Is the Real Age of Connectivity Yet to Come?

If you’ve found the shortest route to a friend’s house, paired your mp3 player with your car’s audio system, or used the touch screen on an ATM, you’ve used machine-to-machine (M2M) technology. It is so ubiquitous in consumer technology that when two machines don’t sync seamlessly, it prompts us to ask something akin to, “It’s 2015, and they still haven’t figured this out?”

M2M (and its Internet-connected iteration referred to as the Internet of Things) have just as much expectation from corporations and entire industries looking to automation and interconnectivity as a cure for inefficiencies and a treasure map to consumer behavior.

Companies like Argent Associates are the arbiters of M2M and help businesses find the solutions that will elevate their operations. Argent CEO Betty Manetta and COO Ray Moya talk to HE about the boom we’re about to see in the demand for their services and how the technology rat race isn’t quite as full-speed-ahead as we may imagine.

SNS Telecom published a report recently that predicts M2M and the Internet of Things will be a $196 billion industry by the end of 2020 with a compound annual growth rate of 21 percent over the next six years. To what can we credit that kind of growth?

BM: It’s a combination of a few things. One, the explosion of devices and their interconnectedness are driving the need for communication among machines for business and personal use. Two, given the dynamic nature of mobile applications and video streaming, networks are becoming more self-optimizing. Networks will need to dynamically reroute traffic to ensure quality service—that’s where M2M comes in. Three, the amount of data collected by these devices is creating a wave of analytical tools. These are the areas where companies and people are making a lot of money.

RM:I think what’s happening in the health industry is going to be huge, and they’re just getting started. You have fitness-based apps, and the health insurance industry has already started looking at how to give discounts to healthy people. They need to capture data to monitor people’s health, and they need M2M to collect and associate that data with other things (like behaviors and events) to make relationships that didn’t exist before. Those associations are very valuable, and their permutations are even more so.

What is the marketplace for M2M technology like right now? Who have been the early adopters, and who still stands to benefit from it?

BM: M2M has been adopted in several verticals. In my house, for example, I have a smart meter tracking my utilities. Smart cars are already being implemented. In 2010 only one percent of the health-care industry was using M2M; that’s scheduled to grow to three percent by 2020. Whereas telecom’s adoption rate, which was three percent in 2010, is estimated to be around 17 percent by 2020. You’ll see those numbers shifting, but adoption is determinant on being able to extract and interpret data, not just collect it. The hottest and fastest growth still remains in smart buildings, which had an adoption rate of 12 percent in 2010 and are estimated to be at
27 percent by 2020.

RM: Tech companies must have M2M capability to introduce new products. Selling a tech product requires that I’m able to talk to it, so I can service it. The product is designed to send me information so I know the health of it. I want to be ahead of the customer’s problems. If I take that to the next step and look at what I can do with the data; that gets into the Internet-of-Things (IoT). That creates a
competitive advantage.

BM: M2M has been used quite extensively in the manufacturing arena as well to monitor inventory, especially when a business has items on consignment. We use it in smart vending machines that track consumable items or access-/asset-controlled cabinets.

Supply chain and warehouse management seem to be the most obvious business applications for M2M. We’ve heard Amazon’s low costs attributed to top-notch inventory management. But small businesses aren’t managing football-field-size warehouses of product or making the amount of transactions that big companies are. Has it been difficult to articulate the value of data collection and M2M solutions to those entrepreneurs?

BM: A lot of small businesses are struggling to find the competitive advantage of M2M in their operations. If you’re a building manager trying to utilize M2M technology with your systems (elevator, HVAC, and lighting for example), having them all talk to each other is a great concept, but you need access to their software, which is a big obstacle. Companies have proprietary source codes, and they don’t want to share them with each other, but that’s the only way for the machines and systems to communicate. When you have a multivendor network whose components aren’t compatible, you need a third party like Argent to intervene. We come in, cloud-based, to pull data and marry it with other information, providing a holistic view with analytics.

Could cloud-based, open-source solutions alleviate that?

BM: Cloud-based solutions are more accessible, but some entrepreneurs are understandably afraid that someone will steal their data. Cybersecurity and uncertainty about where data is going plagues small businesses. A lot of consumers of M2M solutions are forcing their vendors to have open-source products and services. They don’t want to be held hostage. It will happen, but the vendors will go kicking and screaming. It’s no different in telecom.

How so?

BM: Some of the biggest legacy players in the telecom industry want to untether from their wire-line networks and hardware, but because they are regulated, they have to continue supporting those legacy systems. The Apples and the Googles of the world don’t have legacy systems. They’re not regulated. That’s what makes it an unfair playing field.

That seems like an opportunity for niche providers.

BM: The telecom giants need the talent of small vendors. Most of them have foundries and are looking for small players to create new apps, new M2M solutions. It’s a big trend and a way to get products in their portfolios faster. Some large carriers have been selecting small, niche companies to play in that next generation of software development.

Speaking of telecom companies, as mobile carriers’ traditional channels (voice and data) become saturated, there have been projections that they will begin encroaching on the M2M space. How does Argent plan to

RM: Small business is like David of David and Goliath. If you’re afraid of Goliath you probably shouldn’t be in the ring. You can focus on competitors, and then you get distracted. Betty’s a very forward-looking leader. She has vision to see what life will be like in three to five years and how we’ll get there before everyone else. That’s what has driven us to make this company successful.

Do you foresee a future where Internet-connected solutions will render unconnected M2M services obsolete?

RM: The ubiquity of wireless connectivity has overcome wire line, that’s absolutely true. You can leverage wireless technology much more easily and more affordably than wire-line technology. But the trade-offs will continue to determine the demand for each. If I want to monitor the power consumption in my office, for example, I can get a one-way communication meter. However, if I make the technology too sophisticated, too IP-centric, I end up with a hole in it where someone can get in and manipulate it. That’s one of the issues of smart buildings. Two-way communication raises a security flag. If a machine is receiving a message, how does it know it’s authentic?

Do you think we’ll ever reach a point of certain security on the Internet?

RM: I’m not sure if any technology will ever be secure enough. Before people were hacking wireless networks, they were tapping phones and wire lines. As people are creative in creating new things, they’re just as creative in breaking into things.

What’s next for Argent?

BM: In-building wireless solutions will become a larger market. As video applications become the dominant traffic on the cell network, carriers will need to off-load it. This will drive growth in in-building small cells†. We plan to be a player in this market.  Small cells are key to off-loading the traffic from the macros or big towers. They are self-optimizing and will create a seamless experience, so when you move within the building or in and out of the building, there’s no interruption of service. Having this technology in a building will allow owners and businesses to create a competitive advantage. We’ll also keep moving on the path of M2M and IoT. We’ve made additional investments in companies because we see the exponential growth there.

RM: Part of our plan is to make sure that young folks in high school and college understand the implications of the marketplace and the skill sets they need in the coming economy. Tech will be the fourth thing you have to know when you get out of school in addition to reading, writing, and arithmetic.