Hyper Connectivity: Billions of Connected Devices in 2020

2. 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

3. Wireless Connected Devices Ecosystem Smartphones Feature Phones M2M Tablets Mobile Computers MiFi Air Cards Netbooks Notebooks Security & Home/Building Automation Others Financial Services & Retail Smart Grid, Utilities, Industrial Transportation & Telematics Healthcare /Wellness Consumer Electronics eReaders Intrusion Detection & Safety Systems Business Apps Vehicle Convenience, Safety, & Diagnostics POS Terminal Solutions Wireless Patient Monitoring Smart Metering, Smart Grid, Utility Routers Connected Display, Navigation, Gaming Remote Surveillance, Access Control, Building Automation Miscellaneous Systems GPS & Fleet Tracking Vending Machines, ATM, Kiosks Patient Care & Scheduling Remote Telemetry, SCADA Source: Frost & Sullivan.

4. 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.

5. 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.

6. 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 vgandhi@frost.com, 2103481000

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9. If M2M was a Baseball Game, What inning are we in?

10. Spring Training!

11. Why?

12. Why deploy M2M? Market or Revenue Growth Cost Reduction

13. How big is the market opportunity?

14. Quotes “Soon, there will be more than one trillion connected devices…” IBM TV Commercial “…there will be 50 Billion connected devices by 2020.” Hans Vestberg, CEO of Ericsson “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; that’s 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

15. U.S. Next-Generation M2M and Connected Device Application Market Share, 2011 U.S. Next-Generation M2M and Connected Device Vertical Market Share, 2011

16. 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.)

18. 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

19. M2M market has been slow to deliver to date: 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. What is driving change now: 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 – it’s not (just) about ARPU, it’s about margin. Device management has become mainstream The size of the market opportunity M2M – poised for growth? 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.

20. The role for the operator in the M2M value chain B2B value chain Hardware manufacture Hardware customisation & testing Device provisioning & support Connectivity Connectivity monitoring & support Billing & reporting Applications development Applications support Integration of M2M solution Consulting/sales Customer care Customer Operator core positioning The M2M value chain

21. Segments B2B B2B2C Applications Vertical Horizontal M2M approach End-to-end Connectivity Revenue model Revenue share Wholesale Coverage Global Local Organisation Decentralised Centralised Platform DIY Outsource M2M issue Decision point Key decision areas for operators Partnering will be essential,even for core services

22. Broad definition: based on lack of retail relationship for operator Satellitenavigation device E-reader Narrow definition: Based on lack of user interface Smart metering/grid Track and trace Remote sensors/monitoring Digital pictureframe Connectedcamera Vehicle telematics “White Label Network Devices”* 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. * Where the overall proposition presents the connectivity as an attribute of the device rather than as a service provided by a network operator.

23. Summary • Operators recognise there is a significant opportunity in M2M • 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 • Learn from other operators’ experience • 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 • 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 • 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 • Logistics & fleet management • Vehicle telematics • Local regional opportunities will exist • Process monitoring in manufacturing • Utilities – linked to regulation • Retail - POS • Healthcare Mike Sapien - Ovum Mike.sapien@ovum.com (760)931-8025

25. Who We Are • Why We Are Relevant to M2M • Industry Impact

26. TAPA: Who We Are • The Transported Asset Protection Association (TAPA) represents businesses fighting back against cargo crime that want to use real-time intelligence and the latest preventative measures to protect goods in the supply chain. • Manufacturers ~ Carriers ~ Insurers ASIA EMEA AMERICAS

27. 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 CVS/Pharmacy CEVA Logistics Chartis Insurance Dell, Inc. DHL Express Americas DW Morgan Eastman Kodak Eli Lilly Expeditors International Falvey Cargo Underwriting Flextronics International FM Global Cargo Insurance Co Freight Logistics, Inc. FreightWatchInternational, USA Genzyme Corporation Glaxo Smith Kline Hewlett-Packard High Tech Cargo Insurance Program (Insurance Associates of the Southwest) Intel Corporation International Business Machines (IBM) Johnson & Johnson Kingston Technology Kraft Foods Kuehne & Nagel LoJack SCI Marsh Risk & Insurance Services Max Specialty Insurance Co. McCabe Associates Microsoft Corporation MillerCoors Motorola, Inc Motorola Solutions National Air Cargo National Retail Services New Breed Logistics Nike Nippon Express USA, Inc. NNR Global Logistics USA, Inc Ocasa Logistics Solutions, Inc. Pfizer OHL Purolator USA OnAsset Intelligence Performance Team Panalpina Inc. Purdue Pharma Technologies Quantum Corporation Research In Motion (RIM) R&L Carriers Relcor SamsungTelecommunications Sandisk International Sanofi-Aventis Sanofi-Pasteur Seagate Technology Sealock Security Systems, Inc. Shasko Global Logistics Smith & Associates Sony Electronics, Inc Spansion Speedmark Transportation Starr Marine Agency, Inc. Synnex Corp. Tech Data 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 Today, in the Americas, Europe, the Middle East and Africa (EMEA),and Asia, TAPA’s membership is at its highest ever level – and growing every month. The Association’s 700+ members include many of the world’s leading consumer product brands as well as their logistics and transport providers with combined annual sales of over US$900 billion, law enforcement agencies (LEA), insurers and other trade associations.

28. 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

29. 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