Insight: The Global, Wireless, M2M Market
By Tobias Ryberg, Co-Founder, Berg Insight
The global wireless M2M market was strong in 2011, displaying growth in all major world regions and vertical segments. Berg Insight estimates that shipments of cellular M2M devices increased by 35.3 percent to a new record level of 50.8 million units. Adjusted for churn, this resulted in net additions of 29.3 million M2M connections in 2011, taking the worldwide number of cellular M2M subscribers to an estimated 108.0 million. Until 2016, Berg Insight forecasts that shipments of cellular M2M devices are estimated to grow at a compound annual growth rate (CAGR) of 24.6 percent to reach 152.2 million units.
Due to the wide adoption of wireless M2M technology across many industries, a substantial share of M2M device shipments is now generated from replacement sales. As a result the net increase of M2M subscribers will be substantially lower than M2M device shipments. Berg Insight forecasts that the number of cellular M2M connections will grow at a compound annual growth rate (CAGR) of 27.2 percent between 2011 and 2016 to reach 359.3 million at the end of the period.
The most significant market development in 2011 was a major breakthrough for cellular M2M communication in Asia-Pacific. The number of M2M subscribers in the region increased by 64 percent to reach approximately 34.5 million at the year-end, fuelled by massive growth in China that almost doubled its cellular M2M subscriber base to approximately 21 million. North America and Europe recorded annual growth rates of around 26 percent each. At the end of 2011, the number of M2M subscribers in the EU and the U.S. was around 30 million and 27 million respectively. Other world regions accounted for around 20 percent of the global cellular M2M subscriber base in 2011. Latin America had an estimated 6.6 million M2M subscribers, with Brazil being the most advanced country. Southern Asia and Southeast Asia were in a very early phase of adoption with few M2M subscribers in major countries such as India and Indonesia. The Middle East and African markets were dominated by South Africa and Turkey, which had in excess of one million M2M subscribers each.
A sweeping change has transformed the wireless modules industry in the past years. The familiar brand names Siemens, Wavecom, Motorola and Enfora have disappeared and new players such as Sierra Wireless and Gemalto are now in charge of developments. Chinese vendors have taken over the domestic market and some of them are starting on international expansion. Despite a consolidation among Western vendors, average selling prices for wireless modules continue to decline and as a result industry revenues have been declining in the past years. Well executed transformational strategies will be the key to success for wireless module vendors in the years to come. Extended value propositions, product innovation and more mergers and acquisitions are some of the things to expect. Meanwhile software and system solutions has emerged as the fastest growing segment in the M2M industry.
Increasingly advanced large-scale M2M applications require advanced service enablement platforms that integrate remote devices, mobile networks and enterprise applications. A wide range of players are attracted by the market opportunities in the space, most of them having backgrounds in embedded solutions, telecom OSS/BSS systems or enterprise application platforms.
Mobile operators all over the world have announced initiatives for driving growth in the wireless M2M market over the past years. The first results are now visible through rapidly increasing numbers of M2M subscribers and higher revenues. Berg Insight estimates that the worlds 10 largest telecom operators by revenues had 68.2 million M2M subscribers at the end of 2011, an increase of approximately 38 percent year-on-year. Around 3.4 percent of their aggregated base of 2.0 billion mobile subscribers was M2M devices. China Mobile is believed to have emerged as the worlds largest provider of M2M connectivity during 2011, with an estimated 14 million subscribers at the years-end. AT&T established a clear leadership in the U.S. with 13.1 million M2M subscribersup 40 percent year-on-year. Meanwhile Verizon Wireless M2M subscriber base increased modestly to around 8.6 million. Vodafone held the number three spot with approximately 9 million M2M connections, ahead of T-Mobile and Telefónica, which ended the year with around 68 million M2M connections each. China Telecom entered the top 10 with around 4.5 million M2M subscribers, racing ahead of Telenor, Sprint and Orange at 2.53.5 million connections each.
About the author
Tobias Ryberg is co-founder of Berg Insight and principal analyst responsible for the M2M research series. He is an experienced analyst and author of numerous articles and reports about IT and telecom for leading Swedish and international publishers. All major vertical market segments for Wireless M2M have been his major research area for the past nine years. Tobias holds a degree from the School of Economics and Commercial Law at Gothenburg University, Sweden.