The worldwide market for machine-to-machine (M2M) device connections is expected to grow from 62 million devices in 2010 to 2.1 billion devices in 2020, according to a new report from Analysys Mason.
For wireless operators, the opportunity is clear. They should leverage existing spectrum and network assets, drive revenue growth by wireless-enabling new devices and business processes, and maximize profits by avoiding customer acquisition and support costs.
Many are already positioning themselves to take advantage. Yet success in the market is not guaranteed. Almost every M2M device will have a different value chain from the mobile phones and associated devices sold by network operators today.
Many M2M devices have a longer supply chain and ‘shelf life’ poses real challenges to operators. Equally, device manufacturers can demand longer continuity of service for M2M devices, which tests how operators manage technology transitions.
Operators will have to reinvent themselves to take advantage of this marketplace which is radically different from the mobile phone sector on which they have been focused for the past decade and more.
The development of the M2M market depends on operators being able to stimulate innovation and support new business models where the price per device per month may be measured in pence and not pounds.
Operators also need to support “comes-with-data” pricing models where the cost of the device includes an amount of mobile data, regardless of whether pricing is time-limited, transactional, or volume-based.
Due to the fragmentation of the market, operators need to offer a M2M platform that supports a variety of applications. In particular, the connectivity requirements of M2M devices and applications are generally different to those of traditional mobile phones and mobile data devices.