PTOLEMUS Consulting Group

Mobile machines - bringing smart interactivity into the world of moving machines

Mobile Monday Brussels

Frederic Bruneteau, Managing Director

7th June 2010

Introduction

PTOLEMUS is named after Ptolemy, the geographer who created the first map of the world

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Introduction

PTOLEMUS assists its clients, from strategy definition to business development

Our servicesStrategy definition

including business plan development, board coaching and

support

Strategic due diligence and market assessment

Innovation management including product & services

development and launch

Business development including response to RFPs

Our areas of expertisePositioning / Location enablement

Navigation

Location-based content & services

e.g. maps, traffic, fuel prices, speed cameras, weather, parking, etc.

Telematicse.g. connected car, fleet

management, PAYD, road charging, e-call

Intelligent transport systems

Mobile content and social networking, e.g. application stores, content sourcing, crowd-sourcing

M2M

Connectivity (sourcing, MVNO, ESP, etc.)

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Smart machines

We will focus today on mobile, connected, machines

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MOBILE NON-MOBILECONNECTED

NON-CONNECTED

INDIVIDUALS MOBILE MACHINES MACHINES

Cars, motorbikes, bikes, airplanes, ships, trucks, light vehicles, building equipment,

farming equipment...

Vending machines, meters, digital

photoframes, printers, etc.

Mobile phones, PNDs, cameras, game consoles, etc.

IT

EQUIPMENT

PC, working stations, servers, etc,

NON-CONNECTEDToday's focus

PTOLEMUS area of focus, GEO-CONNECTED MOBILITY

Smart machines

In which industries will mobile M2M develop?

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Transportation & logistics Retail & distribution Hospitality

Automotive Energy & mining Construction

Emergency services Health Surveillance & security

Consumer

Smart machines

Machines are dumb

Most machines cannot be considered as smart

• Can do only one thing well

• Do not listen

• Do not speak

• They are often too slow

• Have limited processing power

• They do not understand us

• They do not adapt to us, we adapt to them

• Do not change their behaviour i.e. do not learn / repeat the same errors

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Smart machines

The best of mobile handsets for M2M

However, machines are starting to follow the path of our most important machine, our mobile phone

• Our mobile phones hold a growing part of who we are: they know when we get up and go to bed, who we call and talk to, what is our diary

• This growing intelligence is spreading to more and more objects, from cars to fridges to lampposts

• The mobile phone brings to the M2M industry:

- Miniaturisation,- Unexpensive modules / smart cards- Storage capacity- Standards and economies of scale - Improved battery life- Profitable 2G networks and

worldwide coverage

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We appreciate

Smart machines

Machines prefer

Mobile machines are not like us

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1. Splashy, highly luminescent screens

2. Interaction with other human beings

3. To change our electronic devices every 2 years

4. Beautiful user interfaces

5. To visit a doctor when we are ill

6. Spontaneous gestures and contacts

7. To spleep at least 8 hours a day

1. To avoid displays, which consume power

2. As little interaction as possible to avoid consuming data bundle

3. To stay alive for 10-30 years

4. Straightforward, remote interfaces

5. Remote diagnosis and maintenance

6. Automated responses and processes

7. To be active 24/7

WE LIKE NEW, ORIGINAL AND EMOTIONAL THINGS

THEY LIKE HIGHLY EFFECTIVE, DURABLE AND COLD SYSTEMS

Smart machines

Sources: Cisco, PTOLEMUS

Despite a common belief, machines will not consume most of the mobile network bandwidth

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Machines

Digital connected photoframes,

which consume 10x as much as a mobile phone, are

the exception

0

20

40

60

80

2007 2008 2009 2010 2011 2012 2013 20140

10

20

30

40

Smart machines

Sources: PTOLEMUS, M2M Magazine

Active wireless M2M SIM cards in Europe

Of the 16 billion machines in Europe, probably 5 billion are mobile, so M2M is clearly about volumes

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In millions

What is driving volumes?

• Fast decreasing cost of 2G network (GPRS / EDGE) connectivity

• Fast decreasing cost of data-only roaming tariffs

• Fast decreasing cost of GSM data modules

• Fast decreasing cost of GPS chipsets

• Decreasing cost of SIM cards

• Key projects, often regulatory-driven (eCall, opening of electricity market, etc.)

Penetration rate of total machines: from 0,13% in 2010 to 0,38% in 2014!

Number of connectionsNumber of machines

In billions

Smart machines

Machines are becoming (much) smarter

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Microprocessors

They can reflect...

MEMS

They can feel...

A-GPS SIM cards

They will know where they are

SIM cards

They can speak...

