Location Based M2M OpportunitiesLocation Based M2M Opportunities

Michael Grossi, Director,Altman Vilandrie & Co.

M2M and “The Internet of Things” describe the connection of machines and sensors

Fixed (Wireline) Technologies Wireless Technologies

M2M and “The Internet of Things” describe the connection of machines and sensors through any means to the Internet

Industrial EthernetPowerlineBroadband

CellularGSM/GPRS/EDGECDMA/1xEV-DO3GSatelliteWireless LANWireless LANBluetoothZigBeeOther 802.15.4 and related technologies

M2M offers opportunities in many service sectors

Buildings/FacilitiesOffice Equipment

EnergyMeters

Medical/HealthcareMedical Devices

TransportationVehiclesOffice Equipment

HVAC/EnvironmentalSystemsAccess Controls

Consumer/ProfessionalWhite Goods/AppliancesGame Systems

MetersDistributed GeneratorsElectricity GridPipelines

IndustrialAutomation & ControlEquipment

Medical DevicesRetail

Scanners & RegistersLighting & Refrigeration Systems

Security/Public SafetyHomeland Security

VehiclesAirplanesTransport Systems

IT & NetworksEnterprise: IT/Data Center, OfficePublic: ServicesGame Systems

Consumer ElectronicsEquipmentCapital Equipment

Homeland Security Public: Services, E-Commerce, etc.

The M2M market is highl fragmented in each component of the al e chain no singleThe M2M market is highly fragmented in each component of the value chain – no single market leader has been established

Hardware Enablement Network Services Managed Services

EndUsersChip Vendors M2M Modules/

Devices

Aggregators/Platform Software

Comm ServicesValue-Added

Services / Applications

Machine to Machine Market Opportunitypp yM2M devices are poised for rapid growth, exceeding 600 million devices by 2015 and accounting for $24B in service revenues

Worldwide M2M Devices(Millions) CAGR%

92

25

473

615Middle East & Africa

Asia-Pacific

Latin America

North America

Central Europe

40%

42%

40%M2M – devices that communicate data wirelessly to other devices for the purpose of automating data collection and monitoring of large

102

13428

38

53

69

12

17

365

473p

Western Europe

40%

38%and monitoring of large complex systems/networks

26023

34

47

66

39

56

78

102

11

15

21

27

38

119

182

267

34%

40%

UtilityMeters

24 32 5083

124167

209

1116

1927

39

131981

14

59

2008 2009 2010 2011 2012 2013 2014 2015

Source: Strategy Analytics, AV&Co analysis

Revenue ($B) 7.6 8.5 10.1 12.9 15.9 18.5 20.9 24.2

Mobile Internet Devices (MIDs)Emerging MIDs and especially netbooks are gaining popularity worldwide, and will be a key driver of traffic growth within 3 to 5 years

W ld id M bil I t t D i W ld id N t b k/N tb k Shi t

633.2

Worldwide Mobile Internet Devices(Millions)

Worldwide Notebook/Netbook Shipments(Millions)

Netbooks/UMPCs

Notebooks

Netbooks/UMPCs Share %

416CAGR%

36%

51.7248.7

282.314.2%

17.6% 18.0%18.6% 18.3% CAGR%

25.8%

18.1%

MIDs cover a wide range of devices:

SmartphonesUMPCsNetbooksP t bl i ti d i

230.620.6

32.0

39.0

46.3

145.3

181.6

216.9

16.6%

Portable navigation devicesE-book readersPortable media/MP3 playersHandheld gaming devices

MIDs have Internet access via WLAN (WiFi) or WWAN

54

2007 2012 2015

124.7149.6

177.9202.4

2008 2009 2010 2011 2012

via WLAN (WiFi) or WWAN (3G or better)

2007 2012 2015 2008 2009 2010 2011 2012

All four U.S. carriers have made significant investments in strategic relationships or network improvements to capitalize on this emerging market

