One only has to do a basic Google search on the term “M2M growth” to see some of the amazing projections that analyst expect for the growth of M2M. However, we’ve been reading about these projections for a while now, so while M2M has been one of the faster growing segments in the world of communications, it isn’t anywhere near what is expected.
In this two part series, I will look at two key elements:
- In Part 1, we will look at some of the key reasons why the number of M2M deployments has not yet lived up to its expected potential
- In Part 2, we will look at what the M2M industry is doing to fuel its growth and what it may need to do in the future.
“We’re not selling chocolate bars” This is a quote from my business colleague, Richard Hobbs.....and, it is pretty accurate. The average person easily understands (and can use without much training) most smartphones. They can easily grasp how having access to key pieces of information (email, directions, etc) can benefit your life by making you more productive. However, M2M is intimidating to many people.....IT staff, end users and even some carrier salespeople. Solutions can often involve many moving parts (ranging from sensors that are on-board equipment, local area networks, advanced cellular gateways, not easy to use/integrate middleware packages and integrating into complex systems). The M2M industry has not done a great job in making things simple, and it has to do better.
Those darn iPhones This point kind of links to the previous point. While the M2M industry has not done a great job in making things easy to buy and deploy, the smartphone industry has. You may ask....why does this matter? Well, the reason is that the same people who sell M2M solutions are often responsible for selling M2M solutions at many companies. Which would you rather sell....a more complex solution or one where people line up at the door to buy it without asking any questions while paying full price? The industry has taken some good strides to solve this by offering some good training on M2M to key people, as well as creating specialized teams who work exclusively on M2M. This leads into my next point....
Carrier compensation Out of the many sales courses that I have sat through, one does stand out. The instructor stood up and wrote “____ = _____” and challenged everyone to fill it in. His answer was “Reward = behaviour”. While it was so simple, it was brilliant in its simplicity. Salespeople are going to find the easiest path to achieving their goals. For many, their goals revolved around “Checks and ARPU”. “Checks” refers to an activation of a new subscriber, and for many, it is a bit more complex than it sounds. Most voice activations were worth “one check”, while many received a “second check” if that same device also had a data plan (such as in the case of most smartphones), making these devices very desirable. While M2M solutions often involved many devices (so, a lot of “checks”), their ARPU was so low that it often resulted in as little as “1/8 of a check” being awarded, making them much less desirable. In case you were asking, “what is ARPU?”, this is widely used term that refers to the average revenue per user. This number is greatly influenced by smartphones, as the ARPU tends to be much higher. So, while M2M deployments may have had large numbers of device deployed, the actual amount of “checks” and the lower ARPU that they created often worked as a negative to the compensation plans of many carriers. Moving in a positive direction, most carriers have started to fix this to make these activations more desirable (we’ll go into that more in part 2)
Longer sales cycles While many organizations have pretty thorough testing before they allow new smartphones to be used for business, it generally is not THAT long of a process. This is because they are often upgrading from previous platforms and often are using new security rules and policies that already exist. M2M doesn’t always have that luxury, as many customers are implementing these types of solutions for the first time. As such, when you combine how M2M can have a business-changing effect on most companies with the fact that it often requires a lot of new policies and procedures, it is little wonder why these sales cycles are so much longer. As well, that often isn’t even the worst part....for many deployments in the M2M space, especially the ones that Novotech seems to work on, we are often breaking new ground in terms of application uses. Being on the “bleeding edge” is quite exciting, but the trial and error process can lengthen sales cycles longer than expected.
Integration into IT I have written significantly in the past about how M2M solutions are finally making their way into world of IT. Having started in the world of IT, I have watched it change dramatically. Ok, I might date myself here.....when I started, email was still in its infancy and it was pretty rare for workers to do a significant amount of work away from the office. Smartphones did not exist and there were no online tools such as salesforce.com to access key pieces of information. So, in the past decade or two, the world of IT has grown dramatically, and now a new technology wants to take away more of their time? While the M2M industry has done a great job providing integration tools (such as our friends at Axeda, Sierra and Digi), it needs to do a better job getting this message out to the IT bosses, who are understandably reluctant to take on a new technology.
Reluctance to cut the wire I had thought that this worry had been gone a long time ago. Most of us are bombarded by wireless, ranging from WiFi networks at our home and office, the use of smartphones and even all 5,578 wireless remote controls that we use in our life. I would have thought that wireless had proven its reliability (I mean, other than the batteries being dead, how often does your TV remote not work!). However, I heard from a key customer recently that there is strong reluctance to not hard-wiring in key applications as the management was not convinced of the reliability of wireless technology. I think, as an industry, the M2M world needs to do a better job in selling how reliable wireless technology is and we need to do a better job pushing the benefits of wireless than we have done. I thought we had won this battle, but it appears that we still have some work to do.
As always, let Novotech know how we can help. You can check out our web page @ www.novotech.com. As well, follow Novotech on Twitter @NovotechM2M and you can follow me @LBNovotechM2M.