Machine to machine (M2M) cellular service is a lucrative option for wireless carriers – especially given the market slowdown in cell phone-based communications. By the end of 2017, the number of cellular M2M connections will more than triple, according to a new report by IHS (News - Alert). The study said there will be 375 million global connections in 2017, compared to 116 million connections in 2012.
Also, revenue from cellular M2M services from wireless carriers will jump to $22.4 billion in 2016, compared to $9.6 billion in 2012, IHS adds in the study called “MNO Strategies in the Cellular M2M Market.”
“The rise of M2M comes at a time when the traditional cell phone-based mobile services market is becoming increasingly mature and saturated, with growth slowing particularly in the developed markets like the United States and Western Europe,” IHS added in the statement.
Among the wireless service providers opting for the cellular M2M market are Verizon Wireless (News - Alert), Vodafone and China Mobile.
Also, Sam Lucero, an analyst on M2M and the Internet of Things (IoT) at IHS, cautioned in the statement that to “take full advantage of the M2M’s market’s potential, the wireless firms must deliver their customers much more than simple cellular connectivity. Instead these companies must offer a full suite of VAS [value added services] and MAP services, prompting them to establish their own M2M business units and develop or acquire M2M connection platforms.”
In addition, the study also found that many MNOs (managed network operators) extended market strategies. They do more than provide wholesale connectivity to mobile virtual network operators (MVNOs) and other aggregators. Sprint’s Emerging Solutions Group and Telekom Austria’s Telekom Austria Group (News - Alert) M2M GmbH unit are among the examples.
There is considered to be a major change from the more traditional systems and processes. “The systems are designed for single-device activation processes. They also work with cell phones and other consumer devices that are in the possession of their users in the event of technical difficulties,” the IHS statement said. “Furthermore, they operate based on 18- to 24-month replacement/upgrade cycles, reducing the need for backward compatibility of network infrastructure with still-deployed legacy devices. The use cases also are relatively simple, based on communication and content. Finally, traditional cellular services have high average revenue per user (ARPU), particularly for smartphones, which normally amounts to more than $80 per subscriber per month.”
But M2M services often see devices that are remotely deployed in large volumes. M2M devices are deployed remotely, and M2M devices have longer deployment times. There is also a lower ARPU.