Machine-To-Machine - Real Opportunity in Wireless Data Business White Paper White Paper

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Nokia Corporation Nokia Mobile Phones P.O. Box 100 FIN-00045 Nokia Group, Finland Tel. +358 7180 08000 Telefax +358 7180 34016 www.nokia.com/m2m Machine-to-Machine - Real Opportunity in Wireless Data Business White Paper White Paper

Contents 2. Introducing the M2M Concept

1. Executive Summary ...... 2 2.1 Connecting People, Devices business, creating totally new opportunities, 2.2 The Ever Expanding Field of 2. Introducing the M2M Concept ...... 3 and Systems and essentially making daily life easier. By M2M Communication means of M2M solutions, which are often M2M stands for machine-to-machine, M2M solutions are typically created for 2.1 Connecting People, Devices and Systems ...... 3 tailored to meet the specific demands of mobile-to-machine, and machine-to- collecting information, setting parameters, each situation, companies can automate 2.2 The Ever Expanding Field of M2M Communication ...... 3 mobile and is often related to the concepts sending indications of unusual situations their processes and integrate their assets 2.3 Requirements for Successful M2M Solutions ...... 4 of telemetry and telematics, which can be or taking care of an on-line transaction by with their IT systems. The goal is to increase considered as subsets of the overall means of wireless data connection. There 3. M2M Solutions - An Essential Part of the Wireless Data Market ...... 6 the performance and competitiveness of business scope of M2M. In the Mobile World, are several different application segments, the company through increased efficiency, 4. GSM - The Technology for M2M Solutions ...... 7 M2M is about combining in which these data links can be exploited. cost savings, additional revenues or better telecommunication and information New M2M applications are continuously 5. Business Networks in the M2M Market - Several Business Opportunities ...... 7 service levels. It is rather typical that the technology (IT); wireless data is used to emerging, and they may serve almost any rationale for utilizing M2M solutions is the 5.1 Corporate Customers ...... 8 establish a link between remote devices business area and physical environment. avoidance of physical visits, e.g., meter 5.2 Carriers and Service Providers ...... 8 or locations, systems, and people. M2M It is fair to say that only imagination limits reading visits, and the cost savings that broadens the scope of communication from the range of M2M applications. However, 5.3 M2M Solution Providers ...... 9 can be attained through exploiting the how we have are used to perceiving it - it in order to give a concrete picture of the real-time information provided by the Abbreviations ...... 10 is not only people that utilize total business potential, some of the wireless data connection. Furthermore, telecommunication and Internet recognized M2M applications are presented through M2M solutions, companies can technologies to communicate but the and grouped based on their uses and better analyse their current business and machines around us as well. application environments in figure 1. processes and thereby detect the areas that can be further improved. The M2M business is about creating solutions aimed at improving existing

1. Executive Summary Public traffic services Telemetry - Traffic information Sales & payment - Utility meter reading - Electronic tolling - vending machines - Parking meters - Road usage management - POS terminals - Industrial metering - Speed cameras - Gaming We have recently witnessed a series of enable the vision of a Mobile World and a Nokia supports open technologies in M2M - Elevator control - Changing traffic signs - Photocopiers fundamental changes in communication true independence of location, we have to business and will actively drive the market - Vending machine control culture and technologies. Almost twenty enable communication between toward global M2M standards. Our partners Security and surveillance years ago, the introduction of mobile individuals, devices and systems. In the in M2M business will benefit from our long Service & maintenance - Access and mobility control Telematics / in-vehicle - Elevators devices freed personal voice context of wireless data, machine-to- experience and competitive position in the - Surveillance cameras - Driver navigation - Industrial machines communication from location. machine (M2M) solutions are an ideal mobile marketplace. Furthermore, the - Driver safety - Property monitoring Subsequently, customers learned to satisfy bridge from 2.5G business to the third highly advanced Nokia M2M Platform, - Vehicle diagnostics - Environmental and weather monitoring Industrial some of their other communication needs generation world. The service-focused consisting of Nokia GSM Connectivity - Location services - Traffic information applications using data services on their devices. A business models of tomorrow may already Terminals and Nokia M2M Gateway, will - Process automation mobile connection to the Internet was be here in the form of M2M solutions. benefit corporate customers, carriers, Telemedicine introduced for mobile device users, Together with mobile devices targeted for application developers as well as service Home applications - Remote patient monitoring - Control of electrical devices Fleet management expanding their communication options personal communication, Nokia also offers and solution providers in creating and - Remote diagnostics - Door locking system management - Cargo tracking even further. a platform for creating and operating M2M maintaining industry-leading M2M - Equipment status tracking - Heating system control - Route planning - Staff scheduling solutions, thereby enabling the true solutions. - Order management The next step in the evolution of exploitation of the opportunities offered communications is extending this by wireless data. connectivity beyond human beings. To Figure 1. Some identified M2M applications.

