Operator revenues from M2M services are forecast to more than treble over the next five years, reaching $44.8 billion by the end of the period, according to a new study from Ovum.
Although M2M is seen as a bright spot in the rapidly maturing mobile industry, Ovum says operators will not be able to realize its full potential unless they form strategic partnerships.
It believes that revenues will increase at a marginally slower pace than connections, reflecting the growing competitiveness of the market and the extension of M2M into lower-value applications.
Connections are also expected to treble over the forecast period – rising rom 106.4 million in 2012 to 360.0 million in 2018, with the fastest growth occurring in the Asia-Pacific, the Middle East and Africa.
Ovum says revenues in the Asia-Pacific will rise to nearly $15 billion – at a compound annual growth rate of 26.5% – between 2012 and 2018.
According to the research, the most important industry verticals will be healthcare, manufacturing, and energy and utilities, which are forecast to generate revenues of $7.9 billion, $7.1 billion and $7 billion respectively by 2018.
“This is not a forecast of the ‘Internet of Things’ but rather of managed and paid-for connections over public mobile networks,” said Jeremy Green, a principal analyst of industry communications and broadband at Ovum. “For telcos there are really two opportunities: to stand back and provide the connectivity for M2M services, or to roll up their sleeves and get involved with the end-to-end provision of solutions.”
Green says the first is a smaller opportunity but is much more straightforward for telcos to address, while the second is much bigger but involves new skills and competencies, and defining new kinds of relationship with systems integrators (SIs) and software development.
“If a carrier wants to play an essential part as a connectivity provider and focus just on that role, it must have healthy and robust relationships with device manufacturers and SIs,” said Green. “If a carrier sees itself as an end-to-end provider, its partnering relations are even more critical, because it is unlikely to be heard at the CxO level within an enterprise client unless it is working with a global SI.”