The GSM Association (GSMA) has released a report that says cellular M2M communications will account for at least 10% of the global mobile market by 2020. Of the projected 10 billion total mobile connections expected by 2020, cellular M2M will account for at least 974 million of the total – if growth continues at its current trajectory.
But the study also highlights several factors that could lead to further growth in the sector, potentially leading to 20 billion cellular connections by 2020 – doubling the forecast’s baseline prediction. Notably, the study excludes devices such as smartphones and e-readers from its definition of cellular M2M connections – focusing on the more traditional M2M implementations such as sensors and asset tracking.
At the current projected trajectory, the GSMA predicts cellular M2M connections to grow at 26% CAGR between 2014-2020, with a maximum CAGR of 40% achievable in the right market conditions. The identified growth areas that could stimulate this increase are: reductions in M2M module costs; the development of standardized APIs; and government projects that use M2M connections such as automotive, healthcare, smart cities and utilities.
“Mobile networks are the platform upon which the M2M industry is being built and mobile operators are at the forefront in shaping the new business models that are driving this exciting market forward,” said the GSMA’s Chief Marketing Office, Hynumi Yang.
The report concludes that the China and the US will remain the first and second largest cellular M2M markets globally through the period, and are forecasted to account for more than half of all global connections. The GSMA notes that China’s M2M market is attributable to “significant investment by the government, underlining the important role of regulatory initiatives in stimulating M2M growth. The US market is being driven by strong growth in the automotive, smart home and utility sectors in particular.” The Chinese government plans to invest $603 billion in M2M and IoT platforms by 2020.
In terms of cellular M2M connections as a proportion of total cellular connections, the global total will rise from its current 3% figure to 9.7% in 2020. North America is expected to see 27% of total connections being cellular M2M by 2020, up from the current figure of 10.5%, and Europe will rise from 6.8% to 20.4% over the period.
Growth is quicker but not as prominent in APAC, LATAM and CIS, which rise from 2.4% to 8.8%, 2.1% to 6.9% and 2% to 8.3% respectively, but growth in MENA and Sub-Saharan Africa is much less prominent, with increase from 1.2% to 3.7% and 1.2% to 2.9% in those regions respectively.
“To fully unlock the M2M market opportunity for both consumers and businesses, we need industry-wide collaboration to address the current fragmented marketplace and to drive economies of scale and global interoperability. The GSMA is supporting this industry-wide collaboration as part of its Connected Living program,” added Yang.
A separate study from the GSMA looked more closely at the US cellular M2M market, in which M2M currently accounts for 10% of all cellular connections compared to 5% in Europe and 1% in Africa. The US accounted for 35 million connections, or 19% of global connections at the end of 2013, and is projected to hold 41 million connections by the end of the year – with a global total of 244 million.
The report says the US market currently lacks standardization, which hinders interoperability and economies of scale, as well as causing fragmentation. The GSMA also notes the lack of cooperation between the public and private sectors, which isn’t helped by a lack of regulatory clarity – particularly in the US healthcare sector.
Alex Sinclair, the GSMA’s CTO, said “without common interoperable standards and appropriate regulation, the US market cannot reach its full potential. We look forward to continuing our work with US operators to help them deliver the full power of M2M technology and the Internet of Things, providing important socio-economic benefits to citizens and businesses alike.”
The report also points to the USA’s smart meter deployments as a key area for M2M, with 43 million smart meters deployed by the end of 2012. These meters can be integrated into smart home ecosystems to let owners monitor and control energy usage in HVAC systems. According to the GSMA, there were 2.3 million smart home installations in North America in 2013, although other than the smart meter itself, M2M doesn’t have much potential for penetration in the smart home – where WiFi and the likes of ZigBee will win out.
Another development that the GSMA points to is AT&T’s launch of the GSMA’s Embedded SIM specification – making it the first operator in the US to do so. The Embedded SIM spec allows operators to take over or relinquish devices in which a normal SIM card could not simply be swapped out and replaced – as if often the case with sealed devices, such as connected cars or smart meters. The system allows over the air updates to the embedded card, allowing greater flexibility for the operators and the device users.