New research from Infonetics forecasts that the ‘M2M’ market will triple in size between now and 2017. They predict it will grow from around $15 billion in 2012 to $31 billion in 2017 – passing $20 billion in 2015. Right now the sectors driving this ‘market’ are automotive, transport and logistics, which make up a third of the current market.
Good news then.
Except, the ‘M2M’ market is varied, complex and operators are still trying to work out how to make the kind of money they need to in order to recoup their investment. A familiar story perhaps and some operators have set up competence or research houses in order to do the thinking. One of the problems, as Godfrey Chua, who directs the M2M and Connected World projects at Infonetics points out is that “by far the most popular way to connect to M2M services is via a PAN (personal area network) – comprising wireless technologies, such as WiFi, Zigbee, Bluetooth, and IP500, which do not generate connection revenue.”
With the accepted strategy of partnering with sector experts to address vertical markets, this means that the revenues need to be spread pretty thin. Another problem, as Jim Morrish, Director and Founder of the specialist M2M-focused analyst house Machina Research points out, is that “the first thing you have to realise is that the M2M market is not a market. It is a technology-defined slice through a myriad of different kinds of business processes.” It already is, and will become, they way that almost every industry sector evolves.
“Hard on the heels of that fact is the conclusion that M2M is about more than counting SIMs,” says Morrish. “It is difficult, because mobile operators tend to be measured on the basis of the number of SIMs that are ‘live’ on their networks, whilst we all know, of course, that what really matters is the revenues and net margins that can be generated from M2M, irrespective of connectivity technology.”
Chua agrees. “One of the biggest challenges in M2M is that the use cases are so highly varied. Consequently, enterprises are demanding ever more diverse and flexible tariffing regimes. To fully tap into the growing M2M opportunity operators must therefore have billing systems and capabilities that are robust and flexible enough to quickly adapt to the wide range of requirements emerging from enterprises deploying M2M solutions.” And of course, we know that the margins are going to be wafer thin.
The other worrying fact is that if you talk to billing people within operators they understand the potential of M2M but have no immediate plans or direction for systems to support it. They are too busy deciding which real-time charging system to go with and whether it is possible to implement such a system with the €3.50 they have been given this year.
The upside is that we are beginning to work out how we can bill for non-telco services. Although this has been a discussion point for many years, as telcos begin to offer cloud services and applications, perhaps ‘M2M’ billing is simply a different version of that, but on a scale we simply have not seen before.
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