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telit2market: Mr. Brenneis, what role does m2m play in Vodafone´s overall strategy?
Erik Brenneis: m2m is one of Vodafone's strategic business activities. Vodafone was quick to identify the potential of this sector and has been fine tuning its m2m offering ever since. From the start, Vodafone set out to make it as simple and as cost effective as possible for firms to deploy m2m technology, even on a global basis.
The creation of the m2m division was simply in response to present and future customer demand. Vodafone wants to bring its scale and expertise to this fast-growing market, as more and more companies start using wireless m2m to enhance customer service in areas including smart metering, connected cars, and the remote monitoring of equipment. To help our customers release the potential of this technology, Vodafone was one of the first to launch a global Machine-to-Machine (m2m) services platform enabling customers to deploy and manage large, wireless m2m projects. This effort has been supported by an expert team with worldwide responsibility for growing Vodafone's m2m business, as well as providing customers with consultancy.
telit2market: Do you anticipate that we will experience a dramatic breakthrough in m2m applications in the next five years and that m2m will really become a multibillion-dollar market? What is your specific m2m strategy for the next five years?
Erik Brenneis: Demand for m2m services on mobile networks across Europe is forecast to increase significantly over the coming years. Globally, operator revenues for wireless m2m were € 3 billion in 2008, forecast to rise to € 8.9 billion by 2012, according to the analyst firm Berg Insight. We address this market with a specific m2m offering, consisting of a global m2m managed connectivity platform, global SIMs, and a dedicated global team with experts in every local market. We are able to provide tailored pricing, valid across all our operating companies and partner markets - basically the whole world - as well as consistent service levels.
telit2market: The end-to-end approach, which creates a continuous process chain between the module used in the field and the user's PC dashboard, is gaining more and more popularity. How does Vodafone appraise and support this development?
Erik Brenneis: I absolutely agree that this is the case; therefore Vodafone is working with partners on the module side to ensure compatibility between the communication modules and the Vodafone SIM. We are also working with partners who make specific m2m devices in order to make sure that their hardware interfaces seamlessly with our connectivity solution and works on our networks. On the system side, we are working with system integration companies and service companies, making sure that their systems (e.g. meter data management or telematics services) are seamlessly integrated with our managed connectivity solution.
telit2market: What role in the m2m added value chain does Vodafone want to play and what partner models are you using to facilitate this?
Erik Brenneis: Vodafone's priority lies on providing managed connectivity to all m2m services and solutions. In order to ensure this, we are forming the partnerships in the value chain I described in your third question.
telit2market: What sales and pricing model is Vodafone using to enter the m2m market?
Erik Brenneis: We either have a direct customer relationship with the customer such as a utility company for example, or through a partner, who might bundle our m2m connectivity into a service they offer to their customers (e.g. a telematics company). With regards to pricing, usage models of the different m2m vertical markets are very different and therefore we offer tailored pricing models which suit the particular needs of the customer and the service they are providing/ offering. For example, a security solution needs to have a reliable connection, but uses little data, compared to a navigation device. Our pricing can be on an international level as well, if the customer needs one price for all devices across the world.
telit2market: With respect to manufacturers of m2m modules and m2m hardware, are you pursuing a similar strategy vis-à-vis cell phone manufacturers in the consumer sector? Where do the differences lie?
Erik Brenneis: I see more similarities between hardware devices (like a tracking box or a security device) and the consumer market than on the module side. The main reason being that a customer needs to do real development, usually over a period of months, in order to integrate a module into his solution. For example, you could imagine an m2m device, such as a personal security device, bundled with a Vodafone contract. However, at the moment our focus lies on serving the market with m2m managed connectivity (e.g. for metering and automotive), since these markets are growing fast and are just taking off.
telit2market: What requirements must a hardware or device manufacturer satisfy to qualify as a "Vodafone Vendor"?
Erik Brenneis: These hardware manufacturers need to have a state of the art product, which is thoroughly tested on our networks. Also, especially in m2m, device robustness and longevity is important as well as cost competitiveness.
telit2market: What role does a module manufacturer's service portfolio already play on the m2m market, and how will this role evolve over the next few years?
Erik Brenneis: At the moment, one of the main challenges that still exists in the m2m market is enabling devices to be connected, specifically the integration of the communication module. It is crucial for a module manufacturer to have a strong service and support organization in order to help the customers deliver their products and solutions to market. With regards to after sales service, in the future I believe that remote software download will become more and more important in order to make sure that today's developments will also fulfil tomorrow's requirements.
telit2market: You have been an insider in the m2m market for several years now. How does a module manufacturer have to be set up, in terms of technology and strategy, to profit from the boom of the next few years?
Erik Brenneis: With regards to technology, I believe that it is a given that the technical requirements (interfaces, speed etc.) are fulfilled. I think there will be a differentiation on product longevity and quality as well as on the ease of integration of the module into a device. This also requires a strong global support organization. Strategically, I believe that the module market will continue to grow in size, but prices will keep falling, therefore size and strength of an organization, will be a major differentiator to be able to make the necessary investments into next generation modules. I would expect consolidation in the market to continue over the next years.
telit2market: Mr. Brenneis, to conclude, let's have a look into the crystal ball: How will m2m have changed the world in 10 years time?
Erik Brenneis: I believe that when we look back in 10 years, it will be quite hard to imagine a world without our connected cars, without our e-readers, or how it was when we still had to take a day off work every couple of months just to let the meter reader into our house ... Just like it is very hard to imagine now how we got along without cell phones only 25 years ago.
telit2market: Mr. Brenneis, thank you for talking to us today.
About the author:
Erik Brenneis, Head of Machine-to-Machine (m2m) Smart Services at Vodafone Global Enterprise
Erik Brenneis recently joined Vodafone Global Enterprise and has overall responsibility for driving Vodafone's growth in the Machine-to-Machine (m2m) market. He joined from Cinterion Wireless where he was Chief Sales Officer and a member of their Executive Management Board since 2005. Prior to Cinterion, Mr. Brenneis was Vice President Sales at Landis+Gyr Switzerland. Before that he worked in various functions with Siemens in Germany and the US. He holds a Masters in Electrical Engineering and a Bachelor in Business Studies
