9/9/11 Hyper Connectivity: Billions of Connected Devices in

9/9/11 Hyper Connectivity: Billions of Connected Devices in

9/9/11 Hyper Connectivity: Billions of Connected Devices in 2020 There will be no limit on the number of connections as part of the mobile grid. Everything has the potential to be connected .. Call it the 100 percent ceiling. CEO Verizon Wireless Connected Devices Ecosystem Feature Phones Smartphones Notebooks Netbooks Mobile Computers

Air Cards M2M Tablets MiFi Security & Home/Building Automation Consumer Electronics Transportation & Telematics Financial Services & Retail

Healthcare /Wellness Smart Grid, Utilities, Industrial eReaders Vehicle Convenience, Safety, & Diagnostics POS Terminal Solutions Wireless Patient Monitoring Smart Metering, Smart Grid, Utility Routers

Intrusion Detection & Safety Systems Business Apps GPS & Fleet Tracking Vending Machines, ATM, Kiosks Patient Care & Scheduling Remote Telemetry, SCADA Remote Surveillance,

Access Control, Building Automation Miscellaneous Systems Connected Display, Navigation, Gaming Others Source: Frost & Sullivan. Cellular M2M Communications - Market Forecasts M2M connections on cellular networks in North America to approach 80-85 million in 2017. These figures do not include laptops, netbooks, notebooks and tablets, which would be in tens of millions as well(around 50 million) . Source: Frost & Sullivan.

Key Market Realities in M2M (Past , Present and the Future) 2001-2008 2009-2011 2012-2018 Market Adoption Service & Support Requirements ARPU Bandwidth Consumption 3G/4G Usage Low Medium High Source: Frost & Sullivan. Conclusions

Exceptional growth expected in the global M2M communications market. Virtually all segments of the value chain need to work hard to maximize the M2M opportunity. Ease of deployment ,and ease of management of existing implantations will be the key to achieving long-term success in this market. Frost & Sullivan believes that eventually, both direct connections and revenues from M2M could become larger than traditional mobile phone business in several regions of the world, including North America this could take 20-25 years. Vikrant Gandhi Senior Industry Analyst, Frost & Sullivan [email protected], 2103481000 About Compass Intelligence Compass Intelligence, a global consulting and market analytics firm, specializes in segment and vertical market intelligence for the high-tech and telecom industries; and offers clients a tailored research experience through excellent customer support. Compass Intelligence provides subscriptions and research reports, insight videos, forecasts, competitive analysis, market data and expert recommendations on multiple markets. Find us on http://www.compassintelligence.com or follow us on Twitter( www.twitter.com/CompassIntel).

If M2M was a Baseball Game, What inning are we in? Spring Training! Why? Why deploy M2M? Market or Revenue Growth Cost Reduction How big is the market opportunity? Quotes Soon, there will be more than one trillion connected devices IBM TV Commercial there will be 50 Billion connected devices by 2020. Vestberg, CEO of Ericsson Hans

In this model, there is literally no limit on the number of connections that can be part of the mobile grid: cars, appliances, buildings, roads, sensors, medical monitors and someday even inventories on supermarket shelves. All of these have the potential to become inherently intelligent perpetually connected nodes on the mobile web. Ivan Seidenberg, CEO of Verizon When you look at the numbers between M2M and social networking companies, LinkedIn counts as its market every professional on the planet; thats 1 billion people. Facebook is a little bit more ambitious, it counts as a potential customer over 2 billion internet users and counting. But if you look at M2M, we have a market which consists of over 7 trillion machines Dale Calder, Founder of Axeda Once you embed it [wireless M2M application] in a business process, for example, customers are probably not going to rip you [out] when your annual contract is up. Danny Bowman, Sprint Nextel Corp U.S. Next-Generation M2M and Connected Device Application Market Share, 2011 U.S. Next-Generation M2M and Connected Device Vertical Market Share, 2011 Focusing on Transportation and Logistics Roads and Vehicles: 4M miles of roads, 254M vehicles, 11.8M heavy