AT&T signed an exclusive deal with Jasper Wireless to facilitate

T-Mobile and Sierra Wireless agreed to k t th d t d l tJasper Wireless to facilitate

connection of consumer and M2M devices to their network (May 2009)KPN became Jasper’s preferred European network operator and exclusive operator in Belgium, G d th N th l d KPN

work together on product development, marketing, sales, and deployment of M2M solutions, starting in Germany (September 2009)

Germany, and the Netherlands. KPN has also made an equity investment in Jasper (Q1 2010)AT&T announced a developer connection kit to facilitate deployment of new M2M devices on

Cadec Global, provider of fleet management solutions, began an M2M partnership initiative with Aeris in February 2010

GE developed Wi-MAX-based smart meters that were available as of 2009GE Healthcare signed an agreement with Sprint for wireless networks, services, and software at six Texas hospitals (April 2009)

their network (March 2010)

Vodafone, Verizon, and nPhase 2009)

Sprint and M2M DataSmart have a multi-year agreement to facilitate the deployment of M2M devices on

, ,announced a strategic alliance to accelerate adoption of M2M technologies (February 2010)Verizon reported in Q1 2010 that 7.3% of 101 million wireless connections are M2M deployment of M2M devices on

Sprint’s network (September 2009)M2M

Diverse rate plan needs of different M2M devices and services means increased complexity on the part of wireless carriers

Supply Side Challenges

Operation/running cost was by far the highest concern of adopters surveyedData integration/ interoperability, initial/ installation

Demand Side Challenges

Evolving network technologies (GSM vs. CDMA, LTE vs. WiMAX) create complex choices for device manufacturers

g p y,cost, and development of new support structure followed in importance, but were still considered critical challenges

O i C /R i41%Ed ti th k t

Development of Support Structure

Initial Cost/ Installation

Data Integration/Interoperability

Operation Cost/Running

23%

24%

25%

26%

41%

Forming partnerships between operators and HDW vendors

Supporting open access network policies

Reducing M2M industry value chain complexity

Improving device certification process

Educating the market

Regulation &/or Liability

Gaining Successful Adoption

Complexity/ Risk Assessment

17%

17%

19%

21%

Establishing cooperation between carriers

Overcoming market fragmentation

Reducing sales cycle time

Identifying business models

operators and HDW vendors

0 20 40 60 80 100 120

Privacy & Security Issues

Reliability of Technology

Choosing Right Partner/ Supplier

4%

8%

10%

14%

Changing the M2M acronym

Eliminating channel conflict

Creating app. Developer awareness and interest

Forming partnerships with "machine" manufacturers (OEMs)

Sources: Wireless Week Magazine “A Web of Challenges, Connections: M2M,” 2/1/2010; Beecham 2008 M2M Adopter Survey

0 20 40 60 80 100 1200% 10% 20% 30% 40% 50%

GPS tracking and security are the most likely uses of M2M communication for SMBs based upon our survey

What are the most likely uses for M2M communications at your location? (select all that apply)Do you have any ideas concerning M2M that you would like to see developed?

34%Tracking and

Most likely uses for M2M communications Selected Comments from the interviewees

• “The current M2M applications would provide the resources that we are looking

32%

34%

Safety andsecurity

Tracking andnavigation

p ginto at this time such as tracking fleet vehicles”

• “Implantable chip to allow tracking access to sales reps. Make sure they work a full day”

17%Assetmanagement

y• “Read tanks remotely”• “Not familiar with the applications. Am

taking a seminar on this right now”• “Able to incorporate with in store computer

systems. Such as Open Table or Hot

17%Machinecontrol

systems. Such as Open Table or Hot Schedules”

• “Up - to - the minute information regarding wine barrel system pressure after harvest transmitted from remote location (i.e. form California to France or vise versa)”

0% 10% 20% 30% 40%California to France or vise versa)

• “Automation of commercial food production equipment, room temperature control”

Source: AV&CO primary research survey, n=500

Location based messaging and monitoring has many potential applicationsLocation-based messaging and monitoring has many potential applications

