Worldwide market represents 22 billion EUR in 2012 – 14% growth compared to 2011

Tools

22/11/2012

Recently, IDATE has published its annual M2M in-depth market report which analyses the overriding trends and changes taking place in the M2M market around the globe. It explores the driving forces behind the market's growth and transformation, including an examination of the chief market trends, plus volume and value forecasts up to 2016 by geographical area, by country (China, France, Germany, Italy, Japan, UK and USA). It also presents the quantitative evolution of the cellular modules, by application and by networking technology.

"The M2M market is growing very fast but its development is not spread out homogeneously over the verticals markets", says Samuel Ropert, project manager and senior consultant at IDATE. He adds: "Take the automotive industry worldwide: in volume we predict an average growth rate (AGR) of 40% until 2016. In parallel, the Consumer Electronics industry has an AGR of 15% and will represent barely a third of the M2M volume for the automotive industry in 2016"

Principal findings


  • The M2M market is growing very fast. In 2012, the cellular market is expected to represent 140 million modules worldwide for a total market of 22 billion EUR (of which 5.1 billion EUR for connectivity). The annual growth of the M2M market was around 14% in value and 36% in volume. Most revenues will come from software and IT services (around two-thirds of total market value). The world M2M market should grow by 30% in volume, to represent almost 370 million modules in 2015. Asia-Pacific should dominate Europe and North America in volume only. Europe should still lead in value, followed by North America.

  • Over the next few years, the M2M market will clearly be driven by the three key verticals of automotive, consumer electronics and utilities. However, while they will theoretically drive the market, some barriers could obstruct growth in the M2M automotive and utilities sectors. The global downturn does not explain the trend entirely. In the short term, some applications in these key verticals are recurrently delayed (as with the eCall regulation in Europe, and high-scale utilities deployments) and have a potential impact of the traditional M2M market. Moreover, the utilities market is now seen as less attractive with business opportunity being somewhat limited. In fact, most smart meters will be connected to the cellular network through a concentrator and large utilities players will try to leverage their negotiation power (quasi-monopsonic positioning) to drive down the unit price. Finally, multiple M2M users are adopting a 'wait and see' position regarding the world economic situation.

  • The embedded SIM (known as eSIM) has animated the debate on M2M and beyond. The principle of the embedded SIM refers to SIM cards welded into the modules at manufacturing and the capacity for remote activation and provisioning over-the-air (OTA). It provides overall the possibility of switching from one carrier to another one. It has been designed for meeting client expectations (industrial performance improvements) but some hurdles exist to the eSIM implementation in the M2M industry. The eSIM could be a strong driver for market development but also a shoot in the telcos' arm.

  • The telcos are still looking for business opportunity beyond connectivity. M2M offers
    them attractive opportunities, as, despite low and declining ARPU, projects offer high lifetime value, reduced churn rate and average deals representing thousands of SIM cards. Connectivity alone should represent 8.2 billion EUR in 2015 worldwide (3 billion EUR in Europe) and more than 5.7% of mobile data revenues for European telcos. MVNOs are being pushed out of the market and are therefore repositioning themselves as tool providers (platform providers), while module providers are challenged to break even in a market where unit prices are falling.


Samuel ROPERT
Senior Consultant at DigiWorld IDATE
s.ropert@idate.org