Not long ago, analysts and vendors were predicting fast growth for the machine-to-machine (M2M) software and services market. In a report published in 2007, research firm ABI Inc. forecast that the market for M2M devices and software would quadruple from 2006 to 2012, reaching $8 billion annually.

The expectation was that many manufacturers would jump at the chance to improve field service and even generate new streams of service revenue by using M2M technologies, which rely on sensors, wireless and wired communications, and server software to remotely monitor equipment, such as medical devices and printing presses.

But experts now say the M2M market has failed to live up to expectations. And, recently, two M2M application vendors, Axeda Corp. and direct competitor Questra Corp., announced plans to merge.

"Both sides agree we'd be better off as one company focusing our energy on innovating for customers and not just competing with each other," Axeda Vice President of Marketing Brian Anderson told Managing Automation at the time of the announcement.

"The M2M market has not lived up to expectations so far for several reasons," says John Canosa, president and CEO of M2M start-up Palantiri Systems and formerly chief technology officer at Questra. "The combination of Axeda and Questra was inevitable. It was a matter of who was going to absorb the assets of whom. The companies and the products are so similar that they were just beating each other up in a market that wasn't growing as fast as expected."

One of the reasons M2M market growth has lagged, says ARC Advisory Group analyst Harry Forbes, is that manufacturers have had difficulty integrating the technology with their existing systems and installed products in the field.

At the same time, Canosa says, M2M vendors such as Axeda and Questra have limited their growth by packaging M2M technology as generic, horizontal field service applications rather than technology platforms on which manufacturers and resellers can create field service solutions that address problems faced by specific manufacturing verticals.

And, finally, Canosa says, most current M2M applications don't provide equipment-monitoring data in real time, requiring such data to be downloaded to a server before it can be analyzed.

Canosa's new M2M company, Palantiri, aims to get around those shortcomings by using the Extensible Messaging and Presence Protocol (XMPP) to communicate with field devices. XMPP, the same protocol used to enable instant messaging over the Internet, essentially allows field devices and service technicians to communicate online in real time.

Despite the disappointing M2M market growth, vendors remain hopeful. Axeda, for example, grew revenue in 2008 and sees continued strong customer interest, particularly among manufacturers of complex medical equipment, Anderson says. And the company's shift last year to a software-as-a-service model will help lower up-front M2M deployment costs and improve returns on M2M investments, he says. Anderson declined to say whether Axeda is profitable.