Prioritising M2M Revenue Potential Will Take Telecom To The Next Level In 2013

Telecom companies, despite continuous efforts to fine-tune their machine-to-machine (M2M) strategies, are seeking new ways for revenue growth in a connected M2M world. Up to now, telcos mostly targeted the easy to reach opportunities in areas such as new cars, electricity meters and those around consumer and professional healthcare, traditional telemetry, security and industrial automation. Telecom service companies can accelerate revenue and market development by increasing customer awareness through a broad market strategy and further addressing customer needs.

According to Frost & Sullivan, a priority has to be M2M offerings for the small and medium enterprises (SME) customers. “Widening an M2M telecom service provider’s reach to a spectrum of customers regardless of enterprise size can yield a more sustainable flow of revenue,” said Frost & Sullivan Senior Industry Analyst Yiru Zhong. Frost & Sullivan estimates that a broad enterprise M2M strategy will also stimulate revenue growth by 22.3 percent in the next five years as M2M functions and customer needs evolve.

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The second priority for M2M telecoms service providers is to develop the depth of customer needs outside of traditional M2M logistics applications and applications in smart electricity meters and connected cars for E-call compliance. “Frost & Sullivan predicts that the emergence of M2M opportunities lies in industrial automation, retail sectors and even local governments,” added Zhong. A higher revenue potential of between 10 and 35 percent of addressable revenue is achievable in the next five years, when M2M revenue would be derived from utilising the intelligence generated from machine data or in enabling enterprises to develop new functionality or new services to their end customers.

According to Frost & Sullivan the M2M market will also benefit from new market entrants, as the presence of mobile virtual network operators (MVNOs) or wholesale M2M telecoms service providers will become more vocal in 2013. This additional market entry push will accelerate market development and stimulate greater innovation within the M2M space.

However, there are some restraints which are holding market development in 2013. M2M connectivity roaming is one of the most significant obstacles to enterprise adoption. “This issue applies particularly in the SME sector. We do hope in 2013 this issue comes to the attention of national telecoms regulator’s priorities to provide a coordinating hand across national boundaries,” said Zhong.

Another obstacle to further M2M market development is the rate at which service providers target the SME market. “Deutsche Telekom’s M2M Marketplace approach announced in 2012 is a good starting point,” noted Zhong. “Without a relatively straightforward plug and play M2M solution for SMEs, it is difficult to translate this potential opportunity into actual contracts.”

Another important factor for market growth is the establishment of a common protocol from M2M modules, M2M connectivity platforms, and applications software protocols to eventually machines/devices. However, forecasts on obtain a general standard are very pessimistic since the industry does not even agree on what needs to be standardised.

Summarising, Frost & Sullivan expects market development to accelerate, led by more market entrants and significantly deeper and wider customer education for M2M adoption. Standardisation efforts will be greatly beneficial, but let’s not hold our collective breaths.