Equipment maker Ericsson has struck important M2M deals with TeliaSonera and MegaFon, two of the world’s biggest operators, while saying the broader market for software and services is likely to generate a higher proportion of its revenues in future.
In the last few days, both operators have announced plans to use Ericsson’s M2M Device Connection Platform, which should make it easier for them to manage large numbers of subscriptions and provide more flexibility to M2M partners and customers.
TeliaSonera (Stockholm, Sweden) said the deal will help it to expand its M2M offer in the Nordic and Baltic markets, while MegaFon (Moscow, Russia), in which TeliaSonera holds a 35.6% stake, described the partnership as a good opportunity to develop M2M technologies in Russia.
“The M2M segment is now in its infancy, primarily because the market itself has not been formed,” said Oleg Butenko, the chief executive of MegaFon subsidiary MegaLabs, in a statement. “We expect the solution to help our customers efficiently monitor M2M SIM cards and choose the best tariff options.”
Commenting on the MegaFon deal, Steve Hilton, a principal analyst with market-research company Analysys Mason, said that Ericsson (Stockholm, Sweden) would be able to provide go-to-market support, besides good technology.
“Technology alone is not enough for successful M2M partnerships these days,” he said. “Ericsson has deep relationships with a variety of enterprise customers and will use its local teams in Russia to help bridge relationships between potential customers and MegaFon in key industry sectors.”
TeliaSonera reckons there will be more than a billion connected devices in the Nordic and Baltic countries alone by 2020, 100 million of which will be connected to mobile networks.
“The agreement with Ericsson is part of a strategic partnership between the companies to harness the potential of the fast-growing M2M market, projected to achieve double-digit growth in coming years,” it said in a release.
Ericsson’s revenues from non-core activities have risen fast in recent years, and while the company predicts a slower rate of growth over the next three years it believes services will generate a higher proportion of total business.
While telecoms operators are scaling back their expenditure on infrastructure, they are increasingly outsourcing many of their activities.
“This development will naturally imply a future business mix for Ericsson with more recurring software and services revenues,” said Hans Vestberg, Ericsson’s chief executive, in a statement.