Machine-to-machine (M2M) Market Remains Small

Machine-to-machine service revenues represent 0.5 percent of total mobile operator service revenues at the moment,  according to Informa Telecoms & Media.

Mobile network M2M connections totaled 132 million as of June 2012, up 22 percent year over year and generated US$5.68 billion over the preceding 12 months, according to the latest data from Informa Telecoms & Media.

The M2M market represents an important new growth area for mobile operators. To put the M2M numbers into perspective, total global cellular connections were 6.28 billion at the end of June and annualized operator service revenues totaled US$1.14 trillion.

This means just one M2M connection exists for every 50 “human” connections and $1 of M2M revenue is generated for every $200 of service revenues, Informa says.

“M2M connections and M2M revenues are neither as high nor growing as rapidly as some are anticipating”, says Jamie Moss, senior analyst for M2M at Informa Telecoms & Media.

That should not come as a surprise. Name one area of new services growth (other than mobile data access) that actually has “moved the revenue needle” for mobile service providers over the last few years. Cloud computing? Mobile advertising? Mobile payments or banking? Mobile apps? App stores?

Any new revenue opportunity large enough to be interesting for a tier-one service provider also is likely to be complex enough that the value chain is incomplete at first. That is perhaps one reason why much current success is being seen in “fleet tracking” apps, which are by no means “new.”

It simply is easier to sell a new M2M service by positioning it as a solution that works better or costs less than the older ways of doing things.

Even many “newer” emerging service markets, such as digital signage, also are examples of applying “new” M2M techniques to an older and existing business.

The volume of sales in the M2M market remains in the lower-value areas such as smart metering, Informa says. And smart metering isn’t “new,” either.