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By Dolev via Wikimedia Commons

Avoiding the M2M commodity trap

Posted By TelecomTV One , 28 November 2012 | 0 Comments | (0)
Tags: M2M IoT IHS

Mobile telcos are looking at stellar M2M connectivity growth but are rushing to build their capabilities out to avoid commoditisation says researcher. By I.D. Scales.


IHS (formerly IMS Research) has forecast global cellular-based M2M to comprise around 326 million connections by 2016, compared to approximately 107 million connections now. 
That's a pretty bracing growth number and IHS proffers a variety of reasons for why it should be so in today's bracing economic climate. 
Just to spur it on, of course, the latest growth numbers show mobile operators' current business is contracting slightly, so new growth areas are badly needed to get operators back on track. Cellular M2M is therefore a bit of a lifesaver.
But as we recently discussed (see - The M2M conversation so far: business models and commodity) in the problem is that the more successful the segment in terms of numbers, the more likely it is to experience looming commoditisation.
For this reason, implies IHS,  mobile operators are intent on expanding their activities in and around the basic business of selling M2M cellular subscriptions to protect and enhance revenues.
It fingers a number of factors driving cellular M2M market growth: "government regulatory initiatives (such as eCall in the European Union), the desire by corporate adopters to increase efficiency and develop new revenue models, the increasing number of tools and platforms that help to facilitate cellular M2M application development and the declining costs of components and services (including connectivity)."

"Mobile operators are not simply providing managed connectivity services to the cellular M2M market but increasingly are 'connecting the dots' among M2M ecosystem players, including suppliers and developers – and this benefits the market as a whole," the press release has Sam Lucero, senior principal analyst at IMS Research, saying.  "Examples of this proactive role by mobile operators range from establishing module supply programs to developing partnerships with platfor
The last problem/opportunity is seeing mobile operators establish  M2M business units to deploy connection management platforms (CMP) and to take a leading role in coordinating the cellular M2M value chain at multiple levels.m vendors and solution suppliers to reduce overall complexity in the value chain."
IHS says that mobile operators are providing leadership in the cellular M2M market not only to grow the overall market, including the opportunity for offering managed connectivity services to M2M application service providers (ASPs), original equipment manufacturers (OEMs) and corporate adopters, but also to expand the mobile operators' own share of the M2M value stack. 
It estimates that managed connectivity accounts for only about 10 – 30 per cent of the overall value in the M2M service value chain. Consequently, mobile operators are seeking to provide more value through the provisioning of value-added services to solution developers and end-to-end applications to end-users, typically through partnerships with ASPs.

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