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Machine is the future of man!

Week 26, 2011

So far the M2M industry is richer in forecast levels than in current business, for instance, Orange anticipates 100 million of active M2M SIM will be in use in Europe in 2015, or the 2015 wireless connectivity market will be worth EUR 1.5 billion in 2015. Besides these forecasts, the ongoing development of M2M makes the market evolve from a niche market to a focus market for network operators.

Core applications include automotive, smart metering, logistics, remote services, security, etc. but M2M is also triggered by lifestyle changes such as the appearance of “always on” consumer appliances or the pay-as-you-go insurance business model.

The M2M business is full of interesting marketing facts both for technology vendors and for network operators. For instance, M2M chips come in a variety of form factors depending on their final destination, they have to resist extreme conditions, heat cold, vibrations, … They need to demonstrate a long data retention, at least ten years, but some applications require over 20 years. At the same time the M2M SIM market is characterized by a low churn rate, high customer loyalty, and the fact operators usually get 100% of a business. Hot line services is demanding as applications using M2M modules are often mission critical, but require few resources, and machines don’t call hot lines. ARPU is low, but as the business is not subsidized, actual return on investment is positive for operators. Roaming is to be taken into account, and operators have to deliver a fully globally interoperable service. Traffic is still low, allowing operators to connect M2M SIMs on EDGE or GPRS and saving precious bandwidth on 3G or LTE.

So is M2M the next “50 billion subscriber opportunity” as announced by one of the SIMposium speakers?

Thierry Spanjaard

Chief Editor

Smart Insights