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Currently, the majority of the M2M solutions M2M solutions should be designed to grow the needs of each specific business. M2M 2.3 Requirements for Successful vehicles and containers) to its existing IT because this is likely to lead to the loss of are company internal, and their focus is on along with the company and its needs. solutions should not be seen as merely M2M Solutions infrastructure. Therefore, expertise in both much of the benefit achieved with the improving processes within the company. Technology development or changes in narrow vertical applications, isolated from mobile and Internet protocol (IP) solution. Therefore, easy upgradeability of The requirements of a successful M2M However, an ever growing number of M2M the business environment may create a the external world, but rather as a tool to technologies will be required for effective both software and hardware components solution are reliability, upgradeability and solutions also aims to serve the customer need to introduce new applications or integrate devices, various applications, application development. The reliability of is one of the key elements of an M2M affordability. Today it is not always easy to base of the company by offering value services. Vending example below illustrates people and companies so they become a solution can be guaranteed only by taking solution. meet all these requirements, and even adding services to them. Virtually, all the an M2M solution that develops over time interactive parts of the Mobile World. an end-to-end approach to the though M2M business is in a phase of rapid machines can be networked into the and that ultimately combines both development work. In addition, some The factors affecting the affordability of a growth, even more efforts will be needed Internet. Later, these networked machines company internal applications and applications, e.g., mobile payment or solution are the costs of application to fulfill these three basic requirements. As provide a number of local information consumer services. It even generates new transferring price information, set higher creation, system components, operation, the number of different M2M solutions is points and services for mobile device users. business. requirements for security than others. and upgrades. The optimum cost can be high and the requirements presented by Thereby M2M can be seen as an entity Efficient information security measures, reached only by considering all these the customers are case-specific, application creating information and content that is Similar types of opportunities as in this such as data encryption and authentication, factors; optimizing only one of them could development and system integration are needed in the fulfillment of the Mobile example can be found in almost any are needed to provide adequate security. be achieved only at the expense of the often defined as the most problematic World vision. segment or operating environment. The others. One can minimize the application areas of M2M solution creation. So, solutions just have to be tailored to serve Upgradeability means that the customer creation and upgrade costs by selecting developing and utilizing efficient tools for must be able to take advantage of the reliable products with efficient development this area are one of the key issues in latest technology, whether in terms of lower tools and standard, open interfaces. meeting M2M solution requirements. equipment costs, higher data transmission Operational costs may be minimized by, rates, or more affordable operating costs. for example, using different data bearers M2M solutions will typically link a company's However, solution upgrades cannot lead flexibly. remote assets (e.g., game machines, to expensive re-development cycles

An M2M Solution for a Vending Business The first target of the solution is to minimize the costs of vending machine operation by using remote monitoring, data collection and configuration of the machines. Maintaining optimum stock in each machine, undertaking proactive maintenance, immediately fixing malfunctions and changing prices remotely are just a few of the options for improving efficiency that this M2M application provides.

