The Connected Consumer and Smart M2M Services

Mike UelandVice President & General ManagerTelit Wireless Solutions

Connected Consumers are Mainstream91% US wireless penetration; 25% of all households are wireless only

92% of population is covered by 3G network

6500% Rate of AT&T”s wireless data growth past 3 ½ yrs

89% of the handsets on wireless carriers’ networks are Web capable

Sources: CTIA, AT&T, ABI Research

Regularly visit community sites

(Facebook, MySpace, YouTube)

Kindle eReader sales tripled in the first

half of 2010 and are outselling hard

covers

Over 300,000 iPads sold on the first day

(April)

Consumers are creating and consuming digital data and media

Sample ApplicationsM2M Functions• Track usage• Upload data• Report changes• Monitoring and

notification• Transactions• Digital displays• Location tracking• eReaders/ emerging

devices

Moving to M2M 2.0

Batch •Communication

Productivity •Customer benefit

Niche •Market size

Real-time

Usage based pricing

Broad

M2M 1.0 M2M 2.0

M2M 2.0 Market Drivers•New OEM automotive telematics incorporating 3G (Audi)•Opens up new applicationsEmerging 3G •Next generation 2G/3G modules driving down size/power/price•Carriers open to innovative pricing models (i.e. Kindle)

Airtime & Equipment Costs

•AT&T (EDO), Verizon (ODI), Sprint (Emerging Solutions) have all reorganized their structures•AT&T expects to boost subscriber penetration to 500%

Operators Engaged

•Legislations such as the eCall mandate in Europe, Resolution 245 of the Brazilian government and local initiatives in China create huge market potential

Regulatory Changes

M2M‘s Impact on the Connected Consumer

Recent reductions in the cost to deploy are enabling more consumer-focused applications

Applications have the potential to make a BIG impact on choices we make in our daily lives

Applications can produce positive benefits to individuals and society Many of the new applications are driven by the principles of

behavioral economics Behavioral economics is a field of economic research that looks at

how individuals make economic related decisions – what does this really mean….

m2m Enables Economic Incentives and Influences Positive Consumer Behavior

What is Behavioral Economics?

Behavioral Economics

A classic example is the difference between opt-in and opt-out in a program such as organ donation.

If you tell people that they can opt-in to donating their organs if they are

killed, a few will feel strongly enough to do it—most people won't. If you switch that to opt-out the

reverse happens—very few people opt out.

All of economics is meant to be about people’s behavior. Right??So, what is behavioral economics, and how does it differ from traditional economics?

Traditional Economics• Conceptualizes the world populated by humans that are

rational that behave in a way to maximize their individual self-interest• Framework ignores or rules out virtually all behavior and

includes unrealistic traits

Behavioral Economics• Assumes individuals don’t always make “rational”

decisions because of being influenced by other factors/context• Markets are inefficient

Example – How Choices are Presented Influence Outcomes

• Director of food service for a major city school system influenced what students ate by changing how the food was presented in the cafeteria line• Putting fruit before desserts or moving carrot sticks to eye

level• District found they could increase or decrease the

consumption of food items by 25% without making changes to the menu• Practice of giving people freedom of choice but steering

them toward decisions that benefit themselves and society is called “libertarian paternalism” • Director of food services is a “Choice Architect” by

arranging food choices that resulted in healthier selections- organizing context for decision making

Applying Libertarian Paternalism to M2MApplications Provide Incentives for People to “Do The Right Thing”

• Pay as You Drive captures driving behavior and encourages better driving habits through lower rates • i.e. Progressive Insurance with MyRate Program

• Congestion-based tolls to reduce traffic accidents, congestion and pollution• Demand response programs in the utility sector encourage people to shift

electric power usage to nonpeak periods• Pay as You Throw households that throw out more pay more for trash

collection encourages recycling• Medical reminders to patients encourages better overall health

• i.e. mHealth solution from Vitality, GlowCaps

Pay As You Drive Insurance• Launched in 2008; currently in 22 states• Easy self-install by the consumer into the vehicles

OBD II port• Voluntary program offering 15-25% discounts

based on driving habits• Captures driving data, distance, time, sudden

acceleration, and braking• Benefits Progressive by better calculation of risk,

lower loss ratio, improved segmentation• Benefits consumers through lower premiums• Societal benefits could be fewer accidents, lower

car emissions and less road maintenance

Payment Assurance• As condition of loan, finance

company requires black box• Auto disabler prevents car

from being started• Locate and recover asset

when payments are not made• Encourages on-time payments• Expanding from “Buy Here,

Pay Here” to traditional auto financing• 35-45 million car sales a year,

20 million are sub-prime

mHealth Solutions – GlowCap by Vitality• GlowCaps use light and sound to signal

when it is time to take a pill – relays status to Vitality’s secure network• GlowCaps can even call with refill

reminders and connect the patient to their pharmacy as pills deplete.• Each month GlowCaps mails a printed

report to you and your doctor if requested • Encourages better health and reduces

costs through health maintenance and daily medication adherence• 800 million people have chronic

conditions (GSMA)

Pay as you Throw• Charges households a higher bill for

putting out more trash for collection• Cost effective method of reducing

landfill disposal and toxins • Encourages and increases recycling

efforts• Recycling containers can send

information about how full they are and trigger pickup•Weight of recycled material can be

credited to each household and used to reduce taxes or as a credit towards municipal services

Summary• Consumers are more connected

than ever before•M2M 2.0 is about providing

consumers with more timely information in which to make better decisions• New business models are being

created that leverage M2M technology and create “win-win” scenarios