Regulatory initiatives and the ambition of mobile operators will lead to a tripling in the number of cellular M2M connections worldwide between 2011 and 2016, according to a new report from IMS Research.
The market-research company expects the number of connections to hit 326 million by 2016, from about 107 million last year, as mobile operators respond to the slowdown in their traditional markets by focusing on new growth opportunities.
Various factors are enabling and driving cellular M2M market growth, according to IMS Research, including government regulatory initiatives (like eCall in the EU), the need by corporate adopters to boost efficiency and the falling cost of M2M services and components.
But IMS Research is especially upbeat about the role of mobile operators, which, it says, have become key players in facilitating growth by establishing M2M business units, deploying connection management platforms and taking a lead role in the cellular M2M value chain.
“Mobile operators are not simply providing managed connectivity services to the cellular M2M market but increasingly are ‘connecting the dots’ among M2M ecosystem players, including suppliers and developers – and this benefits the market as a whole,” said Sam Lucero, a senior principal analyst at IMS Research.
“Examples of this proactive role by mobile operators range from establishing module supply programs to developing partnerships with platform vendors and solution suppliers to reduce overall complexity in the value chain,” he said.
Mobile operators are, of course, under pressure to find new sources of revenue as their traditional markets dry up, but IMS Research seems far more optimistic about their efforts than other analysts have been.
At European Communications magazine’s M2M: Beyond Connectivity conference, hosted in London in September, Arthur D Little’s Ansgar Schlautmann implored operators to “please make something happen”, saying there was a lack of momentum needed to drive M2M services and applications into the mass market.
A widespread criticism is that operators have only excelled at providing basic connectivity, which is a relatively low-value function in the M2M industry.
Indeed, IMS Research estimates that managed connectivity accounts for only about 10–30% of the overall value in the M2M service value chain.
As a result, says the market-research company, mobile operators are seeking to provide more value through the provisioning of value-added services to solution developers and end-to-end applications to end users, typically through partnerships.
IMS Research cites Telefonica Digital’s Smart Cities work as an example of the trend towards solution enablement and ecosystem facilitation.
“The Telefonica Digital [London, UK] announcement regarding its new smart cities solution offering – in conjunction with partners Streetline [Foster City, USA] and Libelium [Zaragoza, Spain] – perfectly encapsulates the efforts leading global mobile operators are making to move beyond simply being a ‘bit pipe’ to being a fully encompassing solution provider that coordinates complex technologies, business processes and ecosystem partnerships,” says Lucero.