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Home Tech M2M market will reach US$66bn by 2019 | Ovum Asks Operators to invest to gain share

M2M market will reach US$66bn by 2019 | Ovum Asks Operators to invest to gain share

by Sam Wakoba
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promoGlobal technology research and advisory firm Ovum has announced that Telcos need to invest to grasp a bigger share of the rising machine-to-machine (M2M) opportunity which the research firm reports will bring in a total of $252bn from 2015–19.

According to Ovum, global connections will grow 162% over the next five years to reach 530 million with Asia and Oceania leading with over 200 million M2M connections by 2019 followed by Europe and the Americas. The firm says the operator revenue share of the total cellular M2M market stands to rise to US$25bn by 2019.

“Over the past few years, as the hype around Internet of Things has taken off – driven by some wildly exaggerated forecasts – we’ve seen operators take a gentle approach to M2M. Staying within their main expertise, most have taken on management of the connectivity layer, yet as conventional wisdom tells us, only minor returns will be made here,” says Jamie Moss, senior analyst at Ovum. “Instead, operators need to leverage their other capabilities, namely their ability to aggregate large amounts of data around their customers.”

Moss adds that Ovum is seeing device and application management become the new focus in M2M, and a firm’s ability to collect vast amounts of data will be of considerable value. Though data itself has intrinsic worth it’s the business decisions made based on the aggregation and analysis of that data that are the greatest source of value for enterprises and their connected service provider partners.

Ovum urges operators to develop new business models to gain a greater share of the revenues from cellular M2M.

Such models could include end-to-end services internally as an offshoot of their own supply chain needs, end-to-end solutions for individual enterprise partners and outsourcing to acquire M2M specialisation, which is being done in three ways. Some operators have acquired dedicated M2M service providers to own that intellectual property, resell those services into other markets and use the assets acquired to develop new services. Others have partnered with specialists from other markets, working in unison to deliver connected, value-added variants of existing services. Lastly, some operators have opted to license suites of third-party M2M services from aggregators.

“Ultimately M2M is all about the enterprise partner (not ‘customer’) of the operator. M2M is a market with unique dynamics, where the aim of the operator is to become embedded in the long-term business strategy of the enterprise, not to simply be their current service provider. In order for the M2M market to realise its potential, operators must educate enterprises in the utility that connectivity brings. Enterprises should never have to become experts in connectivity, however, as that knowledge is part and parcel of the managed service that the operator must provide for them,” concludes Moss.

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