connectcompute

The M2M industry is rapidly leaving the first connectivity focused baby phase – thank god! – and enters the productivity phase. This is where we look at operational issues, capabilities and value. Vendors and operators are preparing themselves to be able to serve the market better and more efficiently. And new partnerships, alliances, initiatives and M&A activities pop up on a daily basis. This is all very good and makes life easier for developers, integrators and customers. But it is more about preparing for the business to take off than making it taking off. It mainly improves the capabilities to deliver in an efficient way.

Today’s initiatives are signs of a developing industry. Building blocks are put together into candidate platforms and architectures. As always most of them will fail over time but still it is an important part of growing up. Let’s look at a couple of recent M2M “teenager activities”:

Looking at mobile operator subscriptions for M2M, the market continues to grow roughly 25-30% per annum. The number of cellular M2M subscriptions nearly doubled between 2010 and 2012 to reach 143.7 million according to Pyramid Research. They also claim China is growing over 40% per annum and will become the largest cellular M2M market this year. We should remember that a lot of M2M applications share cellular subscriptions or use other technologies to connect.

So operator’s M2M business is growing quite rapidly but from small numbers. In a fairly well-developed M2M market like Sweden, M2M subscriptions are roughly 20% of all mobile subscriptions today. But still most of the market potential is untouched. Policy-driven markets like smart meters, big global markets like connected cars and consumer oriented stand-alone solutions are all fairly well addressed. But small business is big business also when it comes to M2M, and these companies are only addressed by independent Service Enablers, developers, integrators and turn-key solution providers. The alliances, partnerships and M&A activities aren’t reaching that far. A company connecting 100 of their “things” per year in maybe 25 countries across the globe is simply of no interest to any of the large players. The same goes for ,a company who want to develop a specific application to connect 25 of their “things” in a country, unless they are filthy rich.

Success in SME will come from successful platform support for specialist service enablers, developers, integrators and turn-key solution providers. That has little to do with technical issues and a lot to do with trust and business models. This has to be resolved before M2M will grow up.