While the M2M space is growing, players are exploring their go-to-market strategies.

This year’s Consumer Electronics Show (CES) in Las Vegas should have been evidence enough for anyone who doubts that machine-to-machine (M2M) is on the verge of exploding. The very fact that the definition of M2M seems to include a new verticle by the day should give some indication of the growth inherent in the space. However, along with growth comes a bevy of complications. From pricing to picking the right solution for any given device, the entire ecosystem is learning a new act.

The carriers are large entities, built on simplifying not only their devices but also their pricing and rate plans to meet the needs of the largest population possible. To that effect, M2M is an entirely different beast altogether. There’s a cornucopia of different devices on the way and each has its own special needs.

Macario NamieJasper Wireless is a technology company that provides a software platform for AT&T, accelerating the time-to-market for device manufacturers. Macario Namie, senior director of product marketing for Jasper Wireless, says that when combined with the recent explosion of embedded consumer devices, the M2M market is not only ripe but also increasingly complicated.

“Every company in this space needs something different. It’s not like the consumer space where you say, ‘Look, I have these six plans, choose from one of these six.’ The monetization of the eReader market is different than the monetization of the connected car market… and the operators are not used to creating a new plan with every customer,” Namie says.

In the past, it could take an operator up to six weeks to come up with a rate plan for a new connected device. As part of its solution, Jasper developed a rating and pricing engine that can generate a rate plan and make it available to the customer in half that time.

“It’s not so much can they make the numbers work, because they can make the numbers, no doubt about it. Rather, it’s can they be flexible enough and reactive enough to support this new breed of devices. Because the requirements are really different,” he says.

As diverse as the M2M space has become, operators are searching for the best way to serve the whole market. And while they’re happy to be hands on with some of the larger contracts (think the Amazon Kindle and OnStar), the resources simply aren’t there on either end to service the micro companies wanting to be certified on the network.

Sam Lucero, practice director of M2M connectivity for ABI Research, says the carriers aren’t about to let this opportunity slide. “In the past 18 to 24 months, the carriers have become increasingly directly involved with M2M and are working directly with application service providers and large corporate customers and not relying as much on aggregators,” Lucero says.

Carriers want to get in there on the big deals – what Lucero calls the “low-hanging fruit” – such as an OnStar or Kindle. But a smaller player may be better off dealing with an aggregator that already has an established relationship with the carrier, he says. Most aggregators offer end-to-end services to the smaller developer and can help smaller companies with everything from finding the right modules and chipsets to getting the device certified on the network.

Hamish CaldwellHamish Caldwell, a spokesperson for AT&T, says the M2M market is one of AT&T’s biggest growth areas right now, adding that there are a number of different ways for a large operator to succeed in this space. He stresses the importance of data MVNOs and aggregators as a way to help smaller companies bring their devices to market.

“This market is growing quickly and there’s a lot of variety in the products being offered. We’re particularly good at serving a lot of the market, but that doesn’t mean we’re great at serving all of it,” Caldwell says.

Many smaller companies don’t have the resources to operate at the corporate level of a large entity like AT&T, he says, adding that aggregators are an extremely useful liaison between the carrier and the smaller developer.

Steve Hilton, vice president of Yankee Group’s Anywhere Enterprise research group, says the breadth of carrier solutions for getting devices to market is encouraging and signals the maturation of a new segment of the wireless industry.

“U.S. carriers are becoming more proactive in open development initiatives, but also in forming partnerships upstream in the supply chain, closer to the device side, and downstream, with platform vendors and resellers. I still think the carriers are shying away from picking application providers who have good vertical solutions,” he says, adding that such partnerships are key to success in the M2M market.

Operators aren’t the only ones learning new tricks. Device manufacturers are confronted with their fair share of challenges and that means more than just getting certified on a network. One of the most important choices an OEM will make in the United States is whether to go with CDMA or GSM. And that’s to say nothing of future complications presented by LTE and WiMAX.

Both GSM and CDMA are suitable for providing cellular connectivity. However, CDMA is not as well suited for global roaming as its rival GSM. It’s no coincidence that support for the Kindle contract went from Sprint, a CDMA carrier, to AT&T, a GSM carrier, once Amazon added global roaming to its eReader.

Sandeep SeshadriSandeep Seshadri, solutions lead of wireless practice for Infosys Technologies, an M2M solutions company, says that GSM is almost a necessity for an embedded wireless device that needs global roaming capabilities. “If we look at M2M devices and applications that need to roam internationally, then it would pretty much have to be GSM-based, since GSM is a world standard and is completely interoperable across operator networks globally, which amount to almost 750 carriers across 200 countries,” he says.

And while GSM is also the cheaper of the two technologies, Seshdari notes that there are security issues inherent in GSM that would need to be overcome. “If one were to lean towards GSM-based embedded modules for the M2M applications, one needs to take care of the wellknown issues like fraudulent usage. This could be done by tying the SIM module to the device ID like the IMEI or by tying the application user credentials to the device ID,” Seshdari says.

There’s no shortage of analysts willing to give you their take on what’s the next big thing in M2M. Their responses range from highvolume, low-data industrial applications to high-bandwidth consumer applications.

Two segments that everyone likes to talk about are healthcare and energy. In fact, the M2M market may be in line for some of the $102 billion in stimulus money allocated to those two verticals. The Obama administration has tabbed $4.3 billion of that $102 billion for spending on tech investment in the smart grid. An additional $20 billion has been allocated for investment in the tech side of healthcare.

A number of players in the M2M market find themselves perfectly positioned to get their hands on some of that money. Embedded healthcare and energy metering devices are two of the most promising segments of the market going forward.

The consumer electronics market is also on the tip of everyone’s tongue as M2M becomes synonymous with anything that connects to anything else via a wireless connection.

“M2M will hit big in the consumer electronics space,” says Emil Berthelsen, manager at Analysys Mason. “Telematics and telemetry have been the buzz words for the industry for many years, but the embedded SIM, driving not only sensors but also actuators, will be key.”

Jasper’s Namie seconds that, suggesting that pure enthusiasm, as well as a little experimentation, could be the real drivers for M2M going forward. “If you look at an emerging space like consumer electronics… it’s like the wild, wild west out there,” Namie says. “It’s anything goes. They’re experimenting with all kinds of stuff just to see what sticks because nobody really knows yet.”