The M2M solution in the vending business may be expanded by providing the customers with the possibility of mobile payment. In addition to getting rid of the trouble and cost of handling coins, mobile payment increases sales. The mobile payment solution can be implemented today in cooperation with a carrier, and the evolution of mobile devices will enable new concepts to be applied in the future. Creating a direct link to the consumer through his/her mobile device will for the first time make it possible to build customer profiles and provide personalized services and offerings to customers based on their individual needs.

The next step of the M2M solution in the vending business could be to expand the business scope of a vending operator. The M2M-enabled machines could be used to provide information or content - e.g., news or games - that are financed by a third-party content provider. The same content may also draw people to the machine and make them spend an extra dime for a snack or a beverage while there.

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3. M2M Solutions - An Essential Part of 4. GSM - The Technology for the Wireless Data Market M2M Solutions

As we move rapidly toward the third growing; it would be shortsighted to believe and application concepts are required as It is obvious that solution functionality and providers enables the fulfillment of various generation Mobile World, more attention that Web browsing is all that the wireless a foundation for successful business cases user experience are the things that really customer needs. That there are multiple than ever is being paid to the wireless data data business will be about. As the number before the data market will really take off. matter to M2M customers; they simply do providers also guarantees the continuity of market, particularly to the service offering of different wireless data uses and By means of M2M solutions, the desired not want to be concerned with the GMS technology - no single player can bring aspects of it. While the core of the applications increases, it gets rather content can be created in bi-directional underlying technologies. But when down the GSM market. communication business remains in the challenging to come to grips with the full manner. M2M applications enable designing an M2M application or a solution, increasingly saturated and very competitive variety of these applications. By analysing meaningful, interesting and tangible real- the question of what technology is the most A great benefit of the GSM technology is the voice market, there is a constantly growing wireless data services and applications time content for the professional and suitable is to be considered carefully. This high-level data services, with security demand to look for alternative revenue through customer identity, network consumer third generation applications. decision could have a far-reaching impact features, that are already available with GSM streams - revenue streams generated by environments, access methods, and on the operational costs or the possibilities networks and products. GSM networks the utilization of wireless data. In order to interaction modes, the complex field of M2M solutions will be a significant sector for expanding the solution. There are several usually offer several bearer options, achieve the future growth in the diversity wireless data business can be clarified. in wireless data business, as they enable alternatives, from landlines to proprietary including General Packet Radio Service of data business, completely new strategies mobile connectivity and Internet access data technologies. But it has become rather (GPRS), High Speed Circuit Switched Data and business concepts are to be conquered. When concentrating on communication everywhere. As noted, the importance of evident that, where available, Global System (HSCSD) and SMS. The data services are The Short Message Service (SMS) has already and the means of data access, one can wireless data is increasing rapidly. Nokia for Mobile Communications (GSM) is most continuously developed further, which evolved from a means of personal identify three types of wireless data service will provide a full product portfolio for often the optimum technology for M2M enables a long life cycle for M2M solutions communication to a popular service segments: messaging, browsing, and M2M. exploiting wireless data business solutions. build on GSM technology. The future delivery medium and a real revenue source Each segment has its unique requirements opportunities - together with mobile development path is essential, as M2M for innovative carriers; it is a good example for service creation and strategy devices targeted for personal GSM is global, proven system with solutions are often long-term investments. of how technological innovations influence development. It should be noted that M2M communication, Nokia also offers a considerable benefits compared to other the process of service evolution and thereby applications may be combined with platform for creating and operating M2M technologies. The history of openness and A GSM solution is easy to install. No cabling offer new possibilities to enhance customer applications from the other two areas in solutions, enabling the true exploitation of standardization of GSM enables the creation is needed; equipment with GSM connectivity satisfaction. order to create solution packages that best the opportunities offered by wireless data. of global M2M solutions. With the can be easily moved from one location to satisfy overall customer needs. introduction of 850 MHz bandwidth beside another. For mobile applications, e.g., those But only the first steps have been taken the 1900 MHz bandwidth, widespread M2M in a vehicle, wireless technology is the only toward the future Mobile World. The Content is the real driving force behind the solutions will became a reality also in the option. wireless data market is continuously wireless data business. Also strong service Americas. Therefore, it is not an exaggeration to state that GSM technology enables the The most important aspect of GSM creation of truly global M2M solutions. GSM technology is that it enables M2M business technology roadmaps are created jointly entry now. With GSM systems in almost two with all the major players in GSM industry, hundred countries, the technology is also to guarantee the same level of stability and rapidly becoming the world's most popular global compatibility in the future. third generation evolutionary route. M2M Messaging Advanced solutions may be created today Browsing Text messaging Security and surveillance The GSM market has faced a huge growth based on existing technology, and these Internet data access Multimedia messaging Automatic meter reading during the past decade, and the trend is solutions and services will create an easy Intranet data access Instant messaging Vending machines continuing. Consequently, the prices of GSM evolution path to third generation business. Streaming Unified messaging Fleet management technology and communication are E-mail Telemedicine etc. decreasing, benefiting M2M solutions from the beginning. In addition, the high number of GSM product and communication Figure 2. Wireless data segments.

