Telco’s Connected Objects Strategies : how to compete with OTT players


Samuel Ropert
Director of Studies, IDATE DigiWorld

The connected object market today shows a real complementarity between the major players in terms of their current positionings, aligned with their core business.

In the longer term, however, IDATE DigiWorld anticipates that competition will grow in ferocity, around the platforms and services which are set to be the next source of revenues.


The automotive market

Around the connected car business, is key for Internet giants and telcos. Competition today is, in the main, on the platform side as both telcos and Internet giants are aiming to position themselves here today. Indeed, it is the platform that is the cornerstone of the next connected car strategy. Looking further ahead, the main competitors will most likely be OTT service providers, as they will offer services by exploiting the data generated by sensors in the vehicle – Uber-like companies are one example. Some industry incumbents are already engaged in the battle: earlier in 2016, GM invested half a billion USD in Lyft, the main competitor to Uber. The major involved players are AT&T and Verizon on the side of the telcos and Google (and Apple to a lesser extent) for Internet players.

The wellness market

This market is very recent. Telcos are absent from its value chain, with the exception of very limited volumes of cellular objects. They only focus on the distribution side, where the reselling business can grab them a sale commission on wearable objects, linked to smartphones. OTT Internet players are eying this promising consumer market for the opportunities it will offer in the near future to manipulate and monetise masses of personal data.

The healthcare market :

A specific market for a long time, its very promising market has been in the growing numbers of potential ‘clients’ as their age increases. The key objectives of healthcare applications are to optimise the treatment of disease and to save costs for national healthcare services. Even though solutions will be provided in partnership with experts, both telcos and Internet players will be push platforms and services.

The smart home market

It will be the arena for immense competition in the next few years. It is considered as a growth area for fixed telcos which are already facing competition from cablecos. On the side of the OTT Internet player, smart home applications are seen as a complementary way to follow their consumers/audience, even though they have different approaches. Competition – again, it will be heavy – will on the platform and services side as all players will be wanting to manage the data.

Today, the industrial Internet market is considered as an extension of the Industrial M2M business for telcos. The Internet giants are notable by their absence, even though some could provide cloud-based tool: Google, and Amazon with its specific IoT AWS offering, are prime examples. Analogous with traditional online services, the main threat for telcos is that they yet again become the pipe, and only the pipe. They have, however, anticipated the connectivity commodity trend by offering data platform solutions and related services. The ARPU from connectivity is very limited and the telcos expect only a small share of connected devices will be equipped with a SIM card. Before services, telcos have backed their core business, by setting their eyes on LPWA technologies (SIGFOX or LoRa) or collaborating on LPWA-like cellular ones such as the NB-IoT ahead. They are also backing the next 5G technologies, which aim to empower various verticals, including healthcare, manufacturing, smart cities and the automotive. It will be a tough battle, given that Internet giants are global by definition. Moreover, compared with traditional Web services, the main difference is that Internet giants manufacture their own objects, providing almost an end-to-end solution of product, platform and services on top. Faced with this kind of solution, traditional players in the industry will also suffer from the invasive nature of the OTT Internet players and their fierce competition.

Find out more information on "Telco's Connected Objects Strategies" in our dedicated market report

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[CR] Connected things Forum



Connected things as a strong market game changer?


Connected objects put together several markets. In 2015, 42 billion things are connected. In 2025, 155 billion things will be connected to Internet.

The value chain is different. Machine to machine implies a siloed connectivity, while the industrial network implies an interconnected connectivity.

Smart homes materialize a broad economic system,  may be with too many possibilities. At present, the service is not up-front. There is a lack of services on the top of certain devices. The value added services isn't clear up to now. To take off the market needs to lift several barriers. First, price is the limit.

Connected objects will become one of the key pillars of tbe industrial giants in their servicisation strategy.

Luc Bretones, EVP Technocentre & Orange Vallée, Orange


To invent innovation locally you need to work at the local level so Orange has got offices in several countries.

IOT is a pillar of our innovation strategy. Orange has to work on value propositions. SIM-as-a-service is now on the market. New distribution models are created. At the same time, security has to be tackled. We want to customize customer experience.

