Global M2M cellular connections are forecast to hit the 374.9 million mark by 2017, expanding at a compound annual growth rate of 26.5 percent from 91.4 million in 2011, according to research firm IHS (News - Alert). Berg Insight, meanwhile, forecasts that M2M devices with cellular connectivity will increase by 22 percent this year to reach 164.5 million in emerging markets, and estimates that M2M connections will grow at a CAGR of 24.4 percent with 489.9 million connections in 2018. And Analysys (News - Alert) Mason says the M2M market will be worth $88 billion in the next 10 years.

To meet its potential, there’s little doubt that M2M has to overcome some barriers. But there’s been a good amount of forward momentum to date, and all signs point north.

Perhaps the biggest challenge M2M has faced to date is fragmentation within the marketplace.

“Today, there is a great deal of complexity involved in the development and implementation of M2M solutions that is directly related to there being a very large ecosystem of suppliers offering a wide mix of intermingled solution sets,” explained Larry Zibrik, vice president of market development at Sierra Wireless (News - Alert). “There is an array of devices, management services, subscription services, application and cloud platforms. They are all essential in creating a customer solution that delivers value but can quickly overwhelm a customer.”

Daniel Obodovski, author of the new book “The Silent Intelligence”, also sees hardware as a big bottleneck to more widespread M2M adoption. The issue is that many companies have shied away from the hardware side of M2M because hardware tends to be low margin, so the hardware is not always available to do what people want to do, said Obodovski, a former Qualcomm (News - Alert) guy who co-founded and is currently co-chair of M2M SIG at CommNexus San Diego. This is a great opportunity for investors who may want to consider pumping some funds into this under-appreciated but sorely needed piece of the M2M ecosystem, he indicated.

There’s also an absence of established business models for M2M. Some believe M2M suffers from a lack of standards. And additional education of potential users on the benefits of machine-to-machine solutions wouldn’t hurt either. But, then, most new technologies face similar challenges.

The good news is that M2M appears to be poised for big things. Just look at the expanding adoption of these solutions, the decreasing costs of hardware, the growing array of products and businesses in the M2M space, and rising interest from investors in machine-to-machine companies.

And while there are too many players in the M2M market, at least by some accounts, consolidation has begun. At the same time, there’s been a realization that businesses need M2M integrators to help them formulate strategies around M2M and then put together the pieces to meet those goals – and M2M companies are stepping up to fulfill this role.

A new report from IHS indicates the market for M2M-related value-added services will expand from $1.5 billion in 2012 to reach $10 billion by 2017. VAS includes business and technical services that complement managed cellular connectivity and application platform services to enable application developers, service providers and corporate adopters to create, deploy and manage cellular M2M applications.

Sam Lucero, senior principal analyst for M2M & Internet of things at IHS, said that mobile network operators are increasingly helping their customers connect the dots among M2M ecosystem players, including suppliers and developers. Such efforts, he added, range from establishing module supply programs to developing partnerships with platform vendors and solution suppliers to reduce overall complexity in the value chain. In addition to cellular network operators, Lucero said others in the VAS space include enterprise IT vendors, MNOs, module vendors, platform providers and system integrators.

“It sounds cliché to say, but there is close to limitless potential for connected solutions in 2014,” said Mark Bartolomeo, vice president of connected solutions at Verizon (News - Alert) Enterprise Solutions. “We're entering a time when nearly everything can be connected to the Internet or to another computer system. Our responsibility is to work closely with our clients and show them how they can move across a continuum of M2M services to improve their business.”

The businesses leveraging M2M technology are extremely wide ranging. Indeed, the verticals and applications in which M2M can have a positive impact seem limitless, and even those categories that have embraced M2M in a real way have plenty of runway.

“There are a lot of industries that are in low levels of penetration,” said Mike Ueland, senior vice president and general manager of Telit Americas. “So there’s lots of upside.”