Mobile:
Cellular M2M: Generating Profit from the Business Opportunities (report)
e-Principles
Management Report October 2003
This report explores indicative examples of M2M application areas suited to using cellular networks, defines the main application groups and compares differences in service requirements and type of end user. It provides an outline of alternative wireless technologies, comparing them with cellular, and explores M2M market development – including significant government issues. The key enablers and benefits for users of M2M applications are examined, followed by an assessment of key market drivers and the evolution of a competitive market. All of these inputs provide a basis for the market forecasts.
Summary
A Worldwide analysis of machine-to-machine market opportunities for Cellular networks
Description
Cellular networks have increasingly been used over the last few years as a medium for telemetry applications utilising either Short Message Service or dial-up over modems. However continuing cost reduction, the introduction of wireless packet-based services like GPRS and 1XRTT together with the development of open standards-based Internet solutions now offer new ways forward.
There is an increasing opportunity to transform M2M from a largely closed, highly fragmented and specialist market into one where remote data can be collected and parameters set cost-effectively from an increasingly wide range of products, processes and people and handled on centralised, open systems platforms – perhaps as part of an ASP offering. They may also be linked to in-house ERP systems, for example, in order both to improve customer service and reduce costs.
Although there are key challenges for industry participants to deal with – highlighted and examined in this report – there is no doubt that the market for cellular M2M applications and services will be large. There are an estimated 6 billion microprocessors embedded in operating products worldwide. Many of these would add value if wireless-enabled. There are also many other products (and people) that would also benefit from being wireless-enabled.
This report explores indicative examples of M2M application areas suited to using cellular networks, defines the main application groups and compares differences in service requirements and type of end user. It provides an outline of alternative wireless technologies, comparing them with cellular, and explores M2M market development – including significant government issues. The key enablers and benefits for users of M2M applications are examined, followed by an assessment of key market drivers and the evolution of a competitive market. All of these inputs provide a basis for the market forecasts.
Detailed forecasts covering the period 2003-08 are provided for:
- Application groups
- Cellular modules
- Managed Service Revenue
- Mobile Network Revenue
- ICT Equipment Sales
The report concludes with a value analysis of the cellular M2M business, who stands to gain the most and what is required to move the market forward. It identifies the opportunities for market players and strategic decisions that must be made and provides an assessment of critical success factors for market players, including strategic recommendations.
This report will provide valuable information for:
- Mobile Network Operators
- Device and terminal suppliers
- Service providers
- Hardware and software vendors
- Systems integrators
- Financial institutions looking to invest in this area.
Contents
1 Executive Summary
Overview
Key Findings for Market Players
Strategic Recommendations
2 Introduction
Scope of Study
A Question of Definition
Network Operators Missing the Boat?
Report Brief
3 Analysis of Cellular Machine-to-Machine Applications
Why Cellular?
Machine-to-Machine versus Other Mobile
Application Groups in More Detail
The Vending Community
Vending Machines
Retail and Point of Sale
Wireless POS
Wireless ATM
Parking
Metering/Monitoring
Residential Metering
Industrial Metering
Remote Monitoring/Control
Security and Surveillance
Home/Office
Industrial Automation
Manufacturing Processes
SCADA
Public Transport Infrastructure
Intelligent Transport Services (ITS)
Road pricing
Passenger information
Use on Railways
Public Information Services
Billboards
Location-based Services
Interactive Displays
Telemetry
Kiosks
Others
Auto Telematics
Fleet/Freight Management
Fleet Management
Freight Management
Emergency and Special Services
Telemedicine
Comparison of Application Group Characteristics
Applications in the Future
4 Cellular versus Other Wireless Technologies
Anatomy of an M2M Solution
Wireless Technology Alternatives
Bluetooth
CDMA
1xRTT/CDMA2000
DSRC
GSM/SMS and USSD
GSM-R
GPRS
HSCSD
EDGE
PDC/PHS
RFID
TETRA
Ultra-Wideband (UWB)
WLAN
ZigBee
Proprietary Wireless Data Networks
Control Channel, Packet Radio, Paging
Comparison for M2M use
Review of Standards
5 Enabling the M2M Market
Public Policy Issues
The Transport Imperative
Energy Conservation
The Growing Healthcare Need
Security Concerns
Other Policy Issues
Where’s the Benefit?