Our company has a lack of good designers. The model is evolving from an Internet of things towards an Internet of services, from business to customer services, where you can monitor your home thanks to an SMS. Monitored security is on. Every area of life is under way. The car has got a specific need for connection.

Orange is an IOT data operator aiming to implement:

  • connected devices
  • internet of machines
  • internet of objects

The objective is to get quickly a critical mass. To implement open innovation our company has to set up vertical partnerships. IOT is a broadfield in construction. On this topic data privacy is at the heart of Orange's concern.


What are the key current consumer applications and their business models?

  • 90% value comes from services other than connected objects: Be it a better management of service to make it smooth, to guarantee the quality of service and delivery;
  • Orange packs 4G in expectation to connect any objects, hybrid networks on different spectrum (LoRa and wifi);
  • Orange connected services cover both B2B and B2C;
  • Extend connectivity from cellular network, wifi to other wireless technologies: BLE, zigbee, etc.
  • Spectrum of connected products and services: Orange Drive (critical, launched early 2015), Orange Smart Home, Silver cocoon (plug and go data platform), Pops by Citizen Science (connected health);
  • Customer experience is the top priority – recruitment of designers as an example.

Orange ambition to be the data operator by 2020.

Orange Datavenue (data powered open platform): An IoT enabler platform for data storage, aggregation and securing, in wide range of verticals. Development of new B2B services that require to conclude major partnerships on verticals (entreprises and open data).


Round-table: How will connected objects impact our lives?


Moderated by: Olivier CARMONA, Director of Business Development, Awox
Xavier BOIDEVEZI, Vice President Business Development & Digital, SEB
Bernardo CABRERA, Head of M2M Marketing & Projects Management, Bouygues Telecom
Ludovic LE MOAN, CEO, Sigfox

Current states

Machine to machine is a reality. Today there are around 10 million of connected objects in France. 10% - 20% home appliances in the market have some connectable features.

From the car to consumer appliances, smart buildings, cities, any object can be connected now. At this level, there is a new business market emerging: security with two key elements simplicity and cost.

Generally four standards for connected devices exists, being endorsed by some telecom and internet giants like Google, Apple Homekit, Qualcomm.

 What do I do with a connected object?

The key challenge is to make sense of usage for the consumer in terms of connectivity. The sector has to work more on positioning.

Today, music devices must be connected. For this segment connectivity is a must. For lighting, the market has been tackled with a different approach. With a connected lamp you can change its color right now. It's still a fragmented market.

The key driver is to work on the ecosystem of consumers. The global objective is to simplify life and offer embedded devices.
Experience should be at the benefit of technology. You're at the office and you want to start cooking your meal in the oven. How can we manage interoperability between products? It will bring added value. We need to explain what added-value this will bring to the end-user. So we need to move from manufacturing to service. At first, an innovation always seems crazy. Look at the mobile phone. Hackathons might be a way to develop applications and find a pool of ideas. We need to think big.

In terms of data monetization we have to find new models. There is a surge to be able to network vertical data and aggregate them from several fields of our lives (health, security, trips...). Digitalization and tools are increasing. Brands want to stick to consumers. The focus has to be laid on gather then analyse then exploit to finally aggregate.


Keynote: Paul-Edouard Launay - Jasper


Jasper is a start-up, working on operational excellence in IOT. Its aim is to launch, manage and monetize your IOT devices.

IOT is for everywhere and for all sizes of businesses. Services are for all of us. Jasper means to monitor and master the lifecycle of devices: manage / deploy / monetize. IOT always implies services we support. To deploy the equipment at the international level means having a seamless device.

Key stakes:

  • Business model is not clear yet (i.e. one of the invited company, SEB is still exploring its Business Model).
  • Costs:  Talking about Smart cit, how will the charges of connectable infrastructure and devices be covered, to whom?
  • Energy: Identify the power consumption of devices; apply Low Power Wide Area (LPWA).
  • Technologies come after consumer expectation:  important to figure out what consumers value the most, what services can be offered to meet their needs? Then technologies come to serve the purpose.

To drive market taking-off:

  • The majority of value will come outside the peripheries of home sensors or devices, but services.
  • The market waits some model-effect of big manufacturers’ move, in expectation of lowering entry barriers, for example, lowering the costs.
  • After the decision on what services to propose to consumers, both SEB and emphasized that true benefits/utilities will be delivered by partnership (open innovation) and by establishment of the ecosystem.

