M2M Growth Impressive, Even by Telecom Standards

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The least exciting of telecommunications sectors is machine-to-machine (M2M). That is, until you think about it.

Once that's done, M2M becomes a lot more interesting. This is due to the fact that it is extraordinarily broad, ranging from smart grid applications, sensors in heavy machinery and industry transportation (trucks and railroads), to GPS and other consumer devices. And that's just the tip of the iceberg.

Earlier this month, RCR Wireless reported on an M2M study by Analysys Mason. The piece quotes analyst Steve Hilton, who said that M2M devices will increase by 36 percent next year. The utilities, health care and securities industries are expected to lead the charge to a total of 2.1 billion "connected M2M devices" by 2020, Hilton wrote. The report upon which Hilton based his comments predicted average revenue per connected device will drop from $7 to $5 due to the increase in the total amount and that the lead now enjoyed by North America will fade.

Consumer uses will be hot, according to the story:

While the commercial sector drives M2M deployments today, accounting for more than half, M2M connected devices in the consumer space will outpace commercial devices in the next 10 years. Of the 2.1 billion connected devices in 2020, 1.3 billion will be in the utilities sector, Analysis Mason researcher Steve Hilton predicted. Another 45 million will be from the security sector, followed by 28 million devices in the automotive and transport sector.

Swedish firm Berg Insight also sees a bright future for M2M. The firm found that at the end of this year, 2 percent of mobile connections worldwide were M2M. Subscriber numbers increased 46 percent during 2010, and finished at 81.4 million. The most striking number from Berg's research is that the compound annual growth rate for M2M during the four years the research covered will be 32 percent, and that 294.1 million connections will be reached in 2015. Tobias Ryberg, the Berg analyst who did the study, said that 4 percent of connections will be M2M. He added that AT&T has gone after this market aggressively and, during the first quarter of 2011, will become the first carrier to pass the 10 million M2M subscriber base.

Connected World has a commentary based on the Berg numbers. The writer thinks they are aggressive-and very plausible:

Today, this same average American might own an iPhone, a Kindle, a Ford vehicle with connected in-vehicle technology, a tablet device for business on the go, and a Garmin fitness watch. And the possibilities are endless. Next year, his/her home might be equipped with a smart meter, they may decide to invest in various home-automation systems for security system or energy-management, or they may equip themselves or their loved ones with a connected health-monitoring device/system.

Wireless networks will be a big part of this growth. M2M can use legacy 2G, 3G, 3.5G and, as Wayne Rash pointed out over at CTO Edge in October, 4G. However it is accomplished, a category increasing its percentage of a telecommunications market that itself is expanding almost exponentially is extraordinary. But, it seems, that's precisely what will happen to the M2M sector during the next few years.