Telematics in Japan: Docomo goes for M2M

Telematics in Japan: Docomo goes for M2M

According to Kuninori So, vice president of the Tokyo-based market research firm ROA Holdings, one problem facing NTT Docomo and other Japanese telecommunications providers, such as NTT Data and Softbank, has been cost. Although Docomo developed its own machine-to-machine (M2M) modules for sensors and vending machines for its Japanese clients and has partner vendors that provide it with M2M modules, its modules are very expensive compared to those made outside Japan.

“For instance, the M2M module that Docomo developed and provided to its clients was attached to a so-called protocol convertor and sold for more than $500, compared to about $100 for Cinterion’s module,” So says.

Machina Research Director Matt Hatton says, “Japanese mobile operators have not been very expansionist in general.” And because of differences in technologies and mobile structures from those in other countries, “they have not been successful in pushing their footprint all over the world.” (For more on M2M, see Machine-to-machine telematics: Ready to grow, part I and Machine-to-machine telematics: Ready to grow, part II.)

Competitive disadvantage

According to Thomas Strandin, key account manager at Telenor Connexion and head of sales for the Asia-Pacific region, Japanese companies such as Docomo are at a competitive disadvantage in M2M roaming because they lack the cost control and oversight of their Western competitors and do not offer a single, exclusive platform for M2M traffic. “So they need outside providers for their Japanese clients,” Strandin says.

For example, Telenor provides connectivity in 130 countries for Hitachi Construction Machinery’s excavating equipment, enabling the company to track and monitor its vehicles and machines on a global level and control the costs of its SIM connections in each country. (For more on SIMs, see Q&A: Telematics and the evolution of the SIM card.)

So says that this type of agreement is a good solution for Japanese companies looking for efficient international asset management: “Japanese carriers usually lead the M2M market, especially B2B areas, but they don’t have specific know-how or solutions for professional B2B fields. So what they do is to create partnership programs for M2M in which they get together with solution vendors, device makers, or module vendors to provide specific M2M solutions to clients.”

And since M2M offers cost-effective, rather than technically sophisticated, solutions, Japanese firms are always seeking less expensive M2M solutions. This, says So, has offered Western providers with excellent opportunities.

International M2M solutions

However, recent developments suggest that Docomo has changed its strategy and is trying to become a bigger player in the international M2M market. The company recently signed two important agreements that indicate it is looking for international M2M solutions for its Japanese clients that will be competitive with those offered by foreign vendors.

Last July, Docomo announced it was entering an alliance with six foreign telecommunications providers, including KPN, Rogers and Telefonica. According to the press release announcing the alliance, its goal is eventually to offer “a global unique seamless solution for the provision of M2M communications to multinational customers.”

The alliance plans to provide a global product that features a unique SIM card and centralized management of status and usage of M2M devices around the world, using the Jasper Wireless Control Center.

Hatton says the agreement will enable Docomo to benefit from “greater transparency of networks as well as shared device certification. It will also have a better capability to monitor and control devices across multiple networks and will enable it to provide connectivity to machines going out in the world.”

The companies in the alliance also foresee substantial cost reductions in global M2M connectivity from the deal. “I expect this will become an M2M roaming club with reduced costs for its members,” Hatton says. (For more on M2M costs and business models, see Telematics and M2M: New business models .)

Streamlining M2M processes

A few months earlier, Docomo signed an agreement with Jasper Wireless to improve and expand its in-house M2M platform. Hatton says this collaboration will enable Docomo to “streamline M2M processes and increase incoming and outgoing sales. It also strengthens their arm outside Japan.”

He adds that the two agreements, both centered on Jasper Wireless technology, will make it possible for Docomo to upgrade its M2M platform and more easily export it. “This is about wanting to tap into the global community using the Jasper platform,” Hatton says. “The goal is not just to use Jasper’s technology; it’s to address more of a global audience.”

Hatton says the agreements will help the company attract domestic clients that might otherwise have been drawn to the platforms of foreign providers, such as Telenor Connexion, and has dramatically improved its long-range business prospects. On the Machina Research M2M leader board, which ranks companies according to how their current activities will affect their standing in 2020, Docomo rose to 10th place after the M2M alliance was announced—one spot above Telenor Connexion.

Siegfried Mortkowitzis a regular contributor to TU.

For more on M2M, see Industry insight: Telematics and machine-to-machine communications.

For more on telematics in Japan, visit Data Business for Connected Vehicles Japan 2013 on May 15-16, 2013 in Tokyo.

For all the latest telematics trends, check out Telematics India and South Asia 2013 on April 17-18 in Bangalore, Insurance Telematics Europe 2013 on May 7-8 in London, Telematics Detroit 2013 on June 5-6, Content & Apps for Automotive Europe 2013 on June 18-19 in Munich, V2V & V2I for Auto Safety USA 2013 on July 9-10 in Novi, MI, Insurance Telematics USA 2013 on September 4-5 in Chicago, Telematics Russia 2013 on September 9-10 in Moscow and Telematics Munich 2013 on November 11-12.

For exclusive telematics business analysis and insight, check out TU’s reports: In-Vehicle Smartphone Integration Report, Human Machine Interface Technologies and Smart Vehicle Technology: The Future of Insurance Telematics.

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