Data leverage:

Data analytics allow home appliance makers to discover some key metrics associated with consumer expectation when the devices are being used, thus in return contributing to new services development ( transform themselves to service providers from pure manufacturers).

Data monetization:

Advertising might be possible but commercial viability has not been proven yet. Data analytics are likely to make more sense, estimated by SEB.

 Subsidiary of La Poste, DocaPost

  • Again the key question is the users’ expectation from IoT
  • The objective is to access services in wellness, energy, security, connected home and connected city to have a better life.
  • “IoT, new vector to develop proximity services” according to David De Amorim
  • The innovation will come from the combination of data from different objects and services . It's important to develop an ecosystem
  • The way to develop IoT for DocaPost, subsidiary of La Poste will be done through the development of a cross vertical platform (called Le Hub) to be universal, advantages based on neutral both technically and positioning. La Poste wants to address France entirely. The hub will be launched next year and be showcased during the CES in Las Vegas in 2016 with Atol, BNP, Legrand, schools and other start-ups
  • La poste wants to address all the sectors. That implies the use of the integration of many technologies to address specific sector such as Sigfox for smart meters or WiFI for cameras security
  • For security concerns, La Poste has planned to enable users to manage data

DWS15 Connected Things Forum - Guest Keynote - Paul-Edouard LAUNAY - Jasper

Industrial Internet round table


Moderated by: Ezio ARMANDO, Managing Director in charge of Emerging Technology for Europe, Afriqua and Latin America, Accenture
Vincent CHAMPAIN, Operations Director, GE Corporate France
Andreas FIER, Head of Academic Relations, Deutsche Telekom AG
Didier GUILLOT, Innovation and multi-utilities Direction, director, Sagemcom
Rolf RIEMENSCHNEIDER, Head of Sector for Internet of Things, European Commission
Soline OLSZANSKI, VP Strategy & Innovation, Hub One
Olivier ROUXEL, in charge of RFID & IOT missions, DGE

The definition of IIoT (Industrial Internet of Things) remains blurred. Here, Accenture defined the IIOt as the connected applications and services for business purpose, a broader scope than the conventional definition focusing on manufacturing.


About the IoT architecture and the technologies:

  • Deployment of the architecture is not the key question
  • Low cost and very efficient architecture required
  • The cost of connecting, analysing is almost zero according to GE
  • Building consistent infrastructure to connect objects first !!  then modules and devices
  • The issue is to integrate, the challenge is who is managing and maintaining this architecture
  • LoRa identified by panellists as a good technology thanks to the alliance behind
  • Triangulation of technologies to locate objects; it’s the compilation of technologies that bring value

Main benefits from deploying IIoT:

  • Additional productivity, more reliability especially for oil and gas sectors, new services to client
  • From technical perspective : miniaturization, radio protocols and power consumption

First applications:

  • Environmental (energy, lighting), supervision and monitoring for building, assets and also staff, vertical applications
  • Example in the airplane sector, many applications regarding the planes, the truck etc and also for the customer interaction

Keys of success for IIoT as the deployment path is currently low

  • Business questions to be resolved : how to bring value out of the combination of the use of the technologies
  • Security compliance to be resolved for some sector for instance in airplane sector
  • 3 Focus to be addressed for Soline Olszanski  from Hub One: what services bring, ecosystem to achieve a mass market, business model
  • Standards questions to be fixed : fragmentation and lack of standards. Standardisation is coming
  • No technologies war : Each technology will have its place in the IoT according to Didier Guillot from SagemCom
  • Ecosystem is required otherwise development projects will take longer
  • Needed for skilled people
  • Continue beta tests

Next step is the finalisation of end users applications.


The LTE-only market

Basile Carle

Basile CARLE
Senior consultant, LTE

How much potential for LTE-only?

With LTE nationwide coverage a near-reality in some advanced markets such as South Korea, the USA and Japan, the question arises of the relevance of launching LTE-only devices. Indeed, LTE-only devices come with benefits for both operators and consumers, especially in terms of cost, energy consumption and space saved inside the device and available for additional components or larger capacity batteries.

