Global CIO: What CIOs Can Learn From Kindle

The real lesson is in the growing power of machine-to-machine wireless links.

October 27, 2009

Why Now

Wireless carriers are highly motivated to sell in this market today. Sprint this month created what it's calling its Emerging Solutions group, focused entirely on helping businesses quickly ramp up machine-to-machine systems. AT&T just snatched the contract for connectivity of new Kindle models from Sprint, touting its more global GSM network for such links along the way. Verizon Wireless and Qualcomm formed a joint venture in August, nPhase, to help manufacturers across industries build machine-to-machine networks into their products.

Wayne Ward, VP of Sprint's new Emerging Solutions group, offers four "why now?" reasons for machine-to-machine wireless is gaining momentum:

Consumer voice calling markets are saturated in developed markets like the U.S., giving carriers a big incentive to find growth markets.
The wireless networks are built out to the point they have the coverage and reliability for broad machine-to-machine use by business.
With all the carriers pursuing this, the scale is driving down the price of chipsets and other components, making ROI feasible for a new tier of projects.
Machines make profitable, long-term, low-churn customers that carriers covet. "When you put a module on a gas meter, as an example, that gas meter doesn't want to call up and upgrade the phone, change the rate plan, consume service rep time, etc.," Ward says.

Electronics such as Amazon's wireless Kindle have already shown how they can shake up a market, inspiring imitators as well as lawsuits. I'm not sure how wide the consumer machine-to-machine market will spread beyond electronics--I still haven't figured out why my refrigerator needs an Internet connection, even if it's wireless. Some real-world products out there, such as Ford's wireless in-dash computer for its pickups, feel like a niche to me.

But in the enterprise adoption of wireless alongside everyday business devices, CIOs have an opportunity to drive value. In our cover story, we write about Follett's using wireless telecom networks when it opens a new bookstore, running the entire operating including transferring point of sale data on wireless until it gets wirelines in. Some of the hundreds of millions in tax dollars going for smart grids will be spent on wireless gas and electricity meters, providing for more efficient data collection and more real-time data sharing with customers. Healthcare's a largely untapped market. Cellular machine-to-machine connections will about triple from their current number of about 75 million by 2014, estimates ABI Research.

In agriculture, I talked with a farmer in Modesto, Calif., this week who has soil probes and weather stations across his 1,500 acres of fruit and almonds, taking readings every 15 minutes and sending them by a cellular link to a data center, which he accesses over the Web. "I think we've just scratched the surface of what the use of this is," says Derk VanKonynenburg, one of the partners on BK Farms, who uses the data in deciding when and how much to water.

There are, of course, limits to the advantages of connectivity and more data. Some of the machine-to-machine excitement sounds like the RFID fever earlier this decade, when data gathering by tagging products with radio frequency ID tags promised to broadly revamp supply chains. Instead, many of RFID's successes have come in solving very tightly focused business problems that begged for better data. Not a bad place to start for people looking for place to apply machine-to-machine wireless data in their own companies.

Chris Murphy is editor at InformationWeek.

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