Telcos have dabbled in machine-to-machine (M2M) services for years, but the market for wireless M2M applications has been a sleepy one, limited to industrial uses such as smart grid utility meters sending data over cellular networks. But carriers have the opportunity to tap into what's expected to be a lucrative commercial and consumer market for wireless M2M applications embedded into nontraditional devices.
Carriers are seeing a bigger opportunity for wireless M2M applications because chipsets are getting smaller and cheaper, opening the door to connecting nontraditional commercial and consumer devices to carrier networks, according to Kathryn Weldon, principal analyst at Current Analysis.
"Everyone in the ecosystem is being happily dragged along into the hype cycle, which is interesting because machine-to-machine was sort of neglected for years," Weldon said. "It's like the carriers woke up to this opportunity that has been sitting there -- going slowly, not really explosive -- for years."
"The internet is no longer just an information superhighway. It's expanding beyond that and becoming a platform," said Padmasree Warrior, CTO of Cisco Systems, in her keynote at CTIA Wireless 2010 in Las Vegas. "We are now beginning to see the acceleration of machine-to-machine networks … [with applications that use] low bandwidth, continuous streaming of data and wireless sensors that are deployed everywhere."
Cellular networks supported 500 million devices in 2007, Warrior said. This year, Cisco expects that number to rise to 35 billion connected devices. By 2013, Cisco aggressively estimates it will be 1 trillion devices connected to mobile networks - including traditional devices, such as cell phones and smartphones. Considering only M2M connections, AT&T and ABI Research painted a more conservative picture for the market in 2014 - 400 million and 200 million, respectively.
US operator Sprint Nextel announced recently that it will lease its 3G network to Walsh Wireless. Walsh sells a device to log driver behavior for auto insurance companies to help develop usage-based policies, instead of relying on factors such as age and gender.
"I definitely see it as double-digit growth for us in this space," said Danny Bowman, president of the integrated solutions group at Sprint. "These types of solutions become very sticky, so to speak. Once you embed that [connection] in a business process, for example, customers are probably not going to rip you [out] when your annual contract is up."