Machine 2 Machine Vision

Here is a story from December 31st’s NY Post .

It’s about a victim of a home invasion robbery who breaks free of his bonds and follows the perpetrators (I’m from NY and that is what NY cops call criminals) in his car while having OnStar relay his movements to the police. Seems a little dangerous to me and is definitely not part of OnStar’s sales pitch or stated services. However, this story does point out that once technology is released to the public they will find unintended uses that provide value in a specific situation.

A disclaimer: In my humble opinion, it is not wise to follow armed and dangerous men once you have safely freed yourself from their presence. In other words, don’t try this at home.

Being that I love to observe markets at work, I am particularly interested by the way the broader “telematics” industry is forming up. For the past several years I have worked in what is generally known as the M2M (machine-to-machine) industry of which telematics is viewed as a major segment. I always tell people that M2M is not a segment, but an enabling technology that horizontally crosses multiple vertical segments. In the early days, I simply considered telematics to be one of those vertical segments. I think that previously most people in M2M bundled any applications that were installed in a car or truck as being “telematics”. As applications become more specific – in many cases being pulled in a specific direction by users – it becomes even clearer that the term telematics is much the same as M2M, a general bundling of specific applications that share common technology. By this I mean that the majority of the technology used in deploying a telematics solution is very common, but that everything else, including the value chain, purchasing decisions, etc., are very unique. For example, let’s take two distinct applications:

• Aftermarket AVL
• Sub-prime auto sales payment assurance technology

Both segments use some combination of a wireless radio, a GPS, a basic processor and connectors into the vehicle. So if you are a developer of telematics solutions, you might develop a business plan where you develop one basic platform and then make the specific modifications required for each one of the segments, thus greatly expanding your potential addressable market. This is a very strong strategy, but ultimately it is a technology or product strategy. Many technology companies fail to realize that a unique marketing strategy may be required for each of these segments in order for the overall business plan to succeed. For example:

• In aftermarket AVL, the company that is selling the service will have a business plan, but it is very dependant upon individual sales to individual consumers. There are a lot of issues at work here. What is the distribution or sales channel to the customer? Is the sales staff properly incentivized to proactively sell the product and service? Are they properly trained? Is the service offering attractive to the consumer at a price that communicates value? As a developer of a telematics box, you are dependant on many issues that are completely out of your control.

• In sub-prime auto sales, the sale is not to a consumer or vehicle owner, but there is an economic buyer – that being the finance company. The finance company will decide what features, quality, and cost is appropriate for the business objectives that they are trying to achieve. The service provider will actually be the party purchasing the box, but pretty much with the guidelines for features, price, quality, etc. set by the finance companies requirements. In this case, your shipments and sales will be somewhat more predictable as sub-prime used car sales can be benchmarked using sales history from a particular dealer with deviations being more or less driven by macro economic drivers.

My point in this post is to not lose sight of the unique value chain and market drivers for each sub segment under the telematics umbrella. Addressing multiple sub segments gives you the ability to smooth out the business cycle as each sub segment will move at its own clock speed.

There was a very interesting NY Times article recently that bodes well for the future of the M2M space. The article is based on statements made by the CEO of IBM and clearly refers to M2M technology without using the term or any of the other commonly used related terms such as Smart Services. The crux of the story is that various M2M solutions will be key enablers in helping to resolve the world economic crisis. M2MV was founded on the premise that M2M technology is going to be the next leap forward in global productivity, much the same as the PC was back in the latter part of the last century. We also believe that M2M holds the solution to energy efficiency and reduced greenhouse emissions.