• For the operators, LTE-only devices may even become strategic since it will help them to transition their users more easily to their latest network while releasing new resources to cope with the data traffic explosion. Today, voice is no longer of any importance, but data is. With carrier aggregation, each chunk of spectrum available is valuable. Fewer 2G/3G users means more capacity for mobile broadband networks.

• Few operators have already launched LTE-only devices. Verizon is one of the first to have done so with a digital camera and more recently a tablet. Other operators such as LG U+ in South Korea have also done so with ultrabooks and hybrid laptop/tablets devices.

• Our forecasts for LTE devices indicate that close to one billion will be shipped in 2017.

M2M modules, shipment trends (In millions)

M2M Modules shipment trends for LTE-only market

Source: IDATE

• However, some applications are more suitable than others for those kinds of devices. The first LTE-only handsets, for instance, should arrive on the market in 2014-2015 but they will require VoLTE to be supported on the network to have any meaning. Still, as long as LTE is not widely available worldwide with LTE roaming in place (which may take time), using its device abroad may be tricky.

• In the data-centric segment of devices however, the potential is bigger but the question of the competition with other wireless technologies remains. Fixed LTE broadband in remote areas is an application of choice for LTE where fixed broadband technologies are not available. However, many objects or appliances will rather be connected with shorter range technologies than rely on cellular connectivity. Indeed, why connect your fridge to an LTE network with an associated plan when you already have a broadband connection in your household? Likewise, devices such as smartwatches or e-health devices with sensors embedded for measuring self-use will rather be connected to smartphones with some Bluetooth Smart (Bluetooth Low Energy) than directly to a cellular network.

• Even more specifically in the M2M segment, LTE is currently not adapted to traditional low energy / narrowband / cost-conscious applications such as security, metering, fleet management. For these applications, work is being carried out to bring some machine type communication (MTC) in the Release 12 of LTE but compliant devices are not expected in the immediate future. This work will lead to the emergence of some kind of narrowband / low energy LTE.

The market report entitled “The LTE only market” is published as part of IDATE’s LTE World market series


The enormous growth of Internet of Things

Lead Analyst, IDATE

80 Billion things connected in 2020

The Internet of Things is a concept whereby any item can connect to the Internet to retrieve information to enhance its intrinsic value. The scope of the Internet of Things (IoT) is therefore very broad. It includes communicating devices and M2M but it aims to go beyond M2M by enabling any object to connect and leverage the Internet (Internet of Objects - IoO) even if it does not contain the electronics required to connect directly to the Internet; it connects to the internet with the use of an intermediate device.

15 Billion things connected to the Internet in 2012

According to this definition, 15 billion things (machines, connected devices and objects) were connected to the Internet in 2012, up from 4 billion in 2010. According to Samuel Ropert, project leader of this report “In 2020, there will be 80 billion where IoO will represent 85% of the total IoT, ahead of communicating devices with 11% and M2M with only 4%.” In terms of growth, IoO still leads with a 41% CAGR between 2010 and 2020, followed by communicating devices with 22% CAGR and M2M with 16% CAGR.

Evolution of the different components of the Internet of Things

Source: IDATE

The Internet of Things encompasses multiple and heterogeneous building blocks

The Internet of Things encompasses multiple and heterogeneous building blocks. Underlying M2M and IoO run over different hardware and communication technologies. While RFID and 2D barcodes are used to interact with objects in the IoO concept, M2M application will rely on several different networking technologies that allow the machine to communicate and transmit the data it has generated (or is meant to receive, depending on the application and the machine). While cellular technology is often selected for M2M deployments, new communication technologies (better designed for traditional metering M2M applications) have entered the market in recent years and could act as game changers in the near future (SigFox, Neul, etc). Nevertheless, implementing an open Internet of Things requires a new kind of architecture with scalable naming and addressing (ONS) technologies and new sustainable tools to access the data, as the Internet of Things is designed to browse vast (M2M and IoO) databases.

Internet of Things scope: from M2M to Communicating devices

Source: IDATE

M2M and IoO are driven by vertical markets

M2M and IoO are driven by vertical markets and will therefore be impacted by vertical environments,but adoption levels vary between the different vertical industries. Business maturity also varies considerably from one industry to another. Indeed, both M2M and IoO applications rely on cost-saving objectives for users, so ROI time is critical. Implementation is not always geared to the same objectives. While the textile industry targets item-level deployments for inventory, manufacturing-type industries like automotive and aeronautics use RFID for quality processes across the supply chain where different parts are assembled to form a finished product (only the RTI is tagged, not the part itself). The leading verticals in terms of connected objects (IoO) will be the pharmaceutical and textile industries by 2020.

