What, and How Big, is the M2M Market?

The “machine to machine” communications business is among a handful of truly-significant new revenue categories for mobile service providers. But figuring out how big that opportunity is, and how fast it is growing, is complicated.

One reason is that definitions of what constitutes an “M2M” service vary quite significantly. Some service providers consider mobile broadband connections to “non-voice” devices, such as tablets, to be “M2M” connections. Some would say that those are examples of “connected devices,” but not truly “M2M.”

Others define M2M as business-to-business telemetry and other apps where a human being is not the user of either devices on the ends of a connection. In other words, a wireless meter reader or heart monitor would be an example of M2M, but a connected iPad would not be an instance of M2M.

“Much confusion exists around what makes up M2M,” says James Brehm, Compass Intelligence senior strategist. “In defining the market, the GSMA includes devices like connected iPads and other media tablets, some tier-one  mobile network operators include connected consumer electronics like picture frames, personal navigation devices, and the like, while others look solely to B2B applications,” says Brehm.

Those definitions matter for any observer trying to track the growth of M2M revenues. Some observers would say M2M in the “B2B” sense is more important than connected tablets and photo frames as it represents an entirely new category of mobile services, where connected tablets are an extension of today’s PC dongle business.

Some might prefer to track all non-phone revenues in a separate category than “phone” revenues for reasons of impact on average revenue per user. Most use cases within the broader M2M revenue category will involve connections with far less ARPU than phone connections generally represent.

But the caution is that using the broader definition, as the GSM does, inevitably will provide one view of how big the M2M business is. Using the narrower definitions will provide a different sense of market growth.

For the moment, it appears observers will have to guess at the revenue contributions made by tablet subscriptions, GPS devices and e-readers, as one category, from M2M revenue generated solely by telemetry and other B2b applications that many consider the core of the M2M revenue opportunity.

Of course, some might argue there is a clear “political” reason why the GSM and others choose the broader definition of M2M. It is easier to show revenue and category growth when using the broader definition. Executives will be anxious to demonstrate that they are gaining significant new revenue from M2M, which is among a handful of big growth opportunities for mobile service providers.



New market data from Berg Insight likewise shows strong momentum for M2M so far in 2012, showing year-over-year growth rates around 15 percent to 30 percent, Berg Insight says. Keep in mind that those estimates are made using the broader GSM definitions.

Among the mobile operators that officially report M2M subscriber statistics on a quarterly basis, AT&T reported the highest figure in the first quarter of 2012 of 13.3 million, up 25 percent year-on-year.

Vodafone reported 7.8 million M2M subscribers at the end of the financial year ending March 2012, up 47 percent from the previous year.

Japanese operators NTT DoCoMo, KDDI and Softbank recorded year-on-year growth rates in the range 20–35 percent and reported between 1.9 million and 2.4 million M2M subscribers each.

Many of the leading global mobile operators do not report M2M subscribers separately. Among these Berg Insight estimates that China Mobile has the largest installed base of around 15 million, followed by Verizon Wireless, T-Mobile and Telefónica at around 7–9 million.

T-Mobile USA is the only entity in the Deutsche Telekom group disclosing M2M subscriber data, reporting 2.7 million at the end of the first quarter of 2012. Other major M2M communication providers in Europe and North America include Orange, Telenor and Sprint, which had approximately three million to four  million M2M subscribers each.

New categories seem continually to be added to the M2M device mix, as well. According to Berg Insight, the number of shipped consumer M2M devices with cellular connectivity grew to 7.1 million worldwide in 2011, up from 6.4 million in the previous year.

This relatively new breed of connected devices – neither classified as handsets, PCs, tablets nor traditional M2M devices, includes E-readers and personal navigation devices.

Handheld gaming consoles, personal tracking devices and wellness devices are promising categories as well, Berg Insight says.

the next five years, shipments of consumer M2M devices will grow at a compound annual growth rate (CAGR) of 39.8 percent to reach 37.9 million devices in 2016.


One way or the other, using a broader "connected non-phone devices" or a narrower "sensor" definition of M2M, the category is important. But current broad definitions will obscure progress made on the sensor communications business.