M2M-markkinan tilanne ja kehitys pohjolassa - Sonera

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Connected Things The Nordic region is at the forefront of the Machine-To-Machine revolution

Transcript of M2M-markkinan tilanne ja kehitys pohjolassa - Sonera

Connected ThingsThe Nordic region is at the forefront of the Machine-To-Machine revolution

Machine-to-Machine (M2M) communications is about to radically transform society, industry and the way we live. Managing complex eco-systems is at the core of successfully developing and deploying innovative M2M solutions and business models. The Nordic region, where the number of connected things1 has already surpassed the region’s total population and is expected to grow twice as fast as the global market, is at the forefront of the M2M revolution.

In this report, TeliaSonera and Arthur D. Little have teamed up to draw hands-on insights from the recent development in Nordic M2M market. We make three deep-dives into segments of particular interest in the Nordic context: Connected Vehicle, Connected People and Connected Building. The report seeks to inspire people, businesses, and governments to explore the opportunities that arise when things are connected.

Hans Dahlberg Vice PresidentTeliaSonera Global M2M Services

Martin Glaumann Partner & Head of Telecommunications, Information, Media and Electronics in the Nordic regionArthur D. Little

Preface

Martin Glaumann

1. Excluding mobile phones, personal computers and ICT infrastructure

3

During the last five years, M2M has been one of the hottest topics debated across industries worldwide. Global industrial leaders are preaching a revolution more fundamental than the one created by the internet some 20 years ago. Google’s acquisition of Nest Labs, a connected home solution provider, in 2014 for USD3.2 billion illustrates how world-leading innovators are positioning themselves in the emergent eco-system to capitalize on the benefits of Connected Things.

M2M solutions have the potential to transform society, industries and the way we live through

productivity improvements, greater user convenience, provisioning of value-added services and enablement of new business models. Industry experts are outbidding each other when forecasting the number of global connected devices. The estimates range from 22 billion (IMS) to 50 billion (Cisco and Ericsson) by 2020, growing from an estimated 8-10 billion in 2013.2 In terms of revenue, the global M2M eco-system is estimated to grow by 16 percent year-on-year, from a USD300 billion industry in 2012 to USD980 billion in 2020, according to Machina Research.3

The Machine-to-Machine (M2M) revolution has started

When physical objects can communicate with the outside world, they are said to be Connected Things or Smart objects: one can interact with them remotely, query how they are doing and change their state as required.

Connected Vehicle includes machines that transport passengers or cargo, e.g. e-call, fleet management

Connected People includes humans, human tissue and/or animals, e.g. tracking of people´s geographical positions, measurement of bio markers

Connected Consumer Gadget includes electronic equipment intended for entertainment, communications and/or leisure, e.g. cameras, TVs, white goods

Connected Money includes devices for payment and related services, e.g. vending machines, point-of-sale

Connected Building includes physical structures used as homes, offices or a public facilities

Connected Industrial Process is defined as part of a larger commercial process or procedure, e.g. manufacturing equipment

Connected Infrastructure includes physical objects optimized for public needs or regulatory demands, e.g. Smart grid, Smart meters

2. IMS, Cisco and Ericsson estimates on the number of devices include mobilde phones, personal computers and ICT infrastrucure as well as the new industrial and consumer devices defined as Connected Things

3. Including M2M applications, connectivity, value added services and integration, but excluding the connected object itself

What is a Connected Thing?

In this report mobile phones, personal computers, ICT infrastructure are excluded from the definition of Connected Things and corresponding market data.

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The M2M revolution is developing in three waves. In the first wave, M2M enables remotely control-ling devices such as checking that the front door is door locked or retrieving the position of moving objects. In the second wave, when large amounts of data are collected and processed, M2M enables new innovative services and improved productivity. For example, M2M and Big Data analytics can enable a utility to optimize thousands of turbines and identify leaks in a water supply network. On the horizon still is a third wave, in which M2M solutions are becoming seam-lessly integrated into the most critical systems of society; for instance in health care where M2M enables new advanced remote treatment, or automation of personal transportation (such as Google’s driverless car concept).

