Lead Analyst, IDATE
M2M is enjoying swift growth of roughly 30% in volume and over 10% in revenue, with the market to reach €40 billion in 2017
The 6th edition of IDATE’s M2M Market report, covering 2013-2017, reveals that a healthy growth rate has finally taken hold in this promising but, up until recently, underperforming market. This performance is being spurred by increased use within the main areas of application (automotive, consumer electronics and utilities) and is expected to accelerate even further over the next five years as M2M spreads to other sectors of activity.
The M2M market (Reported devoted to M2M applications, excluding satellite M2M) represented 175 million modules worldwide in 2013, generating €24.2 billion in revenue, which translates in to an annual growth rate of 31% in volume and 11% in revenue. The bulk of revenue was generated by software and IT developments which together accounted for two-thirds of total market value.
IDATE forecasts that global M2M market volume will grow by an average of close to 30% annually between now and 2017, which corresponds to 470 million modules, while market revenue will climb by 13% a year on average, to reach €40 billion.
Europe will be the biggest market in terms of revenue, ahead of North America, even if Asia-Pacific will continue to dominate in terms of volume. At the end of 2013, China rose to the number one spot in number of cellular M2M modules installed, overtaking the United States.
World M2M cellular market, 2013-2017
Million of modules Revenues (billion EUR)
Source: IDATE, December 2013
Over the next few years, the M2M market’s growth will be shaped by three key verticals: automotive, consumer electronics and utilities
While they will theoretically drive the market, certain barriers could nevertheless obstruct their growth. Several long-awaited applications in these key markets have been repeatedly delayed, such as Europe’s eCall regulation and large-scale rollouts by utilities. Added to which certain technical choices can have a tremendous impact on the market, a good example being smart meters connected to the cellular network through a concentrator that would allow large utility companies to further increase their already massive negotiating clout to drive down per-unit prices. But utilities will dominate the M2M market in 2017 in terms of module numbers, all technologies combined. The rise of M2M in consumer electronics will have a major impact on the market as a whole, especially on the number of active modules. Because it is a de facto mass market, consumer electronics will represent the largest number of modules, all technologies combined.
M2M players seeking business opportunity beyond their core expertise
The market offers M2M application providers with very attractive opportunities, despite the already relatively low and declining average revenue per user (ARPU). The projects have a long lifespan, very low churn rates and average contracts representing several thousand SIM cards. Connectivity alone is expected to represent €10 billion worldwide in 2017, and more than 3% of European telcos’ mobile data revenue. MVNOs are being pushed out of the market and so repositioning themselves as platform providers, while module providers will have to adapt to a market where unit prices are in free fall. Meanwhile, the top telcos are exploring new cloud and big data services that would allow them to find solid and sustainable new business opportunities.
This comprehensive M2M report will be followed up over the coming months with other reports with a specific end use or vertical focus. For example, just after Mobile World Congress, there will be a very topical report on connected cars.