An M2M Renaissance?

Few industries have experienced the meteoric rise that the M2M market enjoyed during the first few years of this millennium. According to ABI Research, M2M module shipments increased an average of 25% per year between 2003 and 2007 — peaking in 2007 with an astounding 45% growth rate. All was well in M2M land until the economic collapse in 2008 crashed the party, plunging the world into a deep recession. That year, M2M module shipments grew a measly 4% — still respectable given the state of the economy, but a far cry from the success to which the market had grown accustomed. Some pundits feared that M2M had seen its heyday and the modest growth figures posted in 2008 would be the norm for years to come. However, new research from ABI provides evidence to the contrary.

ABI Research reports that most M2M vendors feel the market bottomed out in the fourth quarter of 2008 and the first quarter of 2009. The research firm also reports that most of the M2M vendors it surveyed report increased sales activity beginning in the second quarter of 2009. Based on this and other research, ABI now forecasts that 2009 will show modest growth, with unit shipments projected to be about 16% higher than in 2008, and revenue up 10%.

Mobile Operator Interest Sparks M2M Uptick
The upward tick in M2M sales being projected by ABI Research is only one reason to look at the M2M space with renewed optimism. The U.S. federal government stimulus package passed in February offers incentives for smart grid applications which should also help propel the industry forward. Other market drivers include telematics services and road safety regulations, both in the United States and Europe.

Another reason to get excited about M2M is the recent interest major mobile operators seem to be taking in M2M. For example, in July 2008, Verizon Wireless entered into a joint venture called “nPhase” with wireless chipset provider Qualcomm. This venture allows Verizon to bring a cellular M2M platform and services offering to market. The Verizon announcement came on the heels of a similar announcement by Jasper Wireless and AT&T on their own partnership. Both ventures are evidence of an increasing interest on the part of mobile operators in the cellular M2M market. This emerging M2M market provides the opportunity to cellular-enable potentially millions of devices that traditionally have not been connected to cellular networks, such as cars, utility meters, vending machines, and consumer electronics devices.

Verizon has had a long history in the cellular M2M market, dating back over a decade. However, it has been an arm’s length involvement, except when engaging with very large corporate customers. For the most part, Verizon has accessed the cellular M2M market as a wholesaler, selling data connectivity to mobile virtual network operators (MVNOs) and master resellers that aggregate the large numbers of smaller application service provider (ASP) customers that drive the bulk of M2M demand. Verizon has, however, over the past 12 to 18 months, started to take a more active interest in the market — with announcements such as the Open Devices Initiative (ODI) announced in late 2007 to make certification of devices easier for ASPs.

All of the above factors are promising signs of an industry on the rebound. For detailed information on projected M2M growth, read ABI Research’s new study, “Cellular M2M Markets,” available at www.abiresearch.com.