Despite the market excitement and user benefits, the reality today is that that the commercial market for M2M services is fragmented and immature in several segments. Solution providers are still searching for sustainable business models and many solutions are far from mass-market adoption. At present in Europe, only Connected Vehicles (in particular tracking and fleet management applications) and Connected Infrastructure (e.g. Smart meters) can be considered relatively mature M2M solutions. Fleet management application s have been commercially successful due to strong busines s cases focused on efficiency improvements for logistics companies and a relatively structured and clear value chain. Deployment of Smart meters has been driven by regulatory requirements in some European mar-kets, notably Sweden, Finland and Italy.

USD 300billion

20124

USD 980billlion

20174

4. Machina Research (2013)

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Successful M2M solutions require several com-ponents: the connected object itself, services and integration, and a sustainable business model that distributes value between players in a scattere d and complex eco-system. To unlock the growth potential and realize the benefits of M2M, the interplay between lead users, enablers and innovator s is essential.

Lead users represent early-adopting customers (consumers or businesses), that are leading the way in their respective field, such as the farmer switching to automated harvesting machinery, or the home-care provider adopting M2M solutions for patient monitoring at home. Lead users are creating the necessary demand pull for these new services.

Enablers are companies that ensure that M2M solutions can be delivered, installed, served and billed. Several enablers are likely to be required for a solution to work. Enablers differ by ap-plication type and market demands, and can be represente d by telecom operators, platform providers and system integrators. Enablers are competing, but also collaborating with each other to ensure coherent service delivery and quality.

Innovators are companies and entrepreneurs that develop new M2M applications. The role of the innovator in the eco-system is to push the applica-tion boundaries, and sense and explore business opportunities. Most innovators face difficulties in reaching lead users by themselves, due to technical limitations (e.g. integration and delivery capacity) or lack of market reach.

Two different approaches to unlock the growth potential in the eco-system can be observed in the market. On one hand, some companies are at-tempting to vertically integrate, breach and rapidly drive growth in a certain connected group or niche application. By doing so, they can assume control over the value chain and provide a complete solution to customers, allowing for quicker time to market and controlled customer experience. Google’s acquisition of Nest Labs could be seen as one example of this approach in the Connected Building segment.

Other key players in the market are striving to build horizontal capabilities and platforms, by creating alliances and partnerships throughout the M2M eco-system. Through standardization, multiple ap-plications can be supported on one cloud-based platform to achieve economies of scale. A key success factor to drive M2M market adoption is to have an enabler that takes the main responsibility for the customer value proposition.

Regulatory, Political, and Economic preconditions are important for M2M market development. Regulation and government policy can both limit and drive the market in a distinct manner. Personal data integrity policies pose a challenge to the growth of some application types, such as health care applications. Many of the more mature M2M solutions as of today have been pushed by regula-tory requirements and political agendas, e.g. the emergency call (e-call) applications driven by the 2015 (EU) e-call mandate for passenger cars and light-duty vehicles, and the two-way emergency call applications in elevators pushed by Nordic legislations in 2012.

Innovating the M2M eco-system for growth

Political environment Economic environment

Reg

ulat

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envi

ronm

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Key roles in the M2M eco-system

Enablers

Lead users

Innovators

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The Nordic region is a hot spot for M2M growthDespite being a relatively small and remote region, the Nordics5 have a strong legacy of creating globally successful and innovative ICT companies. Ericsson, Nokia, Skype, Linux and Spotify all have their roots in the region. The Nordic region has a good infrastructure, a stable regulatory environment and vibrant user communities.

Conditions for early M2M adoption and growth are excellent in the region. In 2013, the number of Connected Things, excluding mobile phones, personal computers and ICT infrastructure, is estimated to have reached 28 million, and thus surpass the total population in the region (26 million). Today, 15 percent of total mobile subscriptions in the region are M2M connections, compared with approximately 3 percent globally.6 In 2017, 70 million things are estimated to be connected in the region, equaling 2.6 Connected Things per person.

