Telenor (News - Alert) Connexion is a genuine innovator and the company has pioneered the M2M market in automotive, security and smart metering industries. In 2009, the company developed and deployed an advanced M2M dedicated platform that was subsequently chosen by companies such as Omron, Nissan, TomTom, and Qualcomm (News - Alert) for their embedded connectivity solutions. Telenor Connexion has now taken the next step – a strategic deal with Ericsson whereby Ericsson acquires the M2M platform.

Under the terms of the deal, eleven Telenor Connexion employees will transfer to Ericsson to work on its Device Connection Platform, which was designed to help mobile network operators offer M2M services to their enterprise customers. Ericsson’s own platform was launched earlier this year. Information released to the media does not indicate how the two platforms will interoperate, but there has to be a synergistic relationship. 

My take, for what it’s worth, lies in the word “Connection”. Telenor Connexion has M2M expertise; Ericsson is a leading NEP (Network Equipment Provider) with a lot of connectivity knowhow and experience. The combination would therefore facilitate the global extension of M2M applications, i.e. allow telco’s match the demands of the “Internet of Things”. Ericsson has been quoted as saying that the market to grown to 50 billion connected “things” (M2M devices) by 2020. Telenor, Norway’s incumbent Telco, will further its own M2M ambitions by becoming the first customer on the Device Connection Platform.

Frost & Sullivan (News - Alert) analyst, Yiru Zhong said, “Ericsson’s acquisition gives service providers – and not only telecoms players –an alternative way to achieve faster time to market with regards to deployment of M2M communication services. As such, we see a potential for Ericsson to disrupt traditional M2M players by opening up possibilities for new types of service providers.”

Wheels within wheels

In 2009 Telenor Objects, a sister company, developed an advanced M2M dedicated platform known as Shepherd. See figure 2 in “M2M In The Cloud: A Logical Development”.  The thrust of that article was that we could expect to see standards-based, net-centric M2M platforms in future. Telenor Objects was heading in that direction, i.e. Shepherd was an ambitious, forward-looking program based on a shift from proprietary, closed solutions to an open, layered architecture.

ETSI (News - Alert) started a standardization process two years ago and now there is an agreement on a high-level system architecture as well as the requisite service capabilities. As illustrated, the architecture, which is based on the existing communications standards of flat, all-IP next-gen networks, has extended M2M capabilities in the core networks as well as a separate device domain.  This development was described in “MSM Moving Forward via ETSI Standards”.  

NB: This isn’t an exercise in self-aggrandizement. Having extended M2M capabilities in the core networks as well as a separate device domain is very important for network operators.  

Until now their role in the value chain has primarily been that of a bit pipe carrier. The networks transport data from the modules to the middleware platform. The new ability to do more local processing in the device domain pushes them further down the value chain. 

Winners and losers

The device domain is particularly good news for module vendors. The gateway concept is able to unleash the power of advanced processors such as the quad-band ARM9, which is embedded in Telit’s GE863-PRO3 wireless module. More local processing equates to less network traffic, which is a low-margin commodity service that MNOs get by default.

Via alliances and acquisitions they have moved up the value chain, i.e. moved on from being a bit pipe. Implementing the new architecture should be relatively easy since it is similar to that of next-gen cellular networks. But they will still need a global connectivity service designed for M2M, i.e. the new offer from Ericsson. And that would explain the apparently illogical decision of Telenor to allow two subsidiary companies to develop two different platforms.

Bob Emmerson is TMC's (News - Alert) European Editor. To stay abreast of the latest news affecting the European market, check out Bob's columnist page.

Edited by Jennifer Russell