PR Vibes Q&A: Matt Hatton, CEO and Founder, Machina Research

Welcome to PR Vibes, created by Calysto Communications to provide you with insight into the publications, thought leaders and events in the communications and Internet of Things (IoT) industries. Today, we visit with Matt Hatton, the CEO and founder of Machina Research, an analyst and consultancy firm focusing on the IoT, machine-to-machine communications (M2M), and Big Data.

Prior to establishing Machina (pronounced Ma-keen-a) Research in 2011, Matt was Director of Research at Analysys Mason, where he managed research for the telco services market, with a particular focus on mobile broadband and other emerging services and business models. He also served as Program Manager, Consumer Wireless EMEA, at Yankee Group.

In this interview, Matt shares some “biggies” in the IoT/M2M space – what he sees are the biggest challenges, successes, and surprises – as well as what he looks for when attending industry conferences and trade shows. Enjoy!

“The most important thing for the everyday person to understand is that the IoT will permeate most areas of life.” —Matt Hatton, CEO and Founder, Machina Research

What is the focus of Machina Research and how big of a role does IoT/M2M play?

Machina Research is a global analyst firm headquartered in the UK, with offices in San Francisco, Toronto, Boston and Hong Kong. We focus on IoT and M2M. It’s 100% of what we do.

We distinguish between M2M and IoT. M2M is about connecting devices and supporting specific applications. We consider IoT to be a broader category, including the likes of application development, systems integration, and data analytics.

Who are your customers and what do they come to you for? 

Our customers fall into two main categories. The first set are the ecosystem: telcos, vendors, specialist IoT players, regulators, investors and various others who want to understand the market opportunity and changing market dynamics. That would include the likes of Vodafone, Cisco, Ericsson, Sigfox, Thingworx, Digi, Telit, Jasper, and so forth. The second group of clients are the end users, both enterprise and public sector. That includes automotive, consumer electronics and industrial manufacturers who are interested to know what the IoT means for them. It also includes cities and municipalities interested in understanding how they should implement Smart City initiatives.

Our customers come to us to understand a few things: market opportunities for vendors, technical and commercial best practices for service providers, and advice on implementing IoT for end users, whether that’s cities putting in place Smart City solutions, or enterprises seeking to understand the transformative effect that IoT might have on them. We provide multi-client research through our Advisory Service Research Streams and client-specific custom research, which might be anything from white papers and webinars to go-to-market strategies.

What differentiates Machina Research? 

There are a few things that we feel sets us apart:

  1. We think we have the biggest (and the best!) team of analysts focused on M2M and IoT. We have 11 analysts located in the U.S., Canada, UK and Hong Kong focused exclusively on the space.
  2. The most extensive published research. Our Research Streams include (amongst other things) incredibly granular market forecasts, reports on every M2M application, detailed analysis of every major carrier’s strategy, assessments of all the key new and emerging vendors and technologies, profiles of the regulations covering IoT/M2M in dozens of countries, guides on the best way to implement IoT as an enterprise, and analysis of the major trends that are shaping the industry.
  3. The ear of the industry. Whichever event you go to in the IoT/M2M space, you’re likely to find at least one of our analysts there. We know what’s going on in this space, and everyone knows us.

How do you segment your research?

Our multi-client research advisory service consists of a series of Research Streams covering different aspects of IoT. Essentially, it is divided into two segments: the vertical demand side and the horizontal supply side.

On the demand side, we cover five vertical sectors: Cars; Cities; Healthcare; Industry; and Living and Working, which include detailed forecasts which are combined in our M2M Forecast Database. These Research Streams explain and quantify the market opportunity. They are also complemented by our Smarter Cars, Smart Cities, Future Wellness and Enterprise IoT Research Streams, which are targeted at the vertical sectors themselves, and provide guidance to those organizations seeking to deploy IoT, rather than just understand the opportunity.

Our key horizontal Research Streams are M2M Strategies and IoT Strategies. These provide technical and commercial best practice to everyone in IoT/M2M, including device manufacturers, network operators, service providers, and software vendors. Our IoT and M2M Regulation Research Stream provides detailed analysis of the regulatory situation in 80+ countries.

What does the everyday person need to understand about the IoT?

The most important thing for the everyday person to understand is that the IoT will permeate most areas of life.

I’d flag up, for instance, how people buy products. In the same way that the Internet changed buying habits (think Amazon, AirBnB, Uber, etc.), so will the IoT create a similar shift. Mostly this will be about servitization, i.e., turning a business model based on selling hardware into one about selling services. So, for instance, we would expect people to increasingly shift from owning cars to car sharing schemes enabled by IoT.

Whatare the biggest challenges you’re seeing in the IoT/M2M space?

Where do I start? It’s important to note is that this is a market that’s happening now and is already powering ahead. That said, there are inevitably some challenges.