There are two key underlying factors that sup-port further growth of M2M in the region. Firstly, ICT infrastructure: The Nordic countries have among the highest fixed broadband (34%) and mobile (149%) penetration in Europe. Secondly, businesses and people are renowned for quickly adopting new trends and technologies. All four Nordic economies are within the top ten of the World Economic Forum’s Networked Readiness Index (2013) which measures the propensity for

5. The terms ”Nordic countries” / ”Nordics” / “Nordic region” refer to Sweden, Finland, Denmark and Norway 6. Machina Research (2013)7. Including M2M applications, connectivity, value added services and integration, but excluding the connected object itself

Number of Connected Things in the Nordic region6

countries (including their populations) to benefit from the opportunities offered by information and communications technology.

The market size for M2M solutions in the Nordics was estimated at EUR1.7 billion in 2012. Thirty per-cent year-on-year growth is forecasted until 2017, roughly twice as fast as the global market, reach-ing a market size of EUR6.1 billion. Despite small differences in market characteristics between the four Nordic economies, some differences can be observed in market size, maturity and growth:

• Sweden is the largest market (EUR515 million), and is estimated to grow by 32 percent year-on-year, reaching a market size of EUR2 billion in 2017.

• Finland is the most mature market, with 1.22 Connected Things per person and a total esti-mated market size of EUR396 million in 2012. The high penetration rate is consistent with the high mobile penetration rate (169 percent) and early deployment of Smart meters. Growth rate is expected to be slightly lower (27 percent year-on-year) compared with the region as whole, reaching a market size of EUR1.3 billion in 2017.

• Norway, with 1.03 Connected Things per person, is relatively immature compared with the region’s other countries. The market is expected to grow by 29 percent year-on-year, from EUR387 million to 1.4 billion in 2017, partly driven by Smart meter deployment in 2014.

• Denmark’s market size is estimated at EUR379 in 2012, and is expected to grow by 29 percent year-on-year, reaching a market size of EUR1.4 billion in 2017.

The market characteristics differ more by Connected Group than by country. In 2012, the largest connected group in the Nordic region was Connected Building (EUR568 million), including both M2M solutions within homes and offices. Security applications are the leading and most ma-ture application types in the group. The segment is expected to grow by 13 percent year-on-year, reaching EUR1,050 million in 2017.

Connected Consumer Gadget (EUR457 million) was the second-largest segment in 2012, and is expected to grow by 42 percent year-on-year, reaching EUR2.6 billion, the largest segment in 2017. Growth is driven by the myriad consumer

Norway Sweden Finland

Denmark

4m2013

15m2017

6m2013

16m2017

9m2013

23m2017

5m2013

16m2017

7

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

201720162015201420132012

1,6772,094

2,664

3,453

4,554

6,099

EURm

Vehicle 46 %

People47 %Consumer Gadget42 %

Money11 %

Building13 %Industrial Process11 %

devices (e.g. cameras, consumer wearables, white goods, music players and TVs) that are being connected.

Connected Infrastructure (EUR279 million), which includes Smart meters deployed in Sweden and Finland, has been a key driver for growth in M2M mobile subscriptions in the region. In terms of revenue per device, this segment is likely to face further price pressure, in particular on connectivity services of installed Smart meters. The segment is expected to grow by 3 percent year-on-year, reaching EUR323 million in 2017.

Connected Vehicle is expected to show 47 percent growth year-on-year, the strongest growth rate driven by solid uptake in the number of connected cars, which will not only be pushed by OEMs, but also other stakeholders, such as repair shops, insurers, rental providers and car pool service providers. In Norway, an electric car subsidy is expected to drive the number of new connected cars, and in Finland, there is an estimated rapid uptake of “Pay as you drive” insurance policies connecting not only new but also aged cars. The segment is expected to grow from EUR196 million in 2012 to EUR1,321 million in 2017.

Connected People (EUR88 million), with health care-related applications such as remote measure-ment of bio-markers, is yet a small and immature

segment, but with immense growth opportunities. It is expected to grow by 47 percent year-on-year, reaching EUR600 million in 2017.

Connected Industrial Process (EUR51 million) is a rather relatively small segment in terms of M2M solutions. The segment is driven by underlying industry demand to improve productivity and com-petiveness, but faces some challenges that limit growth, such as high integration costs and long asset lifetime of industrial equipment. The segment is expected to grow by 11 percent year-on-year, reaching EUR86 million in 2017.

