Machine-to-machine or M2M. The idea has been around for a long time, with Wikipedia noting ‘M2M has existed in different forms since the advent of computer networking automation and predates cellular communication’, having been used ‘in applications such as telemetry, industrial, automation, SCADA. ‘
TechTarget also has a definition, noting that ‘Machine to machine (M2M) is a broad label that can be used to describe any technology that enables networked devices to exchange information and perform actions without the manual assistance of humans.’
The description continues, stating that ‘M2M communication is an important aspect of warehouse management, remote control, robotics, traffic control, logistic services, supply chain management, fleet management and telemedicine. It forms the basis for a concept known as the Internet of Things (IoT).’
So M2M is real, and it’s growing and getting more powerful, with analyst and consulting firm Frost and Sullivan providing the figures and noting the bulk of demand in Australia to come from ‘the transportation and logistics, energy, healthcare, and industrial automation sectors.’
The M2M market is measured by the number of M2M Subscriber Identification Module (SIM) connections activated, with the analysts stating stating that ‘market revenues are measured by SIM activations, including costs of hardware, applications, installation and connectivity.’
And as proof that things are growing, the number of SIM estimated to have been activated in 2013 was 400,000 to 450,000 - an increase of 20% over 2012.
Naturally, Frost & Sullivan has a report with all the details it wants to sell you, dubbed the ‘Australian Machine-to-Machine (M2M) Communications Market Report 2014’.
This report says ‘the market will display high growth rates over the next five years, peaking at over 30% revenue growth by 2016, and doubling its 2013 value.’
Beyond that, the report notes ‘demand for M2M solutions from existing markets such as transportation and logistics, as well as the new opportunities in energy, healthcare and industrial automation sectors will keep growth rates over 25% in 2017 and 2018.’
So we can see this ongoing experiment in connecting everything through ever more powerful networks and modern M2M connectivity in in a range of industrial strength sectors and devices growing strongly as the Internet of Things becomes the Internet of Everything - whether anyone wants it to or not!
In comes Audrey William, head of ICT Research at Frost and Sullivan A/NZ, to explain “although the M2M market is at an early stage of growth, it has not yet experienced high growth rates as usage is currently limited to a small number of industries.
“However, the sustained growth expected over the next five to seven years will largely be due to uptake from a wider market base of industries, and the huge opportunity for connecting a variety of objects with SIMs and sensors.”
William adds: ‘Transportation, Logistics, Energy and Utilities are the key markets for M2M adoption, and currently account for the majority of deployments. These sectors have the strongest business case for using M2M solutions to increase efficiency, and as a result have a much higher awareness and understanding of M2M solutions.
“Although other verticals will increase their uptake of M2M solutions, these sectors will remain significant for driving growth. However, demand from sectors such as Healthcare, Retail, Agribusiness and Banking will increase over the next few years. This will also coincide with the expansion and maturity of the M2M market, where a wider range of industry requirements are addressed.
“As the M2M market moves from a nascent stage of growth towards mainstream uptake, it will attract new players, which will increase competition. This market commoditisation will put pressure on the lucrative profit margins currently enjoyed. Solution providers with a hardware based strategy will find it increasingly challenging to generate growth.
“Local telcos are already building strong service capabilities to address a wider range of requirements. In the next three to five years, although the average revenue per SIM will decline, the telcos will continue to benefit from the larger volumes of deployments,” William explained.
Frost & Sullivan concludes by stating ‘the competitive landscape of the M2M communications market is highly concentrated.'
‘In 2013, the three main telcos – Telstra, Optus and accounted for more than 95% of the market in Australia. Telstra and Optus have a wide breadth of ICT capabilities and their strong networking and infrastructure capabilities enable them to easily integrate M2M solutions with critical backend systems.'
‘The established brand name of these telcos in the local market further strengthens their market position and new entrants will be challenged to overcome these competitive barriers.’