IDATE has published its report on the Internet of Things Market. It provides an opportunity to clarify the frontiers of this new promising market and to present and analyze the key building blocks; the market structure, the players’ strategies and the dynamics of the key vertical markets (automotive, aeronautics, energy, food and retail, connected home, healthcare, textile).


Smart Home

MICHAUD LaurentLaurent Michaud
Head of Consumer Electronics & Digital Entertainment Practice at IDATE

Challenges of Consumer Electronics of Entertainment and Home automation

Despite tough economic times, the consumer electronics sector continues to deliver innovations, both technological and in the realm of usage, which have caught on with consumers. They have demonstrated, if not that value could shift to services and software, at the very least that the sector can rely on a new set of market dynamics in the medium term.

Consumers’ love of mobile devices, smartphones and tablets has not waned. According to IDATE, more than 1.5 billion smartphones and 470 million tablets will be sold in 2017, compared to just over 640 million and 114 million, respectively, in 2012. This popularity can be attributed to several factors:

These devices allow users to make calls and send text messages anywhere, anytime. So they satisfy the needs of that portion of the population that wants to be connected at all times, and even have the potential to create that need;

They give access to a huge selection of varied, simple, affordable and entertaining applications. Games are especially popular, so much so that the makers of handheld gaming devices are being hammered by this new competition. In the coming months and years gateways with other devices, and especially TV, will open up new opportunities – if not at the industrial level, most certainly in terms of fostering innovation;

They are easy to use, in particular thanks to touchscreen technology and the efforts being made by engineers, designers, developers and programmers – all of whom are aware that the user experience is key to coming out on top. Never before has it been so vital to gaining a competitive edge.

Computer vs. tablet sales, 2013-2017 (milion units)

Evolution of computer and tablet sales throughout 2017

Source: IDATE, 2013

So tablets are taking hold as central devices in the digital home. Poised to replace the personal computer, the tablet is expected to continue its rise in 2013 at a rate that was already being underestimated a few months ago. In the coming years, its popularity will be ensured by an expanded product line that includes “phablets” (phone tablets). The aim of this hybrid device is to target the larger, less wealthy section of the population. IDATE estimates that close to 2 billion tablets or phablets will have been sold between 2009 and 2017.

Companion devices, be it a tablet, a smartphone or phablet, act as second screens, or complements to users’ main screens. This relationship paves the way for a tremendous range of applications associated with television. Internet companies, media content providers, TV networks and other pay-TV package vendors will no doubt capitalise on these opportunities, if not to win back a portion of viewers who have moved to the Web, at least to deepen viewers’ relationship with their programmes.

As a result, the connected TV will be one of the cornerstones of the digital home. Like applications sold through app stores, managed and OTT interactive services could prove enough of a drawing card to persuade households to replace their old set ahead of schedule. This would be an ideal opportunity for manufacturers to have their OLED and Ultra HD technological breakthroughs adopted en masse, thanks to the appeal of having an internet-ready set. IDATE forecasts that standalone connected television sales will rise from 22 million in 2012 to 550 million in 2017.

Typical lifecyle of a television incorporating a new technology

Adoptance cycle of a television incorporating a new technology

Source : IDATE, Smart Home market insight, June 2013>

This fiercely competitive landscape provides the battleground for global dominance in the consumer electronics, telecommunications and internet sectors. Thanks to the programme begun in 2006, China is now a serious up-and-comer, moving in on American giants like Google, Apple, Amazon and Microsoft, as well as Japanese and South Korean CE titans.

The technological innovations fuelling the consumer electronics market both serve and inspire the home automation sector. A host of innovations were on display at the Consumer Electronics Show 2013 earlier this year. Although there was no lack of original ideas, it nevertheless remains that a new paradigm is taking hold and enabling the emergence of a segment long awaited by the housing industry, energy companies and users alike. Combining fixed electronic devices (IP boxes, set-top boxes and integrated technologies) with sensors, OLED displays, recognition tools, augmented reality, an internet connection, a WYSIWYG software interface, and more economical home security, energy management and personal home services solutions (for now). Management and remote control features using a mobile device provide increased flexibility and the ability to supply a tracking system that could be monetised.