Connected Money (EUR38 million) is a relatively small segment, but includes some mature ap-plications such as point-of-sale terminals. In some countries, such as Sweden, growth has been driven by regulations requiring restaurant owners to exercise the credit card payment process at customers’ tables. Other application types, such as connected vending machines or parking meters, are yet immature in the Nordic region. The segment is expected to grow by 11 percent year-on-year, reaching EUR64 million in 2017.

In the next section, we explore the largest (Connected Building) and the two fastest-growing (Connected People and Connected Vehicle) groups in the Nordic region, to highlight how M2M is transforming society, industry and the way we live.

Source: Arthur D. Little analysis, Machina Research * Compound Annual Growth Rate

30%(CAGR*)

2012–2017 CAGR*

Infrastructure3 %

396Finland

20121,290

Finland 2017

Market size and growth

379Denmark

20121,374

Denmark 2017

387Norway

20121,402

Norway 2017

515Sweden

20122,034

Sweden 2017

8

Key application types

Sweden531,000

Norway 340,000

Finland314,000

Denmark318,000

0

300

600

900

1,200

1,500

201720162015201420132012

196

327

571

867

1,092

1,321

Per country

1.5 million Connected Things† Segment size

Security & tracking Financing & insurance Navigation & information Vehicle diagnostics

Fleet management Entertainment & convenience

With Sweden, Norway and Finland having a population density of less than 20 inhabit-ants per km2 (compared with the European Union average of 112 inhabitants per km2), combined

with cold and long winters, geographic distance and harsh environments, mobility is an everyday challenge. The average Finn travels more than 46 km per day, compared with 36 km per day for the average German8. Moreover, the Swedish govern-ment has been pursuing a “Nollvision” (vision of zero traffic fatalities) policy since 1997. These are all strong local drivers for developing smarter and safer cars in the Nordics, with improved comfort while on the road, as well as high security to cope with demanding weather conditions. Innovative

solutions were developed early driven by a strong automotive cluster, including Volvo and Scania. An estimated 45 percent of all vehicles (pas-senger and commercial) or 8.3 million vehicles, in the Nordic market will be connected by 2017, up from 9 percent today.9 The market for M2M solutions, within the Connected Vehicle segment, is estimated to grow by 46 percent year-on-year until 2017, from EUR196 million in 2012 to EUR1.3 billion in 2017.

The growth is expected to be driven by increasin g consumer demands, OEMs economics, regulatory requirements and other eco-system innovator s. First, lead users, now used to smartphone features, are increasingly expecting similar sophisticatio n and simplicity in vehicle interfaces.

Connected VehiclesIn 2017, 45 percent of Nordic vehicles (passenger and commercial) will be connected enabling safer, greener and more reliable vehicles with improved driver experience

8. Eurostat9. Some Connected Vehicles include more than one connected device

What is a Connected Vehicle? A single machine or fleet of machines that transports passengers or cargo with a special connected platform that enables a wide array of solutions. The driver of a single vehicle can access navigation systems, entertainment systems, and e-call/emergency notification, and use security applications such as stolen-vehicle location. Fleet owners can manage their fleets of vehicles, access remote diagnostics of engines and manufacturer data.

46%(CAGR*)

Source: Arthur D. Little analysis, Machina Research * Compound Annual Growth Rate † 2012

EURm

9

In September 2013, Tesla Model S was Norway´s top-selling car, all categories, partly driven by a government subsidy on electric cars. As a pioneer in high-performance electric vehicles, Tesla has spearheaded implementation of innovative M2M features for connected services. With the Model S, M2M-enabled features include vehicle diagnostics,

internet radio, and web browsing, which are accessed through a touchscreen. Moreover, using M2M technology, the driver’s experience can be continually improved through remote software up-grades. Tesla’s Model S illustrates how connected cars provide an improved driving experience and can be more cost efficient with smart maintenance.

