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Mobile & Wireless
The global wireless M2M market
by Berg Insight
M2M is an abbreviation for machine-to-machine, or technology that supports wired or
wireless communication between devices. The abbreviation is also sometimes used to stand for man-to-machine, meaning communication between a man operated device and a machine. Wireless M2M comprises all wireless network technologies, even though the term is generally used in reference to systems connected to cellular networks. This report is aimed at describing and analyzing wireless M2M based on commonly used wireless wide area network technologies such as GSM/GPRS/EDGE, WCDMA/HSPA and CDMA. Alternative wireless technologies such as satellite networks, RF tracking and wireless mesh are also covered to provide a complete overview of the market environment.
Defining the addressable market for wireless M2M is a highly complex task. In theory every machine on earth with a microprocessor inside could become networked. However there will not likely be any business case for connecting ultra-low value products to cellular networks in the near term. Berg Insight estimates that about 750 million machines were produced in 2007 for housing, transportation and industrial use. This figure includes approximately 300 million major home appliances, 200 million energy meters, 100 million HVAC equipment, 75 million motor vehicles, 50 million assorted machinery and equipment and 25 million communication devices such as POS-terminals and security alarms. Among these energy meters, motor vehicles and communication devices will remain the principal vertical markets for wireless M2M in the coming five years.
Adoption of wireless M2M technology is still in a very early phase. As a share of total cellular connections, M2M generally accounts for 1–3 percent in developed markets and less than 1 percent in emerging markets. Some individual markets have higher adoption rates as a result of large-scale deployments such as GM OnStar in North America and smart metering solutions in Scandinavia. Automotive and fleet remains the largest vertical market and is expected to increase its share of the total market as more and more OEMs adopt telematics technology. Smart metering and other utility industry applications continue to grow, with initiatives triggered by the challenges facing the energy industry in all parts of the world. Fixed to mobile substitution drives the growth in the POS-terminal and security alarms segments.
There are also high expectations for significant deployments of remote product and asset management solutions.
Europe is seeing large-scale adoption of wireless M2M technology across a wide range of vertical markets. The largest applications in terms of volume have generally been developed in response to local conditions. EU’s two top consumers of electricity per capita – Sweden and Finland – to a wide extent use point-to-point GPRS for smart metering. Germany has deployed a national road toll system for trucks using GSM/GPS tracking. The Italian motor insurance industry has embraced telematics technology for risk mitigation. Few applications are however yet deployed at a European level. In the Americas, adoption of wireless is largely focused on the automotive industry. Berg Insight estimates that GM OnStar alone accounts for more than 70 percent of cellular M2M connections in the US and almost 60 percent in the Americas region. Among other world regions, Asia-Pacific is in an early stage of development while the Middle East and Africa is very much focused on fixed-line replacement and security applications.
Berg Insight believes that shipments of cellular M2M devices will grow steadily at a high rate over the coming five years. But as volumes increase, unit prices are set to decline in the same way as all other electronics components. Maintaining profitable growth amidst stern competition and avoiding commoditisation will be the foremost challenges for cellular M2M device vendors in the coming years. With increasing shipments, Berg Insight believes that cellular M2M devices will account for a significant share of new mobile network connections on mature markets in the coming years. Some operators will see M2M become their top category of mobile subscriptions, while others may decide to stay out of the market completely. Exactly what role operators should play in the value chain remains to be seen as their strategies are still evolving.
This report is provided courtesy of Berg Insight. Access this report by clicking here.
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