Machine-to-machine (m2m) communications technologies have been around for many years—and stuck at the bottom of the growth curve. But their fortunes are about to change. As cellular-based mobile solutions meet the rapidly growing data connection needs for greater speed, cost savings, and accuracy, the growth potential of key m2m markets will rapidly grow as well.
Momentum is building at a number of levels, including expanding economic, technological, and regulatory pressures. This seemingly relentless growth means that it is likely that data connectivity will rival the number of voice connections over the next two years.
As a result, market research specialist IDATE has predicted that the worldwide m2m market will increase from its present size of $20 billion to more than $220 billion by 2010 for an impressive annual growth rate of nearly 50%. Additionally, fellow industry analyst Gartner estimated that m2m module revenues increased from $621 million in 2005 to $830 million in 2006 for 34% growth.
As the need for m2m solutions increases, so does the growth potential of key m2m markets. In particular, telematics and security have seen the greatest penetration of GSM/GPRS-based solutions. In the case of vehicle telematics, m2m solutions have proven ideal for markets focused primarily on the navigational benefits of integrated GPS and mobile communications technologies.
There's also a greater focus on how telemetry can support improved security for commercial vehicles transporting valuable goods or tracking stolen cars. Already, insurance companies are reducing consumers' car insurance rates based on how much they drive. These companies track mileage and other factors using onboard devices that communicate wirelessly with a computer at their headquarters.
Choosing a suitable vendor to enable communication technology is critical to market success. The vendor must be able to supply a solution to meet the needs of today as well as have the long-term financial stability and a strong solutions roadmap to meet the problems of tomorrow.
Furthermore, with many customers having no previous cellular experience and entering the market for the first time, the need to offer a proven and future-proof technology set and customer support that is responsive and flexible is vital. When assessing the technology, integrators and end users should consider three key issues in protecting and deriving maximum benefits from any m2m investment.
First, the solution must be business-scalable, with product families enabling integrators to move easily between products without having to redevelop their application to address issues such as an increase in production volume.
Second, the solution must be easy to integrate. Product and service offerings should be designed to accelerate the integrator’s time-to-market and improve the overall development experience.
Lastly, the chosen solution must protect the investment by shielding integrators and m2m adopters from unnecessary revisions of their application. The solution must be easily adaptable, due to ever-changing requirements on the wireless m2m device by operators or regulatory bodies.
As a result, companies bringing technology enhancements such as higher data rates and new wireless standards to the market must not only ensure that such products be future-proofed, they should also protect any legacy investment by maintaining backward compatibility through the use of common form factors and logical interfaces.
While addressing the business needs in this highly competitive market, the domestic m2m market won't take off on the hockey-stick growth curve that many have expected until the technology can provide real value and return.