Report: M2M ARPU to decline from $4 per month per connection to $1.9 by 2021

A new report from Analysys Mason predicts that machine-to-machine (M2M) device connections worldwide will grow by a factor of 20 in the next ten years, from 100.4 million to 2.1 billion. Revenue associated with M2M connectivity will also increase dramatically over the same period, from $5.7 billion in 2011 to $50.9 billion in 2021.



A new report from Analysys Mason predicts that machine-to-machine (M2M) device connections worldwide will grow by a factor of 20 in the next ten years, from 100.4 million to 2.1 billion. Revenue associated with M2M connectivity will also increase dramatically over the same period, from $5.7 billion in 2011 to $50.9 billion in 2021.


The report presents the annual update of Analysys Mason’s (London) M2M device connections forecast, which includes detailed ten-year forecasts of connections, revenue and average revenue per user (ARPU) for seven sectors and 20 M2M applications, in eight geographical regions worldwide.


The report predicts that ARPU rates generated by M2M connectivity will decline markedly throughout the next decade, from a worldwide average of $4.71 per month per connection to just $1.98 in 2021.


“This per connection revenue decline will be caused by increasing price pressure and growth in the number of M2M device connections in emerging markets,” says Steve Hilton, lead author of the report and principal analyst of Analysys Mason’s Enterprise and SME Strategies research programs. “ARPU rates for M2M applications are generally lower in emerging markets than in developed markets.”


According to the report, the share of worldwide connections attributed to developed markets will decline over the next decade, from 69% in 2011 to 59% in 2021. Similarly, developed markets’ share of worldwide revenue will have declined from its current level of 76% to 64% in 2021.


In 2011, slightly less than 20% of M2M connections were over fixed-line networks, and it is predicted that this figure will decrease to just 7% by 2021. According to the report, almost all fixed-line M2M solutions are in developed countries, because reliable, affordable fixed-line connectivity is difficult to purchase in emerging markets.


“However, mobile operators in developed markets are offering mobile connectivity at attractive prices, and most M2M solutions have fairly low bandwidth requirements. As a result, more and more enterprises are choosing mobile M2M rather than fixed-line M2M,” says Hilton.


The report also found that utility sector solutions will account for 61% of worldwide M2M device connections by 2021, growing at a compound annual growth rate (CAGR) of 50%


According to Analysys Mason, the penetration of M2M connections as a percentage of overall population in developed markets is 5% in 2011, but this is predicted to grow to 86% by 2021.  The automotive and transport sector will have the highest share of connectivity-related revenue by 2021 (43%), driven by the increasing adoption of consumer connected car solutions.