Carmakers are M2M pioneers despite disappointing ROI: Vodafone

The automotive industry stands out as the most pioneering vertical market when it comes to adoption of M2M services, according to a new survey conducted by Vodafone.

Some 19% of automotive organizations interviewed by the operator said they had already launched an M2M strategy, while 40% were expecting to launch one in the next two years.

The automotive industry stands out as the most pioneering vertical market when it comes to adoption of M2M services, according to a new survey conducted by Vodafone.

Some 19% of automotive organizations interviewed by the operator said they had already launched an M2M strategy, while 40% were expecting to launch one in the next two years.

Despite the finding, only 14% of automotive businesses have seen a significant return on their investment in M2M, according to market-research company Analysys Mason – which contributed to Vodafone’s report – compared with 37% of all businesses.

Moreover, some 29% of automotive businesses noted little or no return on investment (ROI) in M2M.

According to Steve Hilton, an analyst with Analysys Mason, planning cycles for new product launches in the automotive sector are at least three years, and it remains too early to say whether many connectivity applications for cars will yield acceptable returns on investment.

Vodafone (Newbury, UK) says that while cost savings stand out as the biggest driver in the M2M planning stage, the greatest benefits after launch often turn out to be improvements in decision-making, with cost savings declining in importance.

Meanwhile, automotive companies in the European Union are being driven to implement M2M by regulation.

The European Commission wants manufacturers to enable vehicles to automatically call emergency services in the event of an accident.

Nevertheless, when it comes to regional comparisons, the Asia-Pacific has taken the lead on technology adoption.

Around 62% of organizations in the Asia-Pacific expect to have launched M2M initiatives by 2015, compared with 54% in Europe and just 35% in America.

According to Vodafone, this disparity has nothing to do with the operating environment for M2M but stems from the fact that the Asia-Pacific was less affected by the 2009 recession than Europe and the Americas.

Another standout finding is that smaller organizations will drive M2M adoption over the next 12 months, with larger businesses starting to fall behind.

Although some 26% of organizations with more than 10,000 employees have already adopted M2M, compared with just 12% of small and medium-sized enterprises, just 18% of large organizations plan to launch M2M initiatives in the next year, compared with 34% of smaller groups.

This means that 69% of smaller organizations will be using M2M in two years time, compared with 58% of large organizations.

“While clearly some giant organizations are agile and forward-looking, in general big ships are slower to turn,” said Analysys Mason. “These enterprises may have more legacy software, networks and processes that have to be considered when integrating M2M.”

Some 653 respondents were involved in Vodafone’s survey, with 327 participating in more detailed questioning and 20 senior decision-makers contributing to in-depth interviews.