Today there are many startups in the M2M market, with ideas ranging from blood pressure measurements to lampposts with built in cameras and microphones for surveillance. The innovation is there, but the market penetration is still very small. The only major success use-case is energy metering. Why is the market penetration still so small? To answer this question we must understand what are the difficult areas for these small start-ups. One of the major pressure points is the connectivity of the device, if the device is to move around a lot it needs to have some kind of mobile connectivity, which means a mobile operator has to be involved, then the next problem comes, during manufacturing there is no way of knowing where a certain device will end up, it can end up in India, or in Norway, and they will require different mobile operators to work. This leaves the start-up with a choice to make:

• Go with a single mobile operator?
• Sign up with multiple mobile operators?
• Let the user decide which mobile operator to use?

Going with a single operator is probably the first choice that many make, and while it limits the effort spent in discussions and negotiations it is difficult for a small company to much attention. A small company will have to pay up front for the subscriptions, and most probably they will not have the best prices. What is often neglected is the SIM logistics required; the mobile operator will deliver the SIMs to the company, which has to then be manually entered, then each subscription has to be monitored depending on activation date so it can be topped up, or for postpaid the company must check the invoices against their inventory to ensure broken/not activated devices are not paid for. This will effectively lock the company to the mobile operator, and it will be very difficult to break free; as long as old devices exist the payments must continue.

The one mobile operator approach also have an issue if the operator in question does not have complete coverage over the intended area. This may affect the quality of the service offered, and users in one part of the area may have a great service, while other in a different area have a bad service. This difference may well be a killer for a consumer-oriented service where feedback of the service quality is faster than ever using social networks.

It may look interesting to sign up with multiple operators to try to get a better price, and also to protect against poor quality areas. This however requires an extended effort in understanding which mobile operators to select (coverage charts are not very useful), and then negotiate with each of these. Since multiple operators are involved there will be less volume for each operator, which may affect the pricing to the worse. Choosing to have multiple operators will affect the logistics heavily, no longer can the SIMs be inserted at the factory, but has to be inserted at the purchase, as it is only at his time it is possible to make the selection based on the user’s location. If the device is sold in outlets the logistics for managing the SIMs will be difficult at best, and training of the staff will be required.

The final option is to let the user select operator, then buy and insert a SIM into the device. This has the obvious drawback of limiting the design of the device, basically the device must either have a slot accessible from the outside, or must be possible to open up the device to insert a SIM. This may affect the appearance of the device, but it may also affect the performance of the device, and some devices that are to operate in extreme environments will not be possible.

Whilst letting the user procure a SIM and insert it to the devices makes it easy for the startup, it forwards the effort on the user and a few problems can be identified:

• The SIM has the physical wrong format
• The Subscription is badly chosen by the user

Today there are 4 different physical formats specified for a slot-in SIM, if the user has the wrong format it will not fit in the tray of the device. So having the right format is crucial, the format specified being;

1. The full size (credit card sized), which is hardly used today, but usually comes with a new subscription.
2. The mini, which is the most common form factor today.
3. The micro, which was embraced by apple with the iPhone 4, and has been adopted by many smartphones today.
4. The final one is nano, which is even smaller, and embraced by apple.

New subscriptions may come with SIMs that supports all four formats, but it is difficult to reuse a SIM if it has the wrong format. If the SIM does not fit in the device, the user will be quite disappointed, and additional effort is required.

If the user does not select a subscription wisely the service will be affected. For instance, if the device is a camera for surveillance the subscription must have a large data amount, else it will run out of data quickly and the service will stop. Many mobile operators today rely on USSD screens or SMS to the subscription to show balance, which is not very useful for M2M devices that do not have any screens. If the user selects to use a prepaid subscription he may run out of time without ever being notified. If the subscription is not properly selected the service may stop, which creates a bad user experience.