Winning with M2M

Machine-to-machine device connections are expected to grow in the next 10 years
M2M deployments are gaining pace around the world.
M2M deployments are gaining pace around the world.

Share

Machine-to-machine (M2M) device connections are expected to grow in the next ten years. Telecom operators appear to be ready to benefit from this fast growing industry. But how should they go about entering the sector, and what growth can they expect?

CommsMEA: What should telecom operators do in order to position themselves to benefit from M2M?

Chady Smayra: In order to benefit from M2M, telecom operators need to address three key areas: service offering development, partnership management, and economies of scale.

CommsMEA: What industries in particular hold potential for M2M services from telecom operators?

John Horn: There is quite a range. The thing to note is that we will see much more of an emphasis on M2M in 2012, as carriers begin to understand that in a volatile world of ever-changing consumer behavior and spending cycles, M2M applications are rock-solid, and the revenue is indisputable. In addition, more companies will come forward with new M2M solutions—like telemedicine, where hospitals are using video diagnostics for remote patient monitoring and remote security that relies on video or GPS systems to help keep track of loved ones and pets. Areas that are already seeing a lot of traction in M2M right now are automotive and telematics and video surveillance. Also, one niche sector we’ve seen growth in recently is ice machine monitoring, in which companies have set up remote monitoring systems to check on quantity of ice, temperature of machine, servicing needs, and can add billing/payment components too. It may be niche, but it’s changing as we speak. Asset tracking and fleet management are also very large vertical markets.

Saad Khan: Widespread availability of M2M technology has already spurred innovative use cases across different industries, such as: smart grid in energy and utilities; communication between various devices for security and industrial and building control; environmental monitoring; and many applications in the consumer domain ranging from retail to home appliance intelligence.

For example, in the shipping industry, a company delivering goods to a merchant can employ a device that tracks the precise location of specific products in transit. This information can then be relayed to customers so they can pinpoint when to expect their delivery and plan accordingly.

In healthcare, individuals, regardless of location, can monitor their own health by wearing medical devices that collect vital stats, such as blood pressure levels, which then can be sent through the cloud where medical personnel can read and take action if necessary. This service reduces the number of routine visits for patients without hindering care.

In agriculture, farmers can connect water pumps with wireless and satellite networks to access real-time information on water use and soil conditions. This knowledge helps them to plan for electric and water usage year round to ensure timely irrigation of crops without having to inspect their property acre by acre.

Ali Mahmoudy: Globally, several industries have been targeted by M2M services with transport and logistics, energy and utilities, financial services, healthcare, retail and manufacturing are expected to capture the lion share of M2M revenues, reaching more than 60% of global M2M revenues.

In MENA, transport and logistics has been widely targeted by telecom operators and business service providers while energy and utilities, financial services and healthcare verticals started to get increased attention.

Operators have introduced various services for each vertical. For transport and logistics, telcos offer fleet management and asset tracking solutions. For energy and utilities, operators provide mainly monitoring and control solutions targeting producers, distributers, and end-consumers.

In addition, telcos have enabled financial services customers with wireless ATM and mobile POS solutions, healthcare customers with remote patient monitoring solutions, retailers with inventory monitoring solutions, and manufacturing industry with metering and control solutions.

Continues on next page

CommsMEA: How big is the opportunity for operators in the region in your opinion?

Hamza Ali: Significant opportunities exist in the region if operators are willing to offer customised and complete solutions which cover all necessary services components such as devices, connectivity and applications. However if operators approach it as just another option to sell more connectivity lines then the opportunity will be less attractive.

John Horn: It is as large as the opportunity in the core business today. The ARPU is considerably lower but the support costs are lower as well, and the potential universe of billions of machines that are yet to be connected is an opportunity that can’t even be measured accurately yet.

Ali Mahmoudy: M2M business remains in early stages in the MENA region, with total revenues estimated at $30m in 2011. Nonetheless, with the increased digitisation in most of the industries, M2M is expected to witness a sharp growth in next five years with total regional revenues expected to reach more than $1.5 billion by 2016.

Krzysztof Kwiatkowski: If we look at M2M from the non-telco perspective, the growth is significant. In many areas, M2M is used. So if we understand M2M as the communication of some devices and sending some data somewhere like in toll roads, vending machines etcetera, M2M is growing. But for telcos the growth is not so big because it is not that SIM cards are always used. For example, in toll roads in Poland, it is not SIM cards that are used but satellite communication and DSL communication. Ut it is big and growing very fast. For telcos, it is at the beginning in the European market.

CommsMEA: What general challenges will M2M present?

Saad Khan: M2M communications will automate and improve the many processes surrounding us – our electricity supply, traffic management, at home healthcare and much more – ultimately making life more convenient. Nevertheless, M2M will greatly tax network capacity, so accommodating these capacity demands on future networks is critically important.


Growth factor

Machine-to-machine (M2M) device connections worldwide will grow by a factor of 20 in the next ten years, from 100.4 million to 2.1 billion. Revenue associated with M2M connectivity will also increase dramatically over the same period, from $5.7 billion in 2011 to $50.9 billion in 2021, according to new report from Analysys Mason.

The report predicts that ARPU rates generated by M2M connectivity will decline markedly throughout the next decade, from a worldwide average of $4.71 per month per connection to just $1.98 in 2021.

“This per connection revenue decline will be caused by increasing price pressure and growth in the number of M2M device connections in emerging markets,” explained Steve Hilton, principal analyst of Analysys Mason’s enterprise and SME strategies research programmes. “ARPU rates for M2M applications are generally lower in emerging markets than in developed markets.”

According to the report, the share of worldwide connections attributed to developed markets will decline over the next decade, from 69% in 2011 to 59% in 2021. Similarly, developed markets’ share of worldwide revenue will have declined from its current level of 76% to 64% in 2021.

 

 

 

 

REGISTER NOW | Webinar Event | Security you can bank on – Safeguarding the Middle East’s financial sector

Presented in partnership with security and network specialist Cybereason, the second in the three part webinar series will bring together a panel of experts to discuss how banks and financial institutions are evolving their service offering while simultaneously staying one step ahead of the cyber criminals who seek to bring their operations crashing to the ground.

Editor's Choice

Emerson expands analytics platform for industrial enterprise-level wireless infrastructure management
Plantweb Insight platform adds two new Pervasive Sensing applications that manage wireless networks more efficiently with a singular interface to the enterprise
Digitalisation seen as a competitive advantage by Middle East private businesses
Nearly 80 per cent of private business leaders acknowledge that digitalisation can impact business sustainability
Etisalat introduces Multi-Access Edge Computing architecture delivering best-in-class video streaming performance for 5G networks
MEC architecture achieves performance gains of as much as 90% in video streaming, validating how ultra-low-latency applications will be delivered over 4G and 5G networks

Most popular

Don't Miss a Story