Use case: Next generation driving experience

The typical car insurance customer is assigned a premium based on so-called risk factors such as postal code, gender, age and vehicle type (in addition to the customer’s own past record). Using M2M technology insurance brokers can provide user-based insurance that gives drivers control over their own insurance policies by monitoring driving behavior to allocate premiums based on

actual habits. The insurance premium can be determined, in real-time, by driving patterns, such as speeding, sharp braking and parking locations. Governments are also exploring the opportunitie s for “Pay as you drive”; in Finland, the Finnish Transport Agency is investigating the use of M2M solutions for tax collection on vehicles based on driving patterns.

Use case: User based insurance “Pay as you drive”

Second, automotive manufacturers (OEMs) seek to meet the consumer demand with connected features to defend premium price points. They also seek to leverage M2M, for example, for failure code predictions and vehicle recall mitigation and after-sales opportunities. Third, legislation is driving innovation through e-call applications with several mandates promoting embedded solutions, e.g. the 2015 (EU) e-call mandate for passenger cars and light-duty vehicles. Other eco-system in-novators such as insurers, repair shops, car rental providers and car pools will push new services into the market targeting mainly the existing non-connected fleet, namely passenger cars older than 3–5 years. Repair shops, for example, have a lot to gain to be able to redirect cars to their own repair shop and do pre-emptive maintenance.

Key benefits of Connected Vehicles include: 1. Improved safety, security, navigation and

entertainment (e.g. traffic condition information, weather and hazard alerts, and p2p alerts on speed camera locations)

2. Preemptive maintenance through remote vehicle performance

3. User-based insurance, where actual driving performance is used to determine insurance premiums. 7 out of 10 drivers could save up to 15 percent of their insurance premiums.11

10. Arthur D. Little analysis, Machina Research (2013)11. Insurance Journal (2013)

45percentage connected

vehicles by 201710

percentage connected vehicles

today10

9

10

268 000 Connected Things† Segment size

Sweden104,000

Norway54,000

Finland60,000

Denmark50,000

Every day approximately 40 people in the Nordics suffer strokes due to undiagnosed or untreated heart diseases. Every year approximately 300,000 people are diagnosed with

Alzheimer’s Disease; some 60 percent of them wander away from their caregivers or homes.12 These are only two of many issues that not only generate great suffering for humans but also cost the health care system many billions of euros every year. At the same time, demographics are shifting, with more than 25% of Swedes expected to be aged over 65 in 2030, creating high pressure on the welfare system. Innovative M2M applications and services are expected to become an essential

part of providing security and patient care, helping to save lives and cut costs.

The market for M2M solutions, within the Connected People segment, is estimated to grow by 47 percent year-on-year until 2017, from EUR88 million in 2012 to EUR600 million in 2017. The strong growth is driven by underlying demand from a growing and aging population with increased demand for high living standards at their homes. Governments and private health-care providers are squeezed between these higher demands and needs for cost savings on State healthcare budget s. The market is still in a trial-and-error stage in which new solutions are pushed into the market by innovators such as

Connected PeopleM2M has the potential to reduce 50 percent of hospital nights and re-hospitalization of certain patient groups and significantly improve quality of life for patients and the elderly.

What is Connected People? A human, huma n tissue and/or animal that is connecte d, enabling tracking of geographical positions or access measurement data of bio markers. By connecting People a wide array of solution s could be offered, such as clinical remote monitoring, first responder connectivity, telemedicine and personal monitoring.

0

300

600

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1,200

1,500

201720162015201420132012

88129

190

278

409

600

EURm

47%(CAGR*)

Source: Arthur D. Little analysis, Machina Research * Compound Annual Growth Rate † 2012

Per country

12. Alzheimer’s Association

Key application types Health tracking & monitoring Telemedicine & remote diagnostics

First responder connectivity People tracking

11

Norway54,000

By means of early detection and treatment of fibrillatio n, a large number of strokes can be pre-vented. Zenicor, a Swedish med-tech pioneer, has developed a small and portable ECG-monitoring device that can be used by all patients, including children and the elderly. Measurement begins

when the patient puts his/her thumbs on the electrodes. Microvolt ECG signals are measured, stored and transferred. The device consists of, among other things, a display, two measuring electrodes, and a built-in cellular connectivity device, allowing for real-time monitoring.