Key M2M Market Enablers
Which User Segments?
Identifying the Business Benefits
The Forces Driving the M2M Market
Towards a Competitive Market
6 Worldwide Cellular Market Forecasts 2003-08
Assumptions and Outline Methodology
Application Group Projections 2003-08
Cellular Module Projections: Units & Revenue 2003-08
Module Price Reduction
Units & Revenue Projections
M2M versus Mobile Phone Growth
Managed Services Revenue Projections 2003-2008
ARPUs for Managed Services
Managed Service Revenue Projections
Mobile Network Revenue Projections 2003-08
ARPUs for Mobile Networks
Network Revenue Projections
Comparison of M2M with Other Mobile Revenue Streams
ICT Sales Projections 2003-08
Outline Methodology
ICT Sales Projection
Sensitivity Analysis
Implications of Projections
7 Value Analysis of Cellular M2M
Extending the Value Chain
Requirements for Service Provision
Improving the Value of the Business
Barriers to Growth
Mobile Networks
Standards Issues
Network Approval
Market Structure
Educating the User
Connecting to the Network
Moving the Market Forward
8 Opportunities for Market Players
Current Business Models
Opportunities in the Value Chain
Module/Modem Supply
Machine Supply
Mobile Network Operators
ISP
Solution Provider/System Integrator
Service Provider
Machine Operator/End User
Network Operators – Pipeline or Service Provider?
Implications for Market Players
Convergence on Service Provision
Opportunities for Proprietary Data Networks
The Need for Speed
Strategies for M2M Partnerships
9 Conclusions and Recommendations
Critical Success Factors
Mobile Network Operators: Time to Decide
Service Provider Market Entry Issues
Priorities for Solution Providers
Conclusions
Figures
Figure 2.1: Report Sections Building the Forecast Methodology
Figure 3.1: Segments of the Wireless Data Market
Figure 3.2: Wireless Vending Solution
Figure 3.3: Interval Metering System
Figure 3.4: Why Cellular for Alarms?
Figure 3.5: Electronic Toll Solution
Figure 3.6: Coordinated advertising concept
Figure 3.7: Location-based mobile promotion
Figure 3.8: First generation car telematics service
Figure 3.9: The scope of Tele-homecare applications
Figure 3.10: Medical monitoring
Figure 3.11: Comparison of Service Characteristics
Figure 4.1: Generalised M2M Solution
Figure 5.2: Towards a competitive market
Figure 6.1: WW Application Group Projections 2003-08
Figure 6.2: Forecast average ex-factory price for Cellular modules 2003-08
Figure 6.3: Percentage of modules shipped actually used 2003-08
Figure 6.4: WW sales of M2M Cellular modules by Region 2003-08
Figure 6.5: Projected Mobile Phone Growth 2003-08
Figure 6.6: Growth of M2M base versus Mobile Phones 2003-08
Figure 6.7: Chart & Table of M2M Managed Service Monthly ARPUs 2003-08
Figure 6.8: WW M2M Managed Services Revenue by Region 2003-08
Figure 6.9: WW M2M Managed Service Revenue by Application in 2007
Figure 6.10: M2M Mobile Network ARPU versus Service ARPU 2003-08
Figure 6.11: Chart & Table of M2M Mobile Network Monthly ARPUs 2003-08
Figure 6.12: WW M2M Mobile Network Revenue by Region 2003-08
Figure 6.13: WW M2M Mobile Network Revenue by Application in 2007
Figure 6.14: Voice, Messaging and M2M Network Revenues 2003-08
Figure 6.15: Comparison of Mobile Voice and M2M Service Revenues 2003-08
Figure 6.16: High/Low Projected ICT Infrastructure Spend 2003-07
Figure 6.17: Cumulative Projected ICT Low Spend by Application 2003-07
Figure 6.18: Growth Rates of Cellular Modules versus Cellular Subscribers
Figure 7.1: Value Chain for M2M Solution
Figure 7.2: The Revenue Opportunities in 2008
Figure 7.3: Ways of Increasing Value
Figure 8.1: Gaining Value for Market Players
Figure 8.2: Summary of Key Movements in the Value Chain
Figure 8.3: Convergence in the Value Chain
Figure 8.4: Key Partnership Preferