Smaller operators should focus on M2M "long tail": Analysys Mason

Small operators targeting M2M growth should forget about the largest and most obvious opportunities and focus on “the long tail of smaller contracts”, where they can differentiate themselves more easily and provide a highly valued service.

Such is the recommendation of market-research firm Analysys Mason, which expects global cellular-connectivity revenues from the provision of M2M services to generate $15 billion in 2018, up from about $5 billion in 2013.

Although much of the value is tied to a small number of large contracts in the automotive and utilities sectors, Analysys Mason believes there is considerable opportunity elsewhere for smaller players if they position themselves appropriately.

According to the company, to compete against larger players smaller players to need to invest in device connectivity platforms as well as dedicated M2M teams.

Larger operators like Vodafone (Newbury, UK) have developed their own systems for managing M2M connections, but small operators should consider buying platforms from vendors such as Ericsson (Stockholm, Sweden) and Jasper Wireless (Mountain View, CA, USA).

Sri Lanka’s Dialog Axiata (Colombo) already appears to have taken that advice, having signed a deal to use Ericsson’s Device Connection Platform this week.

Analysys Mason calculates that at a low volume of 500,000 connections, this option represents a net present value increase of 78% in comparison with using legacy platform infrastructure over a five-year period.

Successful operators have also tended to build up dedicated M2M teams for activities like marketing, sales, platform support and partnership management.

Other recommendations of Analysys Mason are that smaller operators prioritize existing enterprise customers as targets for M2M solutions, and that they avoid “highly competitive verticals”.

The market-research company says that to increase the effectiveness of their M2M business development effort, operators should segment their sales force based on an enterprise’s volume of connections rather than its number of employees, which is their typical approach.

It notes that large enterprises do not necessarily have a high number of M2M connections.

Most importantly, it says, operators should steer clear of M2M applications that have attracted lots of interest from large operators like AT&T (Dallas, TX, USA), Telefonica (Madrid, Spain) and Vodafone.

A better option would be to form partnerships with application providers that can help them provide solutions catering to more niche opportunities.

MB Connect Line (Ilsfeld), a German company specializing in remote maintenance of heavy equipment, is one potential partner.

Others include Aerotel Medical Systems (Holon), an Israeli developer of remote monitoring systems and personal trackers, and Priva (De Lier), a Dutch provider of building energy management systems.