This is an excerpt of our insight "Smart Home"





Senior Consultant at DigiWorld IDATE

Worldwide market represents 22 billion EUR in 2012 – 14% growth compared to 2011

Recently, IDATE has published its annual M2M in-depth market report which analyses the overriding trends and changes taking place in the M2M market around the globe. It explores the driving forces behind the market’s growth and transformation, including an examination of the chief market trends, plus volume and value forecasts up to 2016 by geographical area, by country (China, France, Germany, Italy, Japan, UK and USA). It also presents the quantitative evolution of the cellular modules, by application and by networking technology.

"The M2M market is growing very fast but its development is not spread out homogeneously over the verticals markets," says Samuel Ropert, project manager and senior consultant at IDATE. He adds:"Take the automotive industry worldwide: in volume we predict an average growth rate (AGR) of 40% until 2016. In parallel, the Consumer Electronics industry has an AGR of 15% and will represent barely a third of the M2M volume for the automotive industry in 2016"

Principal findings

  • The M2M market is growing very fast. In 2012, the cellular market is expected to represent 140 million modules worldwide for a total market of 22 billion EUR (of which 5.1 billion EUR for connectivity). The annual growth of the M2M market was around 14% in value and 36% in volume. Most revenues will come from software and IT services (around two-thirds of total market value). The world M2M market should grow by 30% in volume, to represent almost 370 million modules in 2015. Asia-Pacific should dominate Europe and North America in volume only. Europe should still lead in value, followed by North America.
  • Over the next few years, the M2M market will clearly be driven by the three key verticals of automotive, consumer electronics and utilities. However, while they will theoretically drive the market, some barriers could obstruct growth in the M2M automotive and utilities sectors. The global downturn does not explain the trend entirely. In the short term, some applications in these key verticals are recurrently delayed (as with the eCall regulation in Europe, and high-scale utilities deployments) and have a potential impact of the traditional M2M market. Moreover, the utilities market is now seen as less attractive with business opportunity being somewhat limited. In fact, most smart meters will be connected to the cellular network through a concentrator and large utilities players will try to leverage their negotiation power (quasi-monopsonic positioning) to drive down the unit price. Finally, multiple M2M users are adopting a ‘wait and see’ position regarding the world economic situation.
  • The embedded SIM (known as eSIM) has animated the debate on M2M and beyond. The principle of the embedded SIM refers to SIM cards welded into the modules at manufacturing and the capacity for remote activation and provisioning over-the-air (OTA). It provides overall the possibility of switching from one carrier to another one. It has been designed for meeting client expectations (industrial performance improvements) but some hurdles exist to the eSIM implementation in the M2M industry. The eSIM could be a strong driver for market development but also a shoot in the telcos’ arm.
  • The telcos are still looking for business opportunity beyond connectivity. M2M offers
    them attractive opportunities, as, despite low and declining ARPU, projects offer high lifetime value, reduced churn rate and average deals representing thousands of SIM cards. Connectivity alone should represent 8.2 billion EUR in 2015 worldwide (3 billion EUR in Europe) and more than 5.7% of mobile data revenues for European telcos. MVNOs are being pushed out of the market and are therefore repositioning themselves as tool providers (platform providers), while module providers are challenged to break even in a market where unit prices are falling.

Senior Consultant at DigiWorld IDATE

> Visit our website for more information on this topic.

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M2M modules market concentration


Senior Consultant at DigiWorld IDATE


What to retain of the recent acquisition of SagemCom's M2M division by Sierra Wireless

This week, Sierra Wireless acquired the M2M division of SagemCom for €44.9 million in cash consideration plus assumed liabilities. In 2011, the M2M business generated €39.9 million in revenue (and was solidly profitable) according to the press release.