Use case: ECG monitoring at home

Monitoring a person in real time can save both lives and precious public resources. There are many instances in which tracking an individual is a necessary safety measure, such as with patients, children and prisoners on parole. Tracking devices can come as small, wearable devices that often

blend in and are virtually unnoticeable to a pas-serby. For instance, child-tracking devices often look like small wrist-watches. Leveraging wireless cellular M2M technology, these devices can often locate a missing person regardless of whether they are inside a building or under a structure.

Use case: People tracking

large medical supplier s or venture capital-backed start-ups. Creating partnership within the industry eco-system, integration into existing health-care systems and mastering local and often rigid public procurement processes are key success factor s for developing successful M2M solutions in the segment.

Key benefits of Connected People include: 1. Significantly improve the quality of life of an

aging population by providing health care at home and adoption of more patient groups as candidates for home care

2. Generate up to 50 percent reduction in hospital nights and re-hospitalization of patients with chronic diseases such as cardiac disease, high blood pressure, diabetes and obesity13

3. Reduce costs to health-care, elderly care and penitentiary institution s by up to 20 percent13

4. Contribute to a more secure society by cost-efficient tracking and monitoring of people (e.g. patients, children, prisoners) and pets

50%reduction of hospital nights and re-hospitalization within certain

patient groups13

20%cost reduction potential at health-care, elderly care

and penitentiary institutions13

13. Arthur D. Little analysis, University of Oxford

Up to

12

6 million Connected Things†

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900

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201720162015201420132012

568642

726

821

929

1,05013%

(CAGR*)

Source: Arthur D. Little analysis, Machina Research * Compound Annual Growth Rate † 2012

In the Nordics, electric-ity consumption per capita is 16.4 kWh, more than double the European average of 7.5 kWh. In this cold climate, heating of buildings is the key contributor

to this difference. Saving on energy is critical for both protecting the environment and enabling cost savings for home owners and commercial investors. New homes and offices that are being built are intelligent, such as the Stockholm Royal Seaport, a landmark project in Stockholm. Utilizing climate-smart and efficient infrastructure, the city of Stockholm is planning to build a climate-positive

city district by 2030. Some 10,000 homes and 30,000 workspaces will be connected. When homes and offices are being connected, other features can easily be added, such as home automation and improved security.

The market for M2M solutions, within the Connected Building segment, is estimated to grow by 13 percent year-on-year until 2017, from EUR568 million in 2012 to EUR1,050 million in 2017. Connected Building corresponds to one third of the entire market and is one of the more mature segments. In particular, security applications have been commercialized for some time by security

Connected BuildingM2M can support up to 30 percent energy savings in homes and offices and provide increased convenience and security to home owners and commercial developers

What is a Connected Building? A home or office equipped with a special connected platform enabling its occupants to remotely control and program an array of automated connected devices. When the home or office becomes Smart, it offers a wide array of new applications, such as security, automation, optimization of HVAC (Heating, Ventilation and Air Conditioning), and connected office appliances.

Sweden1.9 m

Norway1.3 m

Finland1.4 m

Denmark1.4 m

Per country

Segment size

EURm

Key application types Home/office security Connected Office appliances

Building automation Energy optimization

13

Using M2M technology, heating, ventilation, and air conditioning (HVAC) can be controlled to auto-matically adjust for maximum energy savings and indoor climate comfort. This reduces peak loads and provides a more stable grid. These systems can be used to both optimize and verify the energy savings achieved by the heating/cooling control across devices. For example, ATC’s Scypho

solution, deployed in several Nordic countries, is a hub for Connected Things in the building. It uses ultra-low-power radio communication via standard radio protocols for metering devices, temperature, air quality and humidity sensors, actuators for radiator control, motion, presence and window detection sensors (security alarms).

Use case: Energy optimization in homes and offices

Over one million apartments were built between 1965 and 1975 in Sweden and the plumbing in these homes is in serious need of replacement. These large quantities of reparation and mainte-nance issues have several practical implications. A problem of door-key management for such projects can be easily solved using an M2M motorize d keyless handle. Installation takes just a few minutes, does not cause damage to or leave any marks on the door since neither the lock

engine nor the cylinder need to be replaced. The apartment door and lock continue to work normally for tenants coming in and out using their own keys. Meanwhile, an authorized workman can access the apartment with a digital key consisting of the workman’s own identification tag with an RFID bar-code on it. Access can be monitored remotely, and when work is over, the handle is removed without any damage, providing safety, accountability and ease of use for all parties.