trucks and busses Rail: 140,000 miles of railroad tracks and 1.4M rail cars Air: 5,200 airports including 5 of the 25 largest in terms of air freight and 13 of the top 25 in terms of passenger traffic Pipeline: 1.7M miles of gas and oil pipelines Waterways: 25,000 miles of navigable waterways Shipping Containers: 14.8M TEUs globally. (At any time, over 1/4 could be in the United States or inbound to the United States.) Why now? Operator interest in M2M intensifies Many telecoms operators are seriously looking at the M2M opportunity (again) A stream of recent announcements, particularly partnerships and new organisations Some interesting customer wins Why now? Economies of scale, especially in the market for M2M hardware Increasing importance of connectivity in consumer electronics devices, and the advent of cloud

Availability of device management software, which has become an integral part of M2M platforms and makes it possible for solutions to be deployed on an industrial scale More realism from operators - more acceptance of partnership/wholesale role Main obstacle to growth Absence of an agreed architectural framework for M2M - some limited progress towards this from smaller players M2M poised for growth? M2M market has been slow to deliver to date:

What is driving change now: Lack of scale - specialized industrial applications in narrow industry verticals Value chain is complex and fragmented Lack of standardization The lack of a new revenue model - M2M has looked like a small market for operators Need for partnerships - MNOs lack network coverage. Low ARPU Local opportunities

Consumer market opportunity Old revenue models Lack of scale Global M2M for MNCs Market fragmentation Lack of standards MNO interest Regulation Falling component costs Cloud delivery

model Corporate customer focus within mobile operators Falling costs as scale grows Regulation, particularly in some verticals Consumer electronics companies are interested New delivery and commercial models Operators are recognizing that there is value in M2M its not (just) about ARPU, its about margin. Device management has become mainstream The size of the market opportunity Operators do not want to miss out on a potentially huge opportunity, which some see as many times the size of the current (personal) mobility market. The role for the operator in the

M2M value chain Consulting/sales Customer Customer care Integration of M2M solution The M2M value chain Applications support Applications development Billing & reporting Connectivity monitoring & support Connectivity Device provisioning & support Hardware customisation & testing

Hardware manufacture Operator core positioning B2B value chain Segments Key decision areas for operators B2B B2B2C Applications Vertical Horizontal M2M approach End-to-end Revenue

share Connectivity Revenue model Wholesale Coverage Global Local Organisation Decentralised Centralised Platform DIY Outsource Partnering will be essential, even for core services

M2M issue Decision point What is M2M? - Key Horizontal Applications Strict definition: communication where a remote machine is monitored and/or controlled by a central server. Broad definition: the extension of connectivity to consumer electronics products, particularly where the role of the network operator in providing this connectivity is not apparent to the end user, and where the provider of the consumer device presents itself as the service provider.

Broad definition: based on lack of retail relationship for operator E-reader Narrow definition: Based on lack of user interface Smart metering/grid Satellite navigation device Track and trace Remote sensors/monitoring Digital picture frame Vehicle telematics

White Label Network Devices* Connected camera * Where the overall proposition presents the connectivity as an attribute of the device rather than as a service provided by a network operator. Summary Operators recognise there is a significant opportunity in M2M Learn from other operators experience

Link to the enterprise business unit the majority of early leads will come from business customers, even if applications are B2C Opportunities will span fixed and mobile Build a core of dedicated expertise for M2M, but use and train the enterprise sales team and channels Focus on obvious first verticals these are not country-specific Partner for the M2M platform, at least in the early days Partner for applications development you will need to foster M2M application ecosystems You must build robust and friendly partnerships with complementary providers as the M2M market matures and wider opportunities grow Provide an organisational focus for M2M

Operators have a much more realistic appreciation of their own position in the M2M value chain than in the past You must partner to profit M2M's time might finally have arrived The market has developed in a fragmented way it is not one opportunity, but a collection of opportunities Logistics & fleet management Vehicle telematics Local regional opportunities will exist

