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Next generation of AT&T M2M services calls for new strategy, partners

AT&T tells SearchTelecom about its new approach to the enterprise M2M market. With new M2M services and partners, AT&T hopes to generate more than network access revenue from M2M.

The exponential growth of mobile devices and all the traffic they're expected to generate -- 3.6 exabytes per month by 2014, according to the latest projections from Cisco Systems -- is enough to make telecom engineers want to hide under their desks. But this massive growth also presents an opportunity, particularly for machine-to-machine (M2M) services, which offer a recurring revenue stream at a fraction of the bandwidth required for smartphones.

Like all things in today's telecom market, carriers will have to supply more than network access for M2M communications. Business customers will look to carriers for advanced M2M applications and managed services. Eric Krauss, director of M2M product management in AT&T's Advanced Enterprise Mobility Solutions group, recently spoke with about how the nation's top wireless carrier is revamping its overall M2M strategy and partnering with other M2M players -- Axeda, ILS Technology, SensorLogic and Sierra Wireless -- to seize the enterprise M2M market. The M2M market isn't that young. Why is it getting so hot right now?

Eric Krauss, Director of M2M Product Marketing, AT&TKrauss: There are a number of reasons. One is the carriers -- our distribution approach. Let's just think back to five years ago. We didn't have a lot of internal experts in machine-to-machine. I had my team building these capabilities and supporting our customers, but largely our go-to-market [strategy] was selling services to firms that were building products and developing their own sales forces to approach the market.

One of the classic solutions is fleet management. There are lots of companies that are in the fleet management market, and their approach was, "I don't need very much from you, AT&T. I've got my own people and they're developing applications … so all we need from you is network access and a really good platform to manage that."

What's been happening as of late and over the last couple years is [that] more companies [want more than just access]. The stimulus is really the reduction of price in the hardware to deploy machine-to-machine solutions. And frankly, it's some of the things we've been doing to bring more capabilities to our customers, so we're repackaging the approach and eliminating the barriers to customer adoption so that we can actually leverage our sales force.

We've got 7,000 to 8,000 direct sellers in the U.S., so we have educated them to go to the companies they call on already -- frankly, because they sell BlackBerrys, iPhones, feature phones and all the wireline stuff like MPLS connections. They already have relationships with everyone from Fortune 500 companies to government down through midmarket, and we've even got lots of salespeople that sell into small businesses. In addition to selling the normal wireless … and wireline services, they're now positioning our machine-to-machine capabilities.

We really started [that transition] about three years ago…. It was part of this new focus [in which AT&T] said, "We've got this business that's growing nicely by itself. If we actually invested in it more, we could do more for our customers and capture a greater part of the market."

It was part of this new focus [in which AT&T] said, "We've got this business that's growing nicely by itself. If we actually invested in it more, we could do more for our customers and capture a greater part of the market.

Eric Krauss
Director of M2M Product Management, AT&T How have these market changes affected AT&T's M2M strategy?

Krauss: Over two years ago, we struck a relationship with a company called Jasper Wireless to enable our customers to get the very best service platform … and that's what we've been selling to most customers over the past couple years. Our [recent partnership] announcements were … [a recognition] that customers are looking to AT&T to do more. Machine-to-machine is well known as an area of wireless that has a lot of players, so when we'd be positioning machine-to-machine to customers, we'd been providing them these terrific service delivery platforms and global roaming in many, many countries … But what we hadn't been doing is helping our customers develop applications. We had been [developing applications] in [an ad hoc] way.

Our customers are asking us to take a greater role in the machine-to-machine market, so really, there are a number of adjacent opportunities for us. Today we're focused on providing this data transport and service delivery platforms to help our customers operate that deployment and manage that deployment. But they're also asking us to get into machine-to-machine software, hosting, management and systems integration … so, we can pick up [those] other pieces of revenue.

[AT&T now has] a closer relationship with a number of [third-party providers] that are very specialized in machine-to-machine application development because our customers had been asking us to simplify things for them … so their IT [organizations] don't have to try to figure out themselves how to do this. Of course, it's in our interest, too, to eliminate the barriers to adoption and to eliminate the friction customers might run into in a deployment. We'd been doing that as part of our experience with machine-to-machine service delivery platforms … but we took the step of formally striking relationships with these other people that support the M2M ecosystem so that we can work much more closely with [customers]. What have these new M2M services required of AT&T internally?

Krauss: We've got about 400 people now in the technical sales team, some of which are specialists in vertical industries. We generally hire them from their industry -- retail, healthcare, manufacturing, financial services -- rather than taking a telecom person and trying to teach them what that vertical market is all about. For example, we hire people from the utilities industry that come from IT or product management, and we train them on telecom so they can work in the field together with the sales team and bring that industry knowledge and the language that the customers use. They understand their business problems, so they can help us both develop products and target customers, and [give us] their insights into our customers' problems so we can be a better partner to our customers.

We actually have a small team of M2M specialists that we call "The M2M Circle of Excellence." There are about 25 people on that team now and they also can support our sales forces. The combination of those machine-to-machine Circle of Excellence folks and industry vertical specialists allows us to have really good conversations with our customers. What is the value of these partnerships? Why isn't AT&T dreaming up M2M services on its own?

Krauss: We do today have AT&T-branded products in a variety of areas. We have an asset management product, we have a fleet management product and are also in development of other AT&T-packaged [M2M services] we can provide to customers. But a lot of [the demand is] very niche, so a company like a natural gas pipeline [operator] is probably not in a big enough market for AT&T to develop an oil and gas pipeline monitoring system [application]. We don't necessarily want to go and build something [already developed by] someone that makes valves or manages pipelines…. You may not need to reinvent [these M2M services] yourself if there are partners out in the market that have already developed this. How will the network be affected by these more advanced AT&T M2M services? 

Krauss: A lot of the usage … has been fairly small amounts of data, so you can monitor these endpoints on the Internet with a megabyte of data a month or even less. Some companies send very small amounts of data to their end users or these Internet endpoints on their systems. Even with all the connected devices we have on the enterprise side, it doesn't really amount to much in the whole scheme of things -- whereas your average iPhone user is using gigabytes.

Increasingly, though, as we talk to customers, we're finding opportunities with companies looking to use larger amounts of data for their business systems, so we are talking to customers about cases where they're using hundreds of megabytes per month or even in the gigabyte range…. [But] with all the iPhone users we have [compared] to the total usage we have [and anticipate] from machine-to-machine devices, it's really relatively small.

Let us know what you think about the story; email: Jessica Scarpati, News Writer.


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