Use case: Access control

companies that have developed M2M technology to improve productivity in a traditionally personnel intense industry. In addition, home automation ap-plications have been on the market for some time; however, not until lately has functionality improved and prices have been sufficiently reduced for mass-market adoption to occur. Demand is driven by a need for security and convenience of auto-mated homes, while energy management empha-sizes cost savings and environmental factors.

Key benefits of Connected Building include: 1. New automated services in homes and offices,

e.g. automated lighting, remote door looking2. Improved security for home owners e.g. home

alarms, connected smoke detectors3. Energy savings of up to 30 percent in homes

and offices due to optimization of HVAC (Heatin g, Ventilation and Air Conditioning)14

14. Arthur D. Little analysis, ATC (2014)

EUR1 bnsegment size

in 201730%energy savings in homes

and offices14

Up to

14

Machine-to-machine (M2M) communications is transforming society, industry and the way we live. Myriad things are now being connected, from remote ECG-monitoring devices to traffic control. Industry experts expect the number of connected devices to reach from 22 to 50 billion globally by 2020. Today’s reality, however, is that the commer-cial market for M2M solutions is fragmented and immature in several segments. Solution providers are still searching for sustainable business models, and many solutions are far from reaching mass-market adoption.

To overcome these challenges, the interplay within the M2M eco-system between lead users, enablers and innovators is essential. Prominent M2M players are striving to vertically integrate to drive rapid uptake in a certain segment, and/or to build horizontal capabilities by creating alliances and partnerships. A key success factor to drive M2M market adoption is to have an enabler that takes the main responsibility for the customer value proposition.

The right conditions for early M2M adoption and further growth can be found in the Nordic region, which has an excellent ICT infrastructure, a stable regulatory environment and lead users, enablers and innovators. • The Nordic M2M market is expected to grow

by 30 percent year-on-year until 2017, roughly twice as fast as the global market, reaching a market size of EUR6.1 billion.

• In 2013, the number of Connected Things surpassed the region’s total population. By 2017, there will be an estimated 2.6 Connected Things per person.

There are several examples of how M2M has started to transform society, industry and the way people live in the Nordics. In the Connected Vehicle segment, M2M solutions will revolution-ize the driver experience, enhance security and enable new business models to thrive, e.g. “Pay as you drive”, intelligent car pools and preemptive vehicle maintenance. An estimated 45 percent of all vehicles (passenger and commercial) in the region will be connected by 2017. In the Connected People segment, M2M solutions could reduce up to 50 percent in hospital nights and re-hospitalization for patients with chronic diseases and significantly improve quality of life for patients and the elderly. Innovative M2M solutions are also becoming integral for Connected Building, for example, by offering the potential for up to 30 percent energy savings in homes and offices and providing increased convenience and security to homeowners and commercial developers.

In summary, the Nordic region is at the forefront of the M2M revolution. Decision makers should watch the Nordic markets closely and embrace the opportunity to engage in a pioneering eco-system.

Conclusions

TeliaSonera provides network access and telecommunication services in the Nordic and Baltic countries, the emerging markets of Eurasia, including Russia and Turkey, and in Spain. TeliaSonera Global M2M Services is a global unit in the TeliaSonera group and a founding operator of the Global M2M Association, responsible for business-critical M2M solutions. With extensive mobile networks across

its markets, dedicated M2M services, including technology and support, as well as an expert network of industry and operator partners, TeliaSonera deliver comprehensive M2M Solutions with seamless quality throughout Europe. TeliaSonera believes M2M has the power to transform the way companies do business as well as how people live their lives. Read more on www.teliasonera.com/m2m

About TeliaSonera Global M2M Services

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Authors: Hans Dahlberg, Johan Öberg, Martin Glaumann, Hampus Dahlstedt, Andreas Gjelstrup Björdal