M2M — The Next Wireless Frontier

Today’s hype around the wireless Web typically centers on consumer applications. Witness the phenomenal popularity, especially among teens, of NTT DoCoMo Inc.’s i-mode wireless services in Japan. According to research by Nissan Motor Company, many Japanese kids pay more each month than the cost of a car payment to send messages and play interactive games.

But wireless service companies elsewhere in the world fret about whether they can find the true “killer app” to yield returns on the billions of dollars they’ve invested in new licenses and third-generation (3G) infrastructure. We think a shift in focus from consumer-to-consumer to machine-to-machine (M2M) communications may offer the solution.

According to ARC Advisory Group, a leading analyst of industrial automation and e-business, sales of cellular engines — the “guts” of a cell phone, without key pads, microphones, and power chargers — will outsell cellular phones within the next few years. These cellular engines will provide M2M links among stationary and mobile machines to central enterprise systems. In many cases, field operators will have direct access to remote devices to gain critical operating information. In other cases, the machines will interact directly during the night when wireless networks are less congested from consumer use.

If you have ever visited an English pub, you have surely noticed the gaming machines in a corner and patrons happily clunking £1 coins in the slots. But even as you noticed the machines, you probably didn’t consider the complexity of managing these devices. Pub gaming machines offer a range of features, but eventually regular users tire of playing the same games, so machine owners must physically rotate the machines among pubs to keep up user interest. The machines must also be serviced, and the coin boxes must be emptied regularly to secure the profits. M2M commerce can dramatically simplify the process, increasing revenues and operating efficiency.

Ztango Inc., a pioneer among M2M wireless service providers, has developed technology specifically for gaming machines that can simplify or eliminate these tasks, and more. When problems occur, remote diagnostic technology built into the machines instantly connects to central operations with information about the failure. Repair technicians can then get the machine back online — and earning profits — far faster than in the past.

Wireless connectivity will also allow the machine operator to track daily yields and better plan field visits to collect the coins, reducing the cost of collection. Most importantly, machines can be remotely reconfigured with new software to create a new user experience, rather than relocating an entire machine. Plus, information on daily activity is collected via the wireless network each night, which allows the fleet owner to accurately assess the popularity of each game and rotate the mix without ever setting foot in the pub.

M2M also has huge potential in industrial settings. Take the remote monitoring of plastic resin storage tanks located outside the thousands of factories around the world manufacturing plastic parts. These silos typically hold 40,000 to 60,000 pounds of resin and need refilling every five to 30 days. Programmable Logic Controllers (PLCs), special-purpose industrial computers, monitor and control many storage tanks, but few resin tanks are linked into a central control system for quality assurance or materials management. Accordingly, most materials managers send a technician to bang a wrench on the side of the tank or plunge a stick in from the top to determine inventory levels and plan replenishment orders.

Enter a new offering that combines industrial systems and Internet technology expertise, from a joint venture between the GE Fanuc Automation Corporation and Cisco Systems Inc. By adding a cellular module with unique wireless software reporting data to a central host computer, materials managers can remotely monitor inventory levels to ensure just-in-time replenishments. The device can be configured to link directly to the supplier sales and logistics systems to enable vendor-managed inventory, creating a differentiated service for an otherwise commoditized business.

As these examples indicate, M2M applies in a variety of contexts. With the expansion of the wireless infrastructure, there will be many new cost-effective applications. The greatest challenge to the expansion of M2M comes from the traditional barrier to innovation: change management. Although end-users immediately see the quantifiable benefit of M2M communications, IT professionals, unfamiliar with wireless technology, fear the unknown. The task of putting in place and managing comprehensive M2M wireless data solutions requires expertise in many areas, from machine interface and equipment installation to managing complex integration with carrier networks and enterprise systems. But many companies are now blazing a trail that others will inevitably follow — the newest fast lane on the information superhighway.