| Cellular M2M service market to grow, diversify |
Aug. 23, 2007
Revenues from cellular machine-to-machine (M2M) services will quadruple, from approximately $2 billion in 2006 to more than $8 billion in 2012, a new report from ABI Research forecasts. The study also predicts increasing variety in the M2M market's business models.
In his latest report, ABI senior analyst Sam Lucero noted that three different classes of service providers "face specific challenges and opportunities in delivering this emerging technology." They are defined as:- Traditional mobile network operators (MNOs)
- Mobile virtual network operators (MVNOs)
- A small number of specialized M2M mobile operators (MMO)
The report notes that some MNOs, traditionally offering handset-based voice and data services, are now directly entering the M2M market. Examples include Sprint, Rogers Communications, Orange Business Services, and others in Europe and Asia.
"For the traditional MNO," says Lucero, "there are problems in entering the M2M market directly. A cellular voice customer ARPU [average revenue per user] might be in the $50 to $70 per month range, whereas the M2M services ARPU might be just $5 to $15 per month. MNOs don't want markets without large volume opportunities."
Therefore, the report predicts, there is a major opportunity for the MVNOs. Relying entirely on infrastructure provided by MNOs, they can aggregate both supply and demand, brokering multiple networks to multiple customers. "They have organized their processes and operations around serving lower-ARPU markets."
Lucero also identifies two companies that he says are unique in acting as MMOs. Aeris Communications and Jasper Wireless utilize and aggregate MNOs' base transceiver stations, but they also own key network infrastructure elements, giving them more control over the provisioning, service level agreements, and over the management functionality they can offer.
The report says the few MNOs that have entered the market directly see it as a "solution" sale, involving the opportunity to bundle the M2M services with traditional telecom services. As for MVNOs, Lucero sees them as migrating toward a more MMO-like model.
In its M2M report, ABI focuses on eight providers overall:- Aeris
- Jasper Wireless
- KORE Telematics
- Orange Business Services
- Qualcomm Wireless Business Solutions (QWBS)
- Rogers Wireless
- Sprint
- Wyless
A summary of the report, "Cellular M2M Service Provider Markets," is available here. Pricing was not disclosed.
Embedded systems, such as those running Windows XP Embedded and Windows CE, may incorporate cellular M2M technologies as an alternative to wired connections. Cellular M2M applications traditionally have not required high-speed connections, but have recently started benefiting from 3G cellular technologies, ABI reported last May.
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