For Sierra, the acquisition has 2 main interests:

  • Reinforcement of its business positioning on the technology (cellular mainly) and the key verticals which drive the M2M market such as Automotive, Energy market. For instance, Sagemcom provides smart meters for utilities segments and not dedicated modules only. It also reinforces its local presence in Europe, whereas Sierra Wireless is a North American company (based in Canada; even though they bought the France-based Wavecom few years ago).
  • Broadening of its vertical positioning. Sagemcom has differentiated assets in key segments like payment, transportation, and railways with its GSM-R technology, where Sierra is less involved in. Moreover, this acquisition offers Sierra new geographical opportunities into emerging countries (and key driver for M2M) like Brazil.

According to IDATE, thanks to this acquisition, Sierra Wireless now becomes the #1 M2M module makers in both volume and value-based ranking. Now, there are three significant players in the market: Sierra Wireless, Gemalto/Cinterion and Telit, followed by SimCom.

However, this acquisition is not a real surprise as the hardware M2M market is experiencing a market concentration since 2008. The phenomenon has been accelerated during the downturn where large players could traditionally make appropriate acquisitions at a good price.

This acquisition has at least two mains origins:

  • Fragmentation of the value chain and therefore a quest for scale. The value chain is still too fragmented, being occupied by a large number of small players. Generally, they are specialised in a specific technology/ product, essentially a brick of software or parts of modules. So, we see a quest for scale as some players have already anticipated this consolidation, and they operate a “get bigger or die” strategy.
  • Price competition. The M2M market has witnessed fierce price competition on the module market and the entry of Chinese players (with aggressive pricing) pushes this trend further. Indeed, over the last few years, some new players have entered the M2M market. As in other traditional industries such as fashion and automotive electronics devices, Chinese players have sought to enter the market by competing on price. The M2M market has seen the arrival of Chinese players with low-cost products (SIMCom is the #4 module maker). Even, Chinese telecom equipment vendors like Huawei and ZTE now address the M2M market.

Other reasons explain the multiple mergers and acquisitions occurred in the latest months:

  • End-to-end solutions. This phase is reinforced by the eagerness of the leaders to provide end-to-end solutions as fast as possible. This willingness is translated into the form of acquisitions rather than R&D expenditure. Telit, for example, strengthened its positioning on short-range technologies by acquiring a specialist player called One RF Technologies, including its R&D centre. One RF Technologies provides its own proprietary mesh network solution. For the same reason, Gemalto acquired Sensor Logic, a platform provider.
  • Global economic situation. Multiple acquisitions have already been made and the economic downturn could accelerate this phenomenon. When a downturn is to be long-lasting, small companies could probably either disappear or be acquired. Actually, small players do not have the financial reserves of the larger ones; their deep pockets allow the latter to resist the downturn for longer.
  • New geographical positions. Acquisitions are also made in order to conquer a new geographical market. For instance, Telit acquired BellWave in South Korea. Now, the BellWave R&D centre is the Asian technological point of presence of Telit, supporting CDMA technology. In early 2011, Telit also acquired Motorola Solutions' m2m modules line of products and Motorola Solutions' associated employees joined Telit. This acquisition was an important step to substantially enhance Telit’s global position, including the USA.
  • Enter the emerging M2M market. Acquisition could be the way to open doors to the promising M2M market. Gemalto, for instance, became a leading M2M player when it purchased Cinterion, the Number One modules manufacturer, in June 2010. Indeed, Gemalto benefited from Cinterion’s fragility caused by recurring revenue drops, being thus able to enter the M2M market whereas it was only somewhat involved through SIM cards and security expertise, but not to any great extent. Two years earlier, Sierra Wireless had acquired Wavecom for similar reasons. Finally, in November 2010, Enfora was acquired by Novatel Wireless for about 64.5 million USD. The goal is to expand the Novatel product portfolio (based on end-user modules, not an M2M expert).

Senior Consultant at DigiWorld IDATE

> Visit our website for more information on this topic - a new edition of our yearly M2M market report will be published in September!


Satellite M2M Market


Head of Satellite Practice at DigiWorld IDATE

The global market is forecast to reach 2.3 billion EUR in 2016

IDATE just releases the first edition of its market report providing its readers with an analysis of the M2M market that is currently changing shape, assessing the key technologies to accelerate such a development of this promising market, along with an examination of the positioning of the top players, the key issues to be addressed and market forecasts up to 2015 by geographical area and by type of market.