Customer Select Applications

• Key features across all applications include two-way, location-specific communication and monitoring• Opt-in and Opt-out models are available and have significant impacts on specific applications

Customer Select Applications

Government

• Natural disaster/crime/safety alerts• Crowd monitoring/management• Terrorist tracking and monitoring• Amber Alerts (improved response with tracking abducted child)• Monitoring of Check Points (e g borders battleground check points)• Monitoring of Check Points (e.g., borders, battleground check points)• Communication for military personnel family (e.g., birth announcements)

C i l

• Mobile device management• Monitoring foot traffic at major events• Customer notifications and communication

Commercial • Healthcare applications (monitoring, emergency response locating, messaging)• Order completion• Weather/safety alerts

• Weather Response: school closuresSt d t/ f lt tifi ti f h l l ll ti / b ildi hEducation

(select vertical)

• Student/ faculty notification of school class cancellation, room/ building changes• Communication of registrar and student finance deadline requirements• Tracking school buses/traveling teams• Crime/ safety alert

Parents • Family member locationParents y• Controls on Illicit text messages, emails, instant messages or voicemails received by children

Mobile Resource Management (MRM)

Types of MRM Solutions

Mobile Resource Management (MRM)MRM is a category of business solutions that enables companies to more effectively manage mobile workers, mobile tasks and mobile assets

Industry Drivers Key Purchase CriteriaTypes of MRM SolutionsField Force Management• Business need: to manage the field

workforce in order to reduce business costs and maximize ROI

Industry DriversAttractive, hard dollar ROI• Benefits include reduced overtime, fuel

and labor costs due to increased dispatch and scheduling efficiencies,

Key Purchase CriteriaFeatures and Functionality• GPS location, tracking, monitoring• GPS navigation and optimized

routingTi d di d tiField Service Management

• Business need: to manage the delivery of products and services to customers in order to maintain strong customer service while keeping business costs to a minimum

improved job completion rates, tighter control over spare parts inventory, and higher insurance policy discounts

Affordable entry points• The ability to monitor and track

employees and assets from IP-

• Timecard recording and reporting• Work order management• Alerts and geo-fencing• Data collection and reportsIntegration and Customization

OptionsField Asset Management• Business need: to manage fixed and

mobile assets in order to ensure utilization is maximized and therefore minimize costs

p yconnected devices and the growth of low-cost GPS-enabled mobile devices has increased affordability and flexibility

Competitive advantage with customersMRM iti l i t ’

p• Simple configurations: back-office

integration not required• Configurations and integration:

MRM software is configured with back-end systems

• Complete customization: open• MRM can positively impact a company’s customer satisfaction and customer retention metrics through more timely and prepared technicians and increased first call resolution rates

Complete customization: open developer tools and APIs for customized development

Cost Components• Mobile devices• Monthly carrier data subscription

MRM li ti ft• MRM application software• Systems integration work

Strategic Implications in the M2M Ecosystem

•Given the industry fragmentation – how will industry evolve?

•Reliance on carriers and other third parties to provide network access – how can carriers play a larger role?

•Who is positioned to win in the space?

Contact DetailsContact Details

Michael GrossiMichael GrossiDirect 617.753.7209Mobile 617.480.9389mgrossi@altvil.com

Altman Vilandrie & Co.53 State Street37th FloorBoston, MA 02109Telephone 617 753 7200Fax 617 439 4290www.altvil.com

Michael Grossi, Director

Michael is a Director with Altman Vilandrie and Company and focuses on wireless and digital media sectors. Prior to AV&Co, Michael was an SVP & GM with Helio, a highly innovative MVNO

in the U.S. While at Helio, Michael led all Strategy, Business/Corporate Development and was GM of the Mobile Data Services team responsible for both the data P&L and product

development.

Prior to AV&Co, Michael was a Vice President with Adventis, a strategy consultancy, and a leader in the wireless practice and has 10 years consulting experience. Michael has led many strategy engagements for his clients spanning all facets of the wireless value chain including equipment

manufacturers, service providers and content providers.