

Quality• Energy Mgmt

Public Safety& Defense

HVAC / Climate LightingAppliancesEntertainment

Devices: MRI, PDAs, Implants, Surgical Equip,Pumps, Monitors, Telemedicine, etc.

Devices: POS Terminals, Tags, CashRegisters, Vending M/cs, Signs, etc.

Devices: Vehicles, Lights, Ships, PlanesSignage, Tolls, etc.

Devices: HVAC, Transport, Fire & Safety, Lighting, Security, Access,etc.

Energy: Moving to a Smart Grid – Supply side

M2M Opportunities in addition to Smart Metering:• Development of Smart Grid - substations• Microgrids• Alternative energy sources:

• Wind, Tidal, Solar, Thermal, Fuel Cell

Consumer M2M: Approaching a Mass Market – New Report April 2009

millions BRL Issue: January 2009

Image Source: www.t-mobile.de

Consumer M2M: Approaching a Mass Market – New Report April 2009

Beecham Research: April 2009

0

5

10

15

20

25

30

35

40

2007 2008 2009 2010 2011 2012 2013

Consumer M2M Product Shipments (millions)

2008 Adopter Survey, SIM-Related:

Considering the needs of your M2M-enabled products, how important are the following factors?

2008 Adopter Survey, Network Services:

How important are the following network services?

M2M Services Revenue Streams for Cellular ($m)

Beecham Research: July 2008

Comparison of Revenue Streams for Cellular

Beecham Research: July 2008

Value-Added Services

System Applications/Service Enablement

Network Services

HardwareEnablement

Typical Market Players at Each Level

Service Enablement: Key Issues for Research (Q2 2009)

1. Service Enablement purpose:• Reduce Installation and Running Costs (Adopter Survey results)• Reduce time to market for new services: Create Service Pull• Application Providers: Focus on end user, not infrastructure• c/f Windows and Applications • Market Catalyst: bringing order to a fragmented market

2. Value Assessment• Build versus buy for connectivity infrastructure

– Cost elements– Establishing an ROI– What connectivity provides lasting value?

3. Key Features – now and future: Which add value from user perspective?4. Key sectors – early adopters 5. Who does what?

• Value chain players – compete or collaborate?

About Beecham Research

Beecham Research offers focused research, analysis and consulting services to high technology suppliers, service providers and product manufacturers:

• Focus on network-connected products and services – M2M and the “Internet of Things”.

– Worldwide coverage for all business sectors and all technologies

• Founded in 1991. New name Beecham Research Limited (BRL) from early 2008.

• Based in London. Operating out of Boston MA, London UK, Bonn Germany, Milan Italy.

– Representation in AsiaPac and Latin America regions in progress

• Senior staff with many years of M2M experience internationally – well known in the industry

• Emphasis on services enabled by M2M technologies and on M2M market development through new service implementations:

The services we offer:• Consulting and custom research

• Subscription-based research service – Retainer Service

• Standard publications include Worldwide M2M Market Forecast Report at hardware and service levels, and individual M2M Service Sector Reports (9 sectors)

• Conferences, in conjunction with our partners – Berlin October 2009

About Beecham Research – more

Some of our recent clients: