The two things that could doom the ‘Internet of things’ revolution

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It goes by many names these days: Machine-to-machine communications; the Internet of Things; the Industrial Internet; even just “wireless sensors.” In short, M2M is the technology that enables the automated exchange of key information between machines, and then ultimately to humans.

With seemingly endless applications that range from mere entertainment (say, streaming video to the backseat of your car) to matters of life and death (like the ability for doctors to remotely monitor blood glucose levels), M2M technology is already rapidly changing the way that we live for the better. The M2M revolution is threatened, however, by two crucial and already pressing challenges: unnecessary complexity and the impending sunset of 2G wireless.

The rise of M2M is revolutionizing the way countless industries work. From shipping companies that now track high-dollar assets from country to country, to auto dealers that use GPS tracking and automated collection technology to assess customer loans. From doctors and caregivers who can monitor elderly patients from a distance to know if they need assistance instantly, to bagged ice machine vendors who are alerted when supply is low.

M2M is also a key enabler of Big Data, as an unprecedented amount of information is being collected from automated sensors already—from inside cars, in traffic light cameras, in new automated parking meters, in energy meters and so on. In fact, a whopping 2.14 billion M2M devices will have the ability to “talk to each other” by 2021—up from an estimated 100.4 million M2M device connections in 2011, according to the research firm Analysys Mason Limited. That represents an astounding compound annual growth rate (CAGR) of 36 percent across 10 years. And through it all, M2M is creating greater operational efficiencies, more productivity and fewer costs and headaches for companies across all industries.

All of these growth predictions fail to account for the crucial challenges mentioned above, however, which could become a costly and time-consuming wrench in the works for companies if they aren’t addressed. Some estimates suggest it could slash the forecast for 2.14 billion M2M devices in half—or even worse.

Complexity is a profit killer

Right now, large enterprise M2M projects still often take up to three years to complete, and typically require at least a $25 million investment, according to the research firm Maravedis-Rethink. It’s a big reason that M2M adoption for many businesses is still in a semi-holding pattern, with few committed to building it into their business plans.

That can’t continue if we’re really going to see M2M solutions make their way into improving our everyday lives, helping businesses improve bottom lines and allowing decision makers to make more informed decisions. There is no doubt that the benefits await, but there will be some wrinkles to iron out along the way.

M2M solutions must be made to be easier to deploy. We’re talking days or weeks here – even hours. Not years. Solution providers need the ability to get thousands of M2M devices up and running at once, crucially, using existing, standardized technology. They need the ability to customize rate plans and to see in real-time how their customers are actually using their applications. This is possible. More to the point, enterprises that get their M2M applications up and running quickly are seeing amazing returns. No longer do enterprises have to sit on the sidelines and wait as the process unrolls while they continue running their business with the same deficiencies that their solution is intended to improve. Typically, there is up to a 40 percent return on their investment in the first year alone.

But every time there’s a problem with that M2M application or the enterprise IT department has to focus on something like making the wireless connection work, that ROI is reduced. And at some point, if deploying an M2M application distracts from a company’s core business rather than enhancing it, then the ROI is no longer worth the effort.

Sunsetting 2G could slow some M2M applications

Unfortunately, simplicity isn’t the only thing holding back the growth of M2M right now. In fact, the very future of some M2M applications is being challenged, thanks to the mobile industry’s migration to 3G and 4G networks. In the process many are simply shutting down their existing 2G networks, stranding customers who have M2M applications that rely on them. I recently heard of a small boutique in the Midwest that relies on a 2G network to process credit-card payments. Without notice, its 2G cellular service was shut off and suddenly the shop’s point of sale device was non-functional, leaving a vulnerable small business scrambling to find options.

Complicating matters is that many M2M applications simply don’t use enough data to justify updating or transitioning them to wider pipes and the more costly devices associated with 3G and 4G networks. So, while in many cases it may be an option to upgrade to a significantly more expensive 3G or 4G compatible device, the low levels of data consumption required by these applications would not come close to justifying it, and so unnecessarily put a hit on a businesses ROI.

These shifts force customers to be very strategic in how they plan their M2M strategy. As some carriers are forced to move away from 2G networks because of spectrum constraints or other long-term strategies, there are other carriers that remain committed to supporting their 2G networks.

The bottom line is that for M2M to reach its full potential, application providers need easy-to-implement M2M solutions. And they also need some assurance that their M2M solutions will still be supported in the future as networks continue to evolve. If you give enterprises and potential M2M application developers these two things, M2M will reach its full potential.

And we’ll continue to see a revolution in the way business gets done.

John Horn is president of RACO Wireless.

Photo courtesy of Shutterstock.

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