Mobile phones have been widely adopted by humans as a convenient way to keep in touch â€“ now, machines are increasingly using the same technology to communicate with each other.
Vending machines are ordering refills from suppliers, full recycling bins are asking to be emptied, and personal health monitors are triggering remote alarms with health professionals when patients forget to take medication.
So-called machine-to-machine (M2M) communication, or 'The Internet of Things', has been around as a concept for about eight years. But until recently, it was too complex and expensive to be widely adopted.
"Implementing M2M was a painful process for customers," says Abhi Ingle, vice-president of AT&T's Advanced Enterprise Mobile Solutions Group. "It had to be an intrepid company that had an overwhelming need."
M2M uses special-purpose devices, known as modules in the industry. They contain microprocessors and gather data from sensors in the host machine, transmitting them using a SIM (Subscriber Identity Module) card typically via the SMS (text) messaging network. The signals can be sent on a range of communications networks including satellite, GSM and WiFi.
Placed in vehicles and industrial machinery, the modules can request maintenance automatically and send warnings when components are in danger of failure, thereby potentially stopping road accidents and factory system shut-downs happening.
Until recently, M2M devices were difficult to produce because of the range of organisations involved â€“ component manufacturers, carriers and regulatory authorities which certify radio communications systems in each country.
Unlike mobile phones, M2M modules need to operate in places not favoured by humans that may be subject to extreme heat, cold, vibration and noise. They also need to last much longer â€“ whereas cellular handsets are often replaced every couple of years, modules for installation in machinery, vehicles or homes might need to last a couple of decades.
But technological progress and falling prices are making M2M commercially viable on a large scale. The cost of the electronic module has dropped from â‚¬50 four years ago to between â‚¬10 and â‚¬15.
"M2M has reached an inflexion point and is beginning to take off," says Mr Ingle. The potential market is huge. Analysys Mason, a London-based market research company, expects the 100m devices currently installed worldwide to increase to 2.1bn by 2020. The largest sectors will be utilities, automotive and transport, and security, with 1.3bn, 446m and 277m respectively.
The fact that electronic components can now be much smaller has opened a wider market and has led to what Mr Ingle calls a "democratisation" of the technology.
Marc Sauter, head of global M2M business development at Vodafone, agrees: "Miniaturisation has triggered a surge in applications, because now M2M modules can be integrated more easily into consumer devices such as e-readers." Vodafone's M2M customers range from a 10-taxi business in Madrid to the pan European service for TomTom, the Amsterdam-based in-car navigation service.
Regulation is also helping drive the market. The EU has called for all vehicles to have M2M devices fitted by 2015. These modules would automatically dial the emergency services in the event of a serious accident and communicate the vehicle's location.
By enabling emergency teams potentially to halve arrival times, this move is expected to save hundreds of lives annually, and reduce tens of thousands of injuries.
A number of other vehicle applications are beginning to appear. M2M modules in trucks are communicating their position to central fleet management systems that can then calculate optimal routes and speeds, helping reduce fuel consumption and vehicle wear and tear.
Insurance companies in the US are introducing discounts for motorists willing to have modules fitted to their vehicles that track driver behaviour. People who drive safely and don't tend to exceed speed limits, reap the rewards in lower premiums. Energy monitoring is another area in which the EU wants M2M to play a role; it has called for the introduction of smart meters in offices and domestic properties by 2019. These devices enable people to see exactly how much energy they are consuming in real time, and are expected to lead to a significant reduction in energy consumption.
Vodafone estimates that use of M2M devices in applications such as smart meters and vehicle management could cut CO2 emissions by 90m tonnes a year by 2020 across the EU.
M2M is also being deployed in healthcare, says Mr Sauter. "For example, Alzheimer's sufferers could wear a small device they can press to summon help if they get lost."
AT&T has joined forces with US-based eCardio Diagnostics, to provide near real-time tracking of cardiac patients, enabling them to recover at home rather than spending additional time in hospital.
For mobile phone operators, M2M has created a huge business opportunity because it offers much longer relationships with customers. This is very different from mobile phones, where customer 'churn' rates are high.
Vodafone, which entered the market early, has a team of 200 people worldwide focused specifically on M2M activities. "Without Vodafone, the company cannot provide the service, so we are tightly integrated with our customers' business processes," Mr Sauter says. "It is a much more 'sticky' market than consumer mobile phones."
However, much more market education is needed, because the potential is not well understood, says AT&T's Mr Ingle. "Many companies that might benefit either haven't tried it yet, or perhaps did so in the early days and abandoned it. They may not realise that it's very different today."
More News From Financial Times