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Sunday, September 23, 2012

Machine-to-machine connections and revenue are below expectations

New research says M2M revenue represents just 0.5% of mobile operator service revenues

A new report from Informa Telecoms & Media says M2M growth is lagging behind industry expectations, with 132 million mobile connections in June and $5.68 billion (£3.5 billion) revenue generated in the previous 12 months.

Machine-to-machine connections were up 22% in the last year but still only represent a fraction of ‘human’ mobile network connections. Total global cellular connections were estimated at 6.28 billion at the end of June, with annualised operator service revenue of $1.14 trillion. That’s the equivalent of one M2M connection for every 50 ‘human’ connections and $1 of M2M revenue for every $200 of service revenue.

Jamie Moss, senior analyst for M2M at Informa Telecoms & Medial, said “M2M connections and M2M revenues are neither as high nor growing as rapidly as some are anticipating. However, this does not detract in the slightest from the validity - or long-term prospects - of the market. Indeed, M2M could do well without the hype that is associated with every ‘next big thing’, for it operates on entirely different grounds to consumer services and as a consequence needs to be judged by different standards.”

“Most wireless carriers will seek to improve their revenue potential beyond simple connectivity as much as possible. Platforms dedicated to value-added service creation for M2M are already being deployed by carriers, but how successful they will be in addressing this portion of the market, currently dominated by small independent specialists, has yet to be demonstrated.”

Informa Telecoms & Media gives three reasons why the predicted growth of M2M appears to have been exaggerated. It says connectivity is unlikely to find its way into everything we own and may often be on a per-household basis rather than per-person. It also says many M2M connections will involve one or more steps of aggregation, noting that only a portion of all M2M connections will be cellular. In addition, Informa also notes that reporting of M2M connections is inconsistent and is often combined with cellular connectivity for other devices.

According to the report, much of M2M’s current value comes from fleet tracking, while newer services such as digital signage are also showing strong average revenue per connection. Volume is coming from lower-value areas such as smart metering and potentially from eCall-enabled vehicles in the future.

Author: The Fonecast
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Tags: research data m2m

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