M2M opportunities take shape: Consumer electronics and cars drive the market

New research led by the GSMA and supported by AT&T, Deutsche Bank, KT, Telenor Connexion and Vodafone predicts that the growth of M2M will support an addressable revenue opportunity for ‘pure play’ mobile telcos of nearly $1.2 trillion by 2020. The study, conducted by Machina Research, predicts that the total number of connected devices is expected to increase from approximately nine billion today to more than 24 billion in 2020 – mobile devices will grow from six to 12 billion in the same period.

The study identifies that revenue opportunities for mobile telcos will come from the sale of mobile devices, data traffic, applications, installation, and most significantly, specific service revenues available to MNOs. These revenues are seen to be incremental to existing revenue streams and a significant portion of the new revenues will be based on core business strengths such as provisioning, support, systems integration, settlements and roaming (CP: How can telcos make money on M2M).

The $1.2 trillion opportunity is analyzed by region in the study: Asia Pacific will be worth $447 billion; Europe worth $305 billion; Latin America $92 billion; Middle East & Africa, $87 billion and North America, $241 billion.
The study identifies the industries that will benefit from the growth of M2M services. Foremost among these is the consumer electronics market, followed by automotive, healthcare and utilities as telcos adopt two sided business models to support the growth of communications support for a range of applications from remote alarms and monitoring to reporting of traffic lights, cars and fridges.

According to Dong-Ik Lee, senior vice president at KT, connecting objects to networks can revolutionize their value. For example, helping turn vehicles into infotainment hubs, CCTVs into commercial area analysis units and toys into educational robots.

KT have started a trial on an ‘open objects’ platform to help people to participate more freely in the connected world, and Lee expects it to accelerate the growth of this connected market. Deutsche Telekom and Everything Everywhere have announced similar initiatives to encourage market growth and innovation.

The opportunities around M2M are not simply good news for telcos and others in the ecosystem. According to Matthew Bloxham, director of telecoms research at Deutsche Bank, the growth of connected devices has the potential to offer substantial social, ecological and financial benefits to the world economy. Pleased that many mobile telcos are implementing strategies, Bloxham believes that an industry-wide approach is essential to realizing the full opportunity.

The M2M opportunity is not in doubt. Now, however, the planning is becoming refined as individual industries are considering the benefits of M2M technology and telcos work out how to support the growth. What is also beyond question is that Bloxham is right – a broad, industry-wide approach is essential to realizing this opportunity.