As we continue to explore the evolution of M2M, KPMG's Sanjaya Krishna spoke to Dan McDuffie to find out how the M2M is evolving.
As we continue to explore the ongoing evolution of M2M on the technology, media and telecoms sectors, Sanjaya Krishna, KPMG in the US's Digital Risk Consulting Leader, spoke to Dan McDuffie, CEO of Wyless – a leading provider of global M2M wireless connectivity solutions and managed services – to find out how the M2M managed services sector is evolving. This article complements our previous piece on The Internet of Things (IoT)/M2M where we spoke with Cisco Systems about their view of the fast-moving M2M space.
Sanjaya Krishna (SK): Tell me a bit about Wyless' approach to M2M managed services and the role your company plays in the M2M value chain.
Dan McDuffie (DM): We see ourselves as offering a smarter approach to the challenges of M2M. We understand that every application has its own unique requirements and that customers need access to a wide range of highly-specialized services backed up by dedicated support.
We built our company on the realization that for the vast majority of customers, these needs cannot be met by the traditional mobile network operators (MNOs). No single large operator is capable of providing sufficiently flexible services or the high levels of technical expertise and support required to successfully deploy and manage innovative M2M applications.
That’s why, over a decade ago, we developed a multi-carrier global wireless data network, along with advanced management software and a comprehensive suite of M2M services. We underpinned this with dedicated customer support teams and technical experts. And now, we offer a seamless end-to-end solution that currently powers some of the world’s most advanced, scalable and reliable M2M applications.
SK: People often mistake Wyless for being a Mobile Virtual Network Operator (MVNO). What makes Wyless different?
DM: That’s true. The simple explanation is that most MVNOs sprung up as virtual network operators on the voice side of the business, so they had no real infrastructure; much like a marketing company with a billing element connected to a mobile operator. Think Simple, Virgin or Boost Mobile.
The fact is that Wyless runs a physical network – we look more like a wireless ISP in that we have our own radius core, our own firewalls and routers – and we connect to the mobile operators through physical infrastructure. It’s all about having a managed network. So while we most certainly buy data from mobile operators and then resell that as a managed service to our customers – ASPs, large enterprises and OEMs in the M2M space – we are really more of a managed network than an MVNO.
SK: What do you see as challenges in the M2M market?
DM: What we’ve seen over the past 10 years or so is that the M2M market is very fragmented. Those organizations investing in M2M are really struggling with bringing some simplicity to the technology, particularly when they stretch across multiple mobile operators and geographies. What we do is provide an agnostic service layer that brings together all of the solutions they need to make that project a success.
Wyless started primarily as a managed connectivity business that effectively helped organizations connect to multiple mobile operators. But today we’ve really morphed into more end-to-end solutions that go far beyond the connectivity layer to include life-cycle management, engineering services, customer software development, support and billing and so on.
SK: Can you give me an example of this end-to-end view of M2M managed services?
DM: Say that you are a big OEM manufacturer of alarm panels that wants to embed cellular connectivity into your product. But since you are traditionally a manufacturer, you probably aren’t prepared to do all the stuff that comes with that – such as activations, coverage analysis and trouble shooting for installations. More to the point, it would mean moving from a capital expenditure-based product to an operating expenditure model which is quite a different thing.
So we’ve really created a set of solutions and tools to deliver those services through an M2M managed service model. Maybe it’s just that they need help handling the support, or maybe it’s the full breadth from activations through to billing and customer service. Of course, that’s on top of the ‘bread and butter’ services that other managed services providers deliver – assessing the data profile, the geography and the security requirements and then managing multiple MNOs to deliver a robust and secure connectivity service.
SK: What has the reaction been from the MNOs?
DM: Fantastic. We have already partnered with 15 MNOs including some of the world’s largest, and we expect to have more than 20 MNO partners by the end of this year. What that means for our customers is that we have a wider geographic coverage and can help deliver services into markets where they do not have an existing relationship or network.
But it’s worth noting that there has been quite a shift in the position of the MNOs where now they are really starting to recognize the value of their partnership ecosystem and – particularly over the past 12 months or so – have been exploring new ways to reduce the complexity of their business.
I think there are three key areas where MNOs are now realizing the value that a managed services provider like Wyless can offer. First, we’re able to help them cost-effectively capture the middle market which has faster and more reliable ROI than many of the larger targets they are chasing in-house. Second is that we can partner with MNOs to fill areas that are ‘off-footprint’ since we have networks and relationships with MNOs in other markets. And I think the third advantage that the MNOs recognize is that we have highly leveragable infrastructure that can help move bespoke projects forward faster and more flexibly.
Basically, we’re the kind of guys that the MNOs go to when the Internet of Things becomes too complicated or too costly for them to do on their own.
SK: We’ve also seen some of the MNOs make significant moves into some of the verticals themselves. How is that impacting your business model?
DM: There’s no doubt that some of the big MNOs are strengthening their M2M capabilities in certain verticals. Verizon and Sprint are very strong in some verticals like telematics, AT&T is doing some interesting things in the security vertical and DeutscheTelekom is doing lots of work in smartgrid technology in Germany for instance.
But we also recognize that few MNOs are about to start creating billing or customer care solutions for these verticals. So I see Wyless and our peers as the guys that fill in the gaps between all of these things; we’re the ones that carry the tool box and medical kit and say to the MNOs, “let’s really understand what you need to do in order to get your vertical products to market.”
SK: And what are some of the more active verticals from your perspective?
DM: Obviously, the fleet sector was one of the first adopters of M2M so we – and most of our peers – have seen significant activity there over the past decade. Location security services is also one of those really big verticals that has matured well and continues to be quite active.
One sector that Wyless is particularly focused on is healthcare. On the one hand, we’re seeing a lot of medical service companies come up with tools that use the professional’s own handset – so BYOD or bring your own device models – and that’s a particular challenge when you are rolling out M2M. It’s also going to be a huge vertical because the home diagnostic market is just taking off, so while there are only about a million remote diagnostic devices in the US today, we think we’ll see something like 50 to 60 percent growth (CAGR) in the market over the next few years.
I think the key to succeeding in these verticals, however, is data security and privacy. Whether it’s over alarm data and connections, medical devices, point of sale devices and ATMs, devices that require PCI compliance and, in the medical field, HIPAA compliance; these are all verticals that demand an end-to-end view of security, privacy and policy management. So, clearly, this will be a critical consideration for MNOs and their clients.
SK: What are some of the big issues impacting the adoption of M2M today?
DM: One of the biggest barriers to entry in the US right now is the fact that 2G, 3G and 4G all have life-cycles to them – particularly 2G and 3G – and that means that there may not be a lot of customer service at times. So a lot of MNOs and their customers are talking about the move from 2G to 3G but really there are no guarantees as to how long high speed packet access (HSPA), and the like, will be available in the market.
I think the question of SIM card portability will also become an issue going forward. Once a customer deploys hundreds, thousands or tens of thousands of devices on a mobile operator’s network, their ability to change based on coverage or technology becomes quite prohibitive. I’m not sure that the FCC in the US has really considered how they are going to deal with that question, but it will certainly be important in driving adoption in the US.
SK: It sounds like the market is only just starting to open up.
DM: It certainly is. If I just look at the MNO side, I see a lot of money being spent in the M2M divisions and – from an outsider looking in – it seems like they are putting a lot of resources towards chasing bespoke type arrangements. But once these MNOs start to challenge the ROI behind some of that, they quickly start to think about outsourcing or partnering to deliver the solution faster, more flexibly and more effectively. That’s where companies like Wyless really start to excel so that we can take advantage of these enormous opportunities in the market.