Growth in cellular M2M connections will spur a seven-fold increase in revenues from associated value-added services between now and 2017, according to new research from IHS.
The analyst company expects the M2M value-added services market to be worth some $10 billion by 2017, up from just $1.5 billion in 2012.
Driving that growth will be a surge in the number of M2M connections based on cellular technology, up to 374.9 million by 2017 from 91.4 million in 2011.
“The next Internet wave will be the M2M revolution, where almost anything – from an automobile, to a shipping container, to a home electricity meter – can become a part of a vast network,” said Sam Lucero, senior principal analyst for M2M at IHS. “Cellular communications will play a key role in in this new era of the ‘Internet of Things’, serving as the glue that connects hundreds of millions of nodes together.
“However, the cost and complexity of developing, deploying and operating cellular M2M applications is daunting, leading increasing numbers of companies to outsource cellular M2M application development, deployment and – in many cases – operation, to value-added services providers,” he said.
HIS says various factors are persuading companies to adopt value-added services for M2M applications.
Besides the complexity of M2M, these include the fact that many companies need to focus on core business issues rather than integration of embedded cellular connectivity into new or existing applications.
Many developers also lack the expertise needed to create or deploy applications integrating cellular connectivity using in-house resources.
Meanwhile, value-added services providers are pushing themselves forwards as willing partners, while communications service providers are launching value-added services offerings to increase their share of M2M revenue.
Indeed, notes IHS, value-added services will give various cellular M2M players a means of garnering more of the value of the market for themselves, helping to offset the impact of commoditization in core markets.