Operators must invest to capitalise on M2M growth

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Operators being urged to invest in more than just providing data connection as that’s where eventual revenues will lie

Mobile operators must invest in their M2M capabilities if they are to capitalise on a market that will grow to $66 billion (£40 billion) annually by 2019.

This was the opinion of research firm Ovum which forecasted that the market will generate a total of $252 billion (£152.8 billion) between 2014-2019. Over this period the amount of M2M connections will grow by 162 per cent to 500 million.

Ovum claims that operator’s will receive 37 per cent of the revenues ($25 billion) in 2019, but say that they need to look beyond simply providing connectivity, to get a bigger slice of the pie,

More than 50 per cent of the revenues attributable to M2M are expected to be from integrating the connectivity and the research group says operators should invest in this area.

“Operators need to leverage their other capabilities, namely their ability to aggregate large amounts of data around their customers,” said Ovum senior analyst Jamie Moss. “We’re seeing device and application management become the new focus in M2M, and the ability to collect vast amounts of data will be of considerable value. Data itself has intrinsic worth, but it is 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.”

Moss says there are a number of business models emerging around M2M including: developing end-to-end services internally, providing bespoke solutions to their enterprise partners, and outsourcing to acquire M2M specialisation.

The latter is being done in three ways – buying service providers to own the intellectual property of the company and resell their services (see Vodafone buying Italian telematics service provider Cobra), partnering with service providers to offer M2M services in other markets, while some are opting to licence suites of M2M services from aggregators.

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