Promising M2M Rich in Challenges, Too

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The machine-to-machine (M2M) industry, which is closely related with the more evocatively labeled "Internet of all things," is extraordinarily promising.

I've written a lot about it from that perspective. Slapping an IP address on everything - something that is quite possible in an IPv6 world - creates a landscape in which refrigeration units traveling on trucks speak with devices at the dispatch office and sound an alarm if the temperature rise too high, where highway sensors tell GPS units of deteriorating traffic conditions and suggest alternate routes and millions of other staccato communications are done without the interference of us pesky humans. (Those humans do, of course, have to get the ball rolling. Here's a picture diary of a CNET reporter's visit to Sprint's M2M Collaboration Center in Burlingame, Calif.)

Telco 2.0 released a report - apparently this week, though it isn't really clear - on the vast difficulties of this market. The firm describes a business that is very promising, but incredibly diverse and horizontal. It points out that there a multiple types of networks, customer types, service providers and devices. There are significant and very basic barriers (lack of uniformity in solutions, performance and cost issues, and low consumer understanding). In the final analysis, the firm says that the real money will be made in "software enabling services," which, as the name implies, is the value-added service layer atop the pure connectivity. Connected Planet had its own take on Telco 2.0's rather open-ended presentation, which is designed to promote a research report prepared by the firm.

Other firms are talking about M2M's potential as well. Last week, MarketResearch announced a study that predicts the number of connections will explode from 100 million last year to 1.5 billion in 2020. Smart metering, the study found, represented 97 percent of the connections in 2010 and will add two percentage points by 2020. The release identifies nine drivers and seven obstacles to M2M.

Finally, Nokia Siemens Networks released research that said as many as 1 billion M2M subscriptions may exist by 2015. The dynamics, noted IT Pro in its story on the research, are unique:

But the volumes of data created by machine to machine communications are relatively small, Nokia Siemens Networks suggested. A typical M2M connection can generate as little as 1MB of data a month, which is well within the capabilities of the older GSM networks. GSM, for its part, still offers wider network coverage than even 3G, and especially new 4G networks.

Nobody doubts the immense, even amazing, potential of the M2M market. But, as the Telco 2.0 report points out, there is quite a chasm between potential and actual profits. The next few years will be key in seeing whether the jump can be made.