M2M APPS: You're widely recognized as one of the pioneers of M2M - what about it made you first realize that this was a growth market you needed to be a part of and, in fact, lead?
STEVE PAZOL: Part of it for me, and I came from the IT side, was that it seemed like an obvious thing that everything would be connected, like the idea of “the Internet of Things.” We started off monitoring cell towers for a customer, and the light bulb went off in my head and I thought, “Wouldn’t it be cool if we could connect to all the different things that are out there.” We were so early to the space; there wasn’t even a name for the market at the time. It was very interesting to me personally, and fortunately we had the staying power to stay with it as it grew.
M2M APPS: In a post on our M2M blog in partnership with Beecham Research, analyst Robin Duke-Woolley called the recent acquisition of nPhase by Verizon a “personal triumph” for you, as you’ve retained control over the direction of the company through 3 ownership changes now. What has enabled you to maintain this position of leadership and achieve success with nPhase?
STEVE PAZOL: I think a large part of it is having the right team and having that team motivated and interested in the space and in the market. I also think a lot of it has come from being both persistent and paranoid; it’s been a bit of a gamble. You must know when to hedge your bets and know when to double down and I think we executed pretty well. nPhase as a company has always been pretty introspective and willing to confront the facts, whether they are desirable or not and to take action to address the issues.
M2M APPS: How is nPhase in it current form different from the company you initially founded?
STEVE PAZOL: There are many parts of the business model that are the same from when I initially set up the business before all of the acquisitions and transitions. The biggest change is something that I learned from reading Crossing the Chasm by Geoffrey Moore and being on the inside of Qualcomm. When we started nPhase, as with most new markets, you really have to bring a complete solution to the market. The market isn’t knowledgeable enough to be able to take different components and put them together to get what people need. Early on we needed to provide a much more complete suite of services. We partnered with hardware providers, and provided the enablement middleware, the wireless data, the backend applications and the professional services to really deliver a turnkey solution. As the market matured, we focused more and more on our core capabilities, which were the device enablement middleware and associated software and allowed others to deliver the rest of the solution.
M2M APPS: With all of the recent consolidation and strategic partnerships in the M2M industry, what is the benefit for application developers and end-users?
STEVE PAZOL: I always think of consolidation as a double-edged sword. At one end, it’s obviously a strategic decision. When the little guys finally start to get traction, it makes sense for the bigger companies to come in and buy them and scale the market. As some of the bigger players and brands come in, it gives comfort to customers that the platform that they are building on, for example, is one that will be around long term. It also provides scale to the market and drives further investment in technology and innovation. Another important aspect is the amount of resources that can be applied. I look at what Qualcomm and Verizon can do with their resources, and you realize how important that can be.
M2M APPS: Is this a trend that you see continuing?
STEVE PAZOL: It’s going to continue. There are still a lot of small companies out there as the ecosystem continues to evolve and new entrants all the time. In the meantime, the carriers have jumped in with both feet, and given the size of their sales channel, they are a huge driver of the market in general. As the carriers look to move up in the value stack, they are going to need to continue to partner and to acquire to get the expertise necessary. It’s easier to buy that expertise than it is to develop it in-house. In a build vs. buy analysis, buy will often be attractive. It’s easier to leverage an existing platform than to build your own.
M2M APPS: If you could sum up the 2011 M2M market in just a few words, what would they be and why?
STEVE PAZOL: It’s finally reached the mainstream. Companies like IBM and Cisco are advertising on primetime TV. We’ve seen the commitment shown by some of the biggest carriers to invest in a sales force in order to really drive adoption. I would characterize it as the real start of the hockey stick. I’ve been in this space for a long time, and last year, for the first time, I experienced real hockey stick – week-over-week growth.
M2M APPS: What key trends do you predict for 2012?
STEVE PAZOL: I think we’re going to see continued acceleration. Bigger and bigger deals will be announced, not just in telematics and smart grid, but also in logistics and other verticals as well. I also think we might finally see the big SIs like Accenture and IBM get more active than just working on a project-by-project basis and really enter into the ecosystem with platforms and/or acquisitions.
M2M APPS: What are the verticals that you anticipate taking off in terms of M2M growth?
STEVE PAZOL: Aside from logistics, I think we’ll see growth in the mobile health vertical, although this is an extremely challenging market to work in due to the regulations and payer/payee complexity. I think it will take a while. I see a lot of activity around digital signage and kiosks, things like Redbox or a digital jukebox at a bar. Another market that I think is very interesting, and I know the carriers are looking hard at this, is using tablets as a really good portable computing device. Whether it’s for menus at a restaurant or educational materials at a university, it’s not just going to be somebody using their iPad, but it’s going to be the industry turning the tablet into a single-function product.
M2M APPS: What would you say is the single greatest challenge the M2M market faces? How do we overcome it?
STEVE PAZOL: There is still too much friction in getting a solution to market fast enough. The majority of companies in the industry know a lot about their particular vertical but don’t know much about wireless. So the first time they try to bring a connected device to market, they’re going to make some mistakes. Whether it’s an antenna that gives off too much interference, the wrong modem manufacturer or network technology, , poorly written code or any of the myriad of other possible issues, it’s still takes too long and is too hard to do it right the first time. Across the layers, we must reduce the friction that it takes to deploy these applications. It has to be made easier and more plug-and-play in the future. If you think about the internet as it started, it would have been impossible to imagine all the applications that we have developed and still will develop. The Internet of Things is no different. We’re still putting down the plumbing, and the best applications and coolest business models haven’t even been thought of yet. There is a huge amount of room to play with in the space for some creative people.