Multi-bearer connected modules

Smart machines

Source: PTOLEMUS

The evolution of species

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Low HighTotal solution intelligence

Local device

intelligence

High

Low

Connected PND

Connected car

Smartphone

Connected plug

Die-cutting machine

Connected photoframe

Connected train

WiFi router

Connected copier

Parking metre

Tractor

Airplane

Fixed phone

Laptop

Connected truck

Connected vending machine

Server

OvenTraffic light

Air conditioning

system

Elevator

Layering machine

Fridge

Lawn mower

Hairdryer

Washer

Toaster

Connected watchConnected

videocamera

Cash register

#

An increasing number of bearers are available

Smart machines

Key factors of selection

However, this connected intelligence will not always come from the cellular network

• ADSL / cable / fibre can work when a synchronization is possible and when large data exchange is required

• WiFi can also provide unexpensive connectivity

• Bluetooth

• RFID is well adapted to logistics and industrial requests

• GPRS, 3G and soon LTE

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• Amount of data exchanged

• Possibility of synchronization?

• Regular or bursty data exchange

• Cost

• Availability of economic modems and / or devices

• Ability to integrate with vertical application

• Supplier competition

• Sustainability of suppliers

Smart machines

There is someone to talk to in the car!

At last, machines are starting to talk to us... and to listen

• Text-to-speech: the device provide voice route guidance, reducing user distraction

• Speech recognition enables the user to indicate his destination for an increasingly large number of operations

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Garmin embedded device for Citroën

Smart machines

Machines are our friends

Machines are even helping us when we are in trouble

• Peugeot launched a joint eCall / B-call service in 2003, starting with high end models.

• It now has over 800 000 cars equipped with the functionality.

• Since 2003, roadside assistance has been provided 3 500 times, including 2 000 times for an automated emergency call.

• Peugeot recently decided to broaden the scope of the service by pricing Peugeot Connect at only €290 and making it accessible to entry-level cars such as 207 and 308.

• The service provides assistance in local language on a 24/ 7 basis. It is now available in 10 countries.

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PSA's eCall system

Smart machines

Source: TomTom

Machines can now learn from the same machines

• With IQ Routes, TomTom uses historical speed data to provided improved routing

• This data has been generated by millions of PNDs in last 3 years - connected through TomTom HOME (i.e. DSL / cable)

• TomTom devices have brought 800 billion measurements

• Rather than using estimated speeds, TomTom devices use these actual speed profiles to route drivers

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Itinerary based on estimated speeds

This itinerary actually lasts 29 minutes

The shortest itinerary at this time takes actually 26 minutes

Smart machines

Progress towards the connected car is a unique opportunity for wireless M2M

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2013 estimated revenues for selected telematics markets (Europe, € in millions)

•The connected car vision is about to become a reality

•Telematics vendors can address new multi-billion market opportunities- Embedded in-car

navigation- Roadside assistance- Fleet / asset tracking- Car insurance (PAYD)

•Connected solutions can encroach on significant existing industries

The wireless M2M industry will benefit from a number of

key projects

0

5.000

10.000

15.000

20.000

25.000

Portable navigation

Embedded navigation

Fleet & tracking

Roadside assistance

Car Insurance

Road charginge-Call

0

18.000

13.000

7.700

0

1.654460 3.7503.000

9.500

1.5001.0702.5482.047

ConnectedNon-connected

126.000

Smart machines

Smart mobile machines are coming

• Boundaries between "our" machines and other machines are blurring

• The path towards connecting 16 billion machines is just beginning- Machines are becoming part of an ubiquitous intelligent network- Growth potential is enormous

• Contrary to mobile, it will not be about ARPUs but about volumes (at least at the connectivity level)

• The ability to show and align all players towards clear and large vertical revenue opportunities such as eCall is key to generate these volumes

• In the end, we expect fixed M2M / telemetry to become a particular case of wireless M2M

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Mobile Monday offer

PTOLEMUS will publish next week its 2010 European Location Study

• 150 pages of our expertise about the location industry, built on

• Interviews with over 100 executives from all sides of the industry, from Admob to Yahoo!,

• Over 6 months of desk research and primary research, notably an online survey,

• A detailed market model so as to combine strategic and technology analysis with hard figures

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If you wish to receive the free version, or want to have more information, just give me your business card after the conference

PTOLEMUS Consulting GroupS t r a t e g i e s f o r M o b i l e C o m p a n i e s

Brussels - Paris - Londoncontact@ptolemus.comw w w. p t o l e m u s . c o m

Frederic BruneteauManaging Directorfbruneteau@ptolemus.comTwitter: PTOLEMUS