  1. Security.. We’ve been focusing a lot of attention here recently, and the hacked Jeep announcement that was in the headlines recently is a testament to the criticality of solving this problem.
  2. Privacy. People are concerned — understandably so — about how information about them is being used. Consequently, this is holding up growth in some sectors. There is a lot of good work going on in government, in both Europe and the U.S., to address this.
  3. Technology choices. There are a hundred different technologies that companies looking to implement IoT might choose to adopt, and the number is increasing. Uncertainty over which will prevail is hindering growth.
  4. Cost. We’re seeing substantial reductions in the cost of hardware and connectivity, as well as the availability of building-block platforms that reduce the development costs for IoT. However, inevitably it still persists as a barrier, and much of the focus of the supply side continues to be on driving cost down further. In many cases it’s a question of trading off cost vs. functionality, so it’s absolutely critical to understand long-term needs and the future technology roadmap to avoid making an unnecessary and expensive mistake.
  5. Fear. Enterprises don’t understand (or don’t want to face) the impact that IoT could have on their business. In many cases, it’s transformative. However, inertia is a terrible thing and it takes a long time to recognize and embrace change. For those enterprises that don’t do it, there is a massive risk that new competitors will. History is littered with companies where new technology has overtaken their business model.

What are the biggest successes you’ve seen in the IoT /M2M market to date?

I think we can look to some of the early adopters of IoT/M2M for the most prominent examples of wins, such as industrial automation, fleet management, electricity grid monitoring, and various forms of asset monitoring (e.g., aircraft engines or other expensive pieces of kit). Here the value of the asset being monitored was so substantial and the benefits so great that it was the proverbial “no-brainer.”

What recent developments in devices, networks and software have done is democratize that ability. The remote monitoring and control that was previously only viable for high-value assets is becoming feasible for billions of devices. It’s a trend similar to mobile phones. In 1990, they were something only used by the very wealthy, but by 2005, they were almost universal. Scale and cost reduction did that.

What’s been the biggest surprise about this market?

What always surprises me is the speed of movement. No one can sit still, including us. Whatever knowledge one might have had about the state of the market or technology — even 12 months ago — will have been completely turned on its head. That’s why we spend so much time at conferences, because it’s only through this constant interaction with the IoT/M2M world that you can hope to stay up to date. And that’s also the reason why we’ve expanded our team so much recently. You need a lot of eyes on the industry if you really want to keep track of the constant change.

Any interesting market data to share?

Absolutely! We’ve just recently published our annual snapshot of the global M2M market opportunity. It’s based on extracts from our M2M Forecast Database, which is an exceptionally granular and detailed forecast of M2M.   Here are some of our findings:

  • Overall we’re expecting 27 billion connected M2M devices by 2024, an average annual growth of 18 percent. Most of those connections will be short range (Wi-Fi, Zigbee, Bluetooth, etc.) within categories like consumer electronics and building automation.
  • Cellular connections will go from 256 million at the end of 2014 to 2.2 billion in 2024. By 2024, the majority of those will be LTE and connected car will be the largest sector. We’re expecting big things of the new Low Power Wide Area Network (LPWAN) technologies. By 2024, we expect those to account for 14 percent of all connections.
  • In revenue terms, M2M will account for $1.6 trillion in 2024, up from $500 billion today. A few months ago we also did an assessment of the total IoT opportunity, which we estimate at $4.3 trillion in 2024.

What are some of the key topics you plan to cover in the future?

We will have a number of key topics in the next few months:

  1. Security and how to secure the IoT.
  2. How enterprises should implement IoT and the implications for their businesses.
  3. The evolution of network technologies, with changes to existing cellular networks and new arrivals.
  4. The changes happening in the platforms space, with lots of developments in the tools available to build and manage devices and applications.

You mentioned you’ve expanded your team. Please tell us more.

Over the last 12 months, we have almost doubled the size of our analyst team, bringing in some very experienced and well-known analysts in the space. In July alone, we recruited two new principal analysts: Aapo Markkanen and Isabel Chapman, both very experienced people in the world of IoT. Aapo will be focusing on access technologies, including the new LPWAN  technologies. Isabel will be picking up the baton on software platforms, which is also a crucial area. With a bigger team comes an increasing ability to specialize and focus, providing even more insightful analysis.

What’s the best way to catch your team’s attention?

That’s a very good question, and I don’t think there’s a simple answer. If there’s a company out there with a compelling or unusual proposition in IoT, something truly interesting, it’ll tend to come onto our radar. Conferences and trade shows are usually good places to do that. Or, word of mouth. It’s a regular conversation I have with people: “Who have you seen recently who is doing something interesting?” or “What do you know about x?”

If you have an offering in the IoT/M2M space that’s interesting and relevant to our analysts, please get in touch!

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