M2M Check-In: Are We There Yet?

Kathryn Weldon

Kathryn Weldon

Summary Bullets:

  • Operators are seeing average annual growth rates in M2M connections of about 20-30%, with new customers evenly distributed among diverse vertical solutions.  UBI and asset tracking solutions are gaining steam, with healthcare and energy management solutions also becoming a source of new ‘wins.’  Although automotive telematics wins are being announced, most of the actual connections associated with them are poised for growth in 2014/2015, when the auto OEMs launch their new ‘next-generation’ models.
  • IT service providers are playing both sides by partnering with and empowering operators to offer end-to-end solutions and going directly to enterprises through their vertical practice groups.  Automotive, utility/smart grid and smart-city deployments, which require multiple network technologies, complex integration and data analytics, are focus areas.

It is difficult to assess traction quantitatively in the M2M market since not all operators are citing numbers of connections these days (let alone revenues or numbers of customers), but Current Analysis estimates that, by the end of 2012, Telefonica had grown its M2M connections to 7.5 million, up from 6.6 million; AT&T had grown to 14.2 million, up from 13.2 million; Vodafone had grown to 9.7 million, up from 7 million; and Orange had grown to 3 million active SIMs, up from 2.5 million active SIMs, plus another 4.8 million SIMs sold by the International M2M Center (IMC) to MNCs, up from the 1.5 million SIMs sold by the IMC in 2011.  Verizon, Sprint and Deutsche Telekom have not reported their numbers for 2012.  In addition, of the 13 publicly announced new M2M ‘wins’ among these operators since January 2012, two were for UBI, two were in healthcare, three were for asset tracking, four were in automotive, one was in energy management and one was in industrial monitoring/control.  This is not a highly scientific ‘study,’ since many wins are not announced at all, but it does show general trends pertaining to growth of connections (which averaged 20-30% in 2012) and to the vertical distribution of current M2M deals.  In general, forecasts of the total number of cellular M2M connections worldwide for 2013 are in the 180-200 million range.

As for IT service providers, we know they play a role in many large engagements by helping the operators integrate large and complex applications and provide end-to-end solutions across many vertical industries.  Recent discussions with IBM, Accenture, CSC and CGI/Logica make it clear that they view M2M as a big opportunity and are routinely partnering with operators such as Vodafone, AT&T and Deutsche Telekom.  However, they can and do approach enterprises themselves through their vertical practices; their revenue is derived from consulting, business case analysis, design, deployment, integration and ongoing management, with additional recurring revenue streams coming from the platforms they have developed for service and application enablement.

About Kitty Weldon
As Principal Analyst for Enterprise Mobility at Current Analysis, Kathryn is responsible for analyzing events, companies, products and technologies within the wireless and converged wireline/wireless enterprise services and solutions space.

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