Why M2M + the Internet of Things = $1 trillion

Why M2M + the Internet of Things = $1 trillion

The rate of adoption for machine-to-machine, or M2M, technologies enabling devices of virtually every size and function to share valuable data will be nothing short of mind-boggling over the next seven years — becoming an almost $1 trillion industry by 2020, according to a new report published by the Carbon War Room.

What exactly does that mean? By that timeframe, there will be approximately 12.5 billion devices endowed with sensors that enable them to be controlled, monitored, and automated based on our wishes, according to 2012 data from Machina Research cited in the report. Everything from intelligent, programmable light switches to buildings sensors that keep tabs on ambient climate and operating conditions to sensors that monitor moisture in agriculture fields will communicate with the so-called Internet of Things, as these billions of devices have come to be collectively known.

The potential benefits center squarely on improved efficiency, with particular promise for applications in energy, transportation, agriculture and the built environment.

By the end of the decade, for example, the Carbon War Room report predicts that M2M solutions and related technologies could help reduce greenhouse gas emissions by 9.1 billion metric tons or gigatons (Gt) annually. That's an amount equivalent to the total emissions attributable to the carbon-intensive economies of the United States and India in 2010.

The big reason you should care is this: M2M promise to be instrumental in helping businesses reduce energy and water consumption — without forcing them to constrain growth. That's a position that sits well with Carbon War Room, started by entrepreneur Richard Branson, who advocates the notion that sustainable business practices can yield substantial returns.

"In the past, sustainability often meant privation — a contraction of economic activity, but by optimizing the functions of our ever more complex industrial societies, M2M could represent a solution to the interconnected global challenges of resource scarcity and climate change," write the Carbon War Room report authors. "If we utilize technologies such as M2M to their full potential, 'low carbon' will by synonymous with economic growth and sustainable prosperity, now and into the future."

Given the role that wireless connectivity will play in enabling M2M, it shouldn't surprise you to hear that AT&T helped underwrite the analysis.

Consider that in 2011, the number of wireless connections used for M2M applications grew by about 37 percent to 108 million, according to Berg Insight. Europe will claim the biggest share over the next seven years, with 3.5 billion connections by 2020, although China is leading the way in incorporating M2M in its national infrastructure.

"We've seen the great potential in this technology and made aggressive investments to capitalize on that potential," said John Schulz, director of sustainability at AT&T.

That said, here's the estimated environmental impact on the four key industries that M2M promises to disrupt:

  • Energy: Savings of more than 2 Gt of carbon dioxide (CO2) emission, via smart meters and demand-response applications
  • Transportation: Reductions of close to 1.9 Gt of CO2, through route optimization of planes, trains, trucks and ships.
  • Built Environment: CO2 emissions cuts of 1.6 Gt, related to energy efficiency of heating, ventilation and air conditioning (HVAC) systems, lighting, appliances and security systems.
  • Agriculture: Savings of about 1.6 Gt of CO2, through M2M-enabled forestry management, harvesting, fertilizer applications and water use.

What's holding things back?

The report tempers its optimistic view by pointing to five barriers that could make it tough to scale M2M technologies:

  1. The reliance of mobile network operators on other M2M players to bring end-to-end solutions to market
  2. Lack of universal standards that govern components, data exchange and applications development
  3. Limited metrics on the return on investment offered by M2M applications
  4. Lack of strong marketing angles for "selling" M2M technologies, due primarily to limited performance data
  5. Long sales cycles and payback periods for M2M technology deployments

Despite those obstacles, there are plenty of viable examples of companies that are making M2M real, and the Carbon War Room report offers six case study examples that could spark ideas. Here's one from three of the primary industries where M2M will play a revolutionary role:

Transportation (KORE Telematics and Navman Wireless) — KORE, which is currently the world's largest M2M wireless network provider, is providing the backbone for a Navman Wireless solution that has dramatically improved the way that a private bus company dispatches vehicles to transport more than 1,500 special-needs children to 200 different schools. The company realized an annual savings of $400,000, cut routing time in half and eliminated wasteful driving.

Built Environment (Jones Lang LaSalle and Pacific Controls) — The IntelliCommand solution created by the two company is a real estate portfolio monitoring and control system that provides detailed insight into performance of building systems. The technology is used to diagnose and fine-tune settings, and to optimize maintenance. The application generated 24 percent energy savings in just 11 months at one of the four pilot sites; the solution paid for itself in about six months.

Agriculture (John Deere i-Solutions) — The i-Solutions systems created by agricultural equipment manufacturer John Deere include modules and technologies that automate seeding, and that automatically record and map harvesting data. The system includes GPS receivers that are accurate to 0.78 inches and monitoring devices. So far, the technology has been demonstrated to reduce fuel use by 15 percent, while helping improve crop yields by up to 50 percent.

Image by Sergey Nivens via Shutterstock