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Ericsson Works With SAP on Technology for Directing Machines

Ericsson AB (ERICB) and SAP AG (SAP) will work together to offer technology that may be used to detect risks at oil refineries and direct vending machines to restock items appropriate to the weather.

Ericsson, the world’s largest maker of wireless networks, will deliver hardware to connect machines to the Internet, while software from Walldorf, Germany-based SAP will analyze data and issue commands, according to the companies, which will announce details of the accord today during the Mobile World Congress in Barcelona.

Phone companies, equipment manufacturers and software makers are among businesses seeking to benefit as items such as refrigerators and oil drills join smartphones and computers in making connections through the Internet. Machine-to-machine communication will help global mobile data revenue overtake voice revenue by 2018, according to the GSM Association, which represents mobile-phone operators.

“What we want is to see that operators can tap into the machine-to-machine market and make money,” Hans Vestberg, chief executive officer of Stockholm-based Ericsson, said in a phone interview. “We will create the scale for them and take down the barrier of entry.”

Wireless Sensors

Using the new technology, sensors will be able to send information about chemical levels and temperatures at oil plants to a database that can rapidly determine whether there’s a problem and send instructions for a shutdown, Sanjay Poonen, head of SAP’s mobile division, said in a phone interview. Vending machines could order a restocking based on information that the next day will be hotter or colder.

The system will be sold through a phone company or a network integrator, with whom Ericsson and SAP will share revenue, Poonen said. While the technology can be deployed in a matter of “weeks or months,” customers first need to make sure their machines are equipped with sensors to generate the data, he said.

“This is a solution that’s not ‘vaporware,’ it’s got some very tangible use cases that we think show the future of the world,” Poonen said.

Ericsson shares rose as much as 1 percent in Stockholm and were up 0.8 percent at 79.05 kroner at 10:16 a.m., extending the gain this year to 21 percent. SAP gained as much as 1.4 percent in Frankfurt and was up 1.1 percent to 60.23 euros, paring its loss this year to 0.8 percent.

Ericsson this month announced a partnership with Gemalto NV, which will supply SIM cards needed to secure and remotely control machines.

International Business Machines Corp. (IBM) last week announced a partnership with German phone company Deutsche Telekom AG (DTE) to link machines in order to enable cities to better manage traffic, optimize routes and organize parking spaces.

Gartner Inc. estimates that the number of connected items will double to 30 billion by 2020 from 15 billion in 2011.

To contact the reporter on this story: Cornelius Rahn in Berlin at crahn2@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net

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