M2M is a growing segment for the satellite industry, although satellite still has only a small share of the machine-to-machine market which is largely dominated by cellular systems: around 2% in terms of volume and 6% of revenue in 2011.
For most operators, M2M is still very much a niche market, but everything points to real growth potential for these applications.

“While it is sectors like fleet management and maritime security that have driven the sector’s development up to now, new markets have been emerging over the past several years, especially in the area of energy, but also in the homeland security/military arena.” insists Maxime BAUDRY, project manager of this study and IDATE’s head of the satellite practice.

Satellite M2M market growth/disruptive factors

There are several factors driving the growth of satellite M2M applications, starting with:

Clear assets in terms of coverage: once classic and low-cost wireless solutions (chiefly GSM and 3G) are no longer available, satellite becomes the only possible solution for M2M applications. This is especially true of vast desert areas, and of oceans where demand for M2M solutions is high: for tracking fishing vessels, dangerous cargo, monitoring offshore wind farms, etc.

Tremendous increase in applications requiring M2M. Examples here include smarts grids in the area of energy, tracking shipments – whether on land, sea or in the air – and for the military which are heavy users of M2M applications for tracking combat assets, in addition to having the means to pay for very high-end and so very expensive products.

Complementary nature of terrestrial and satellite networks to deliver M2M links end-to-end. Manufacturers have been innovating over the past several years by rolling out hybrid equipment which is being used more and more by operators. Orbcomm was a pioneer in this field, and was then followed by players such as Iridium and Inmarsat.

Stricter regulation. Recent developments in maritime regulation, notably the adoption of stricter regulations over monitoring commercial vessels, have been beneficial to satellite which is the only possible solution for this type of application outside of coastal areas.

Current satellite M2M market estimates

The satellite M2M market still represents only a small fraction of satellite services revenue. In the satellite M2M market came to 1.5 billion USD while the Satellite Industry Association (SIA) puts the entire satellite services market at an estimated 101 billion USD – giving M2M a 1.5% share of the market. IDATE estimates for 2011 indicate that this share will increase to 1.6%. The number of M2M modules in services stood at 1.3 million units in 2010.

The global satellite M2M market is forecast to reach 2.3 billion EUR in 2016. The highest rate of increase will be in the Asia-Pacific region thanks to developments in countries such as China, Indonesia, Vietnam and India.

Historical growth of satellite M2M market volume
(Millions modules)

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Machine-to-Machine Market


Senior Consultant at DigiWorld IDATE

Worldwide M2M market revenues passed 18 billion EUR in 2011

IDATE publishes every year a market report providing its readers with an analysis of the M2M market that is currently changing shape, assessing the key technologies to accelerate such a development of this promising market, along with an examination of the positioning of the top players, the key issues to be addressed and market forecasts up to 2015 by geographical area and by type of market.

“The volume of connections and M2M SIM card shipments has attained a new level of significance with regulatory bodies starting to take them into account. For instance, the French ARCEP and Spanish CMT telecoms regulators now register the number of active M2M lines (M2M SIM cards). The Japanese regulator, TCA, is also providing estimates of active use on a regular basis.”

M2M cellular market
The M2M cellular market currently accounts for 90 million modules, in late 2011. It must be borne in mind that the number of communicating modules (also called ‘concentrators’ or ‘hubs’) is significantly lower than the total number of machines. The ratio depends on the type of application, but it can reach up to 50:1 in energy and more than 200:1 for other utilities. In 2010, North America had already overtaken Europe with the consumer electronics M2M segment, growing strongly.

Cellular M2M modules or SIM cards, by region (Million units)

Connectivity revenues
The rapid growth rate of connectivity revenues is still holding firm, thanks to the soaring volume of modules, in particular consumer electronics devices. In fact, it is largely compensating the drop in ARPU. Cellular M2M connectivity revenues are over 1.5 billion EUR in Europe in 2011, slightly more than 1.1% of mobile operator revenues in 2011.

Connectivity revenues in Europe, North America and Asia-Pacific (Million EUR)

Market by geographical zone
The worldwide market for cellular M2M will reach 18 billion EUR by year-end, despite a lower growth rate in 2011 (20% vs. 32% in 2010). North America is the leading market in terms of volume but Europe is still the leader in value.

Overall cellular M2M market, by region (Million EUR)


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