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and competition in the mobile business development, system integration, mobile business opportunities for companies that 5. Business Networks in the M2M Market - Several tightening up, carriers are looking for new virtual network operator activity, content understand these needs and are able to revenue streams. M2M solutions provide a provision, or a combination of any of these. adopt the role of an M2M solution provider. Business Opportunities new, appealing opportunity to strengthen By noticing and utilizing these business a carrier's position in the profitable As the demand for M2M services increases, opportunities in the corporate sector, corporate sector and to expand its business there is a need for a broader spectrum of current and future solution providers can scope toward providing total solutions. service providers. M2M service provision is expand their business and thereby increase an outstanding business opportunity for their revenue streams. Also, carriers can The overall business trend of networking, From the carrier's point of view, the M2M existing ASPs that may use M2M services choose to take the role of a solution partnering, and focusing on core business scenario is ideal in many ways. in expanding their portfolio for existing provider rather than that of a data carrier. competencies applies also to the M2M Application Application Traffic can often be concentrated in the off- customers or to penetrate new business M2M solutions complement a carrier's development business. Networks of companies are development System peak hours to balance capacity utilization, areas. Also, companies currently acting in existing service portfolio well. support needed in M2M solution creation. Specific integration GSM and much of the traffic flow is predictable. completely different fields may find M2M knowledge of the business environment, terminal Business and With M2M solutions it is possible to expand service provision gives them a way to supply solution communication technologies, software M2M Corporate the customer base to new market expand their business scope and fully training consultancy development, total system integration, customer segments, and win all mobile traffic of the capitalize their business understanding. It customer care and billing is required when Network Gateway customers by bundling traditional telecom could raise their profitability to a whole Solution creating a successful M2M solution. access access and services with company-specific solutions. new level. support services Therefore, such solutions are always and upgrades M2M solutions make it possible to generate produced as a joint effort from experts in significant additional revenues with a 5.3 M2M Solution Providers several different fields. The variety of minimum initial investment. Furthermore, While, in the creation of M2M solutions, activities needed in creating and operating M2M applications offer good means for the Figure 3. Activities needed in M2M business. value networks consisting of several an M2M solution is illustrated in figure 3. content creation, which is especially needed companies are needed and the customer in the third generation world. is "owned" by the whole network, it is As described earlier, the variety of M2M The business opportunities offered by M2M Furthermore, when competition in the rather evident that the customer typically application segments is almost limitless. business from the perspectives of selected traditional business area is getting more The Nokia approach enables the emergence wants to deal with a specific company The solution requirements and the optimal M2M counterparts, i.e., corporate customers, intense and eating into profits, expanding of a new business model into the M2M instead of the whole network when division of the roles between the parties carriers and service providers, and M2M the business - for example, in terms of market - some companies, including acquiring an M2M solution. These specific within the value networks differ accordingly. solution providers, are discussed in the service provision - with the help of an M2M carriers, can adopt the role of offering M2M companies can be defined as M2M solution Furthermore, one company may adopt following. However, these are not the only solution may be a way to maintain gateway services to several different providers that actually offer the total M2M several roles within the network if the parties benefiting from M2M solutions. In profitability. companies. M2M service providers play a solutions to the customers. Thereby, they required competencies are in place. The fact, we all may benefit from M2M - value critical role in developing and expanding are in the central role when interacting optimum division of activities and roles is generated for consumers through M2M An M2M solution integrates all assets of a the M2M business, and their significance with the customers. must be defined individually for each M2M business networks, in the form of new, company in one complete system, including will only increase along with the growing solution. better services. those in the field and even in various demand for M2M solutions. M2M solution providers will typically have locations around the world. Operation costs competence in some particular aspect of One of the greatest challenges of the M2M 5.1 Corporate Customers can be minimized when needless site visits Basically, offering gateway services means M2M solution creation, e.g., in system business seems to be that of mastering The obvious beneficiaries of M2M for service, maintenance, machine updates managing and hosting the data link integration or application software the complexity of the value network which applications are corporate customers i.e. and so on can be avoided thanks to online between customers' remote and server development. However, it is most likely that provides total solutions. Customers do not customers of total M2M solutions. connections with all machines. Manpower applications. However, the business scope they need partners in their solution creation want to purchase the solution piece by Companies are constantly looking for new can thus be used more productively. The of M2M service providers may vary efforts. Therefore, successful orchestration piece from different companies, and instead ways to increase efficiency, cut costs, and amount of downtime can be minimized considerably. Probably the best known of the M2M business networks is of central of reliable components they want end-to- improve customer service to gain a or even eliminated. Sometimes, M2M business model is that of an application importance, particularly from the solution end solution reliability. Therefore, the competitive edge in their core business. solutions can also help meet requirements service provider (ASP), which manages and providers' perspective. winners of the M2M race will be those The possibilities raised by M2M solutions set by legislation. For instance, energy hosts software on the basis of renting or companies that succeed in establishing are already recognized in several industries. meters should be read a certain times a leasing it to companies wishing to minimize Because many corporate customers will and managing partner networks with a By means of M2M solutions, companies can year - an M2M solution can ease this task. the cost of their IT resources and find that M2M provides the way to make top competence portfolio for creating end- more easily analyse their current business equipment. In addition, M2M service their operations more profitable than to-end solutions. and processes, which enhances the 5.2 Carriers and Service Providers provision may include application before, there are plenty of untapped continuous improvement in the company. With the voice market becoming saturated

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Abbreviations

ASP Application Service Provider GPRS General Packet Radio Service GSM Global System for Mobile Communication HSCSD High Speed Circuit Swithed Data IT Information Technology M2M Machine-to-Machine, Machine-to-Mobile, Mobile-to-Machine SMS Short Message Service

The contents of this document are copyright © 2002 Nokia Corporation. All rights reserved. A license is hereby granted to download and print a copy of this document for personal use only. No other license to any other intellectual property rights is granted herein. Unless expressly permitted herein, reproduction, transfer, distribution or storage of part or all of the contents in any form without the prior written permission of Nokia is prohibited. The content of this document is provided "as is", without warranties of any kind with regard its accuracy or reliability, and specifically excluding all implied warranties, for example of merchantability, fitness for purpose, title and non-infringement. In no event shall Nokia be liable for any special, indirect or consequential damages, or any damages whatsoever resulting from loss of use, data or profits, arising out of or in connection with the use of the document. Nokia reserves the right to revise the document or withdraw it at any time without prior notice. Nokia and Nokia Connecting People are registered trademarks of the Nokia Corporation. Nokia product names are either trademarks or registered trademarks of Nokia. Other product and company names mentioned herein may be trademarks of their respective owners.

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