Process monitoring in manufacturing Utilities linked to regulation Retail - POS Healthcare Mike Sapien - Ovum [email protected] (760)931-8025 Who We Are Why We Are Relevant to M2M Industry Impact TAPA: Who We Are The Transported Asset Protection Association (TAPA) represents businesses fighting back against cargo crime that want to use realtime intelligence and the latest preventative measures to protect goods in the supply chain. Manufacturers ~ Carriers ~ Insurers AMERICAS EMEA

ASIA We Are: Abbott Laboratories ADT AFC Worldwide Express, Inc. Air and Ground World Transport Allianz Global Corp & Specialty Alterra E&S (formerly Max Speciality Ins.) Amerifreight, Inc. Amgen, Inc Aon Risk Services APL Logistics, Ltd. Applied Materials Associated Global Systems Astellas Avnet, Inc. Best Buy, Inc. Brightpoint, North America Bristol-Meyers Squibb Cargo Screening Solutions Challenger Freight Systems, Inc. Crane Worldwide Chubb Insurance CEVA Logistics Chartis Insurance Dell,East Inc. DHL Express Today, in CVS/Pharmacy the Americas, Europe, the Middle Americas DW Morgan Eastman Kodak Eli Lilly Expeditors International Falvey Cargo Underwriting

and Africa (EMEA),and Asia, TAPAs membership Flextronics International FM Global Cargo Insurance Co Freight Logistics, Inc. FreightWatch International, USA Genzyme Corporation Glaxo Smithever Kline Hewlett-Packard High Tech Cargo Insurance Program is at its highest level and growing every (Insurance Associates of the Southwest) Intel Corporation International Business Machines (IBM) Johnson & month. The 700+

members include Johnson Kingston Technology KraftAssociations Foods Kuehne & Nagel LoJack SCI Marsh Risk & Insurance Services Max Specialty Insurance Co. McCabe Microsoft Corporation MillerCoors Motorola, Inc Motorola many of theAssociates worlds leading consumer product Solutions National Air Cargo National Retail Services New Breed Logistics Nike Nippon Express USA, Inc. brands

well Logistics as their logistics andOHL transport NNR Global Logistics USA, as Inc Ocasa Solutions, Inc. Pfizer Purolator USA OnAsset Intelligence Performance Team Panalpina Inc. Purdue Pharma Technologies Corporation providers with combined annual Quantum sales of over Research In Motion (RIM) R&L Carriers Relcor Samsung Telecommunications Sandisk International Sanofi-Aventis Sanofilaw enforcement

(LEA), Pasteur SeagateUS$900 Technologybillion, Sealock Security Systems, Inc. Shaskoagencies Global Logistics Smith & Associates Sony Electronics, Inc Spansion Speedmark Transportation Marine Agency, Inc. Synnex Corp. Tech Data insurers and other tradeStarr associations. Corporation Travelers Tyden Brooks (formerly EJ Brooks Company) UPS Watson Pharmaceuticals Willis of New York, Inc. Xerox Corporation Yusen Air & Sea Service (USA) Inc. Zurich Services NA Relevance to M2M TAPA Global Standards Freight Security Requirements (FSR revised in 2011) Truck Security Requirements (TSR due 2012) Parking Standards (Europe only)

Air Cargo Standards (TACSS EMEA and ASIA IIS (Incident Information Service) Benchmark Studies Industry Impact Cargo Theft: Low Incidence, High Impact Events 2010: The volume of cargo theft is consistent with 2009, but value per loss continues to increase dramatically The average value per loss increased by 69% Extreme high value thefts are occurring more frequently: $76 million warehouse theft, Enfield, Connecticut (pharmaceuticals) $37 million full truckload loss, Carlisle, Pennsylvania (pharmaceuticals) $10 million electronics warehouse theft, DFW Trends in 2010: Televisions are the most sought after electronics products Pharmaceutical theft rates equal to 2009, yet value of shipments sharply rising Multi-load theft incidents becoming more common

SHIFTS IN FOCUS Assessing General Routing Requiring Checks of Documentation Different Government Agencies for Different Cases From Risk Assessments Per Individual Shipment Checking for Fraudulent Documents and IDs One platform for interacting with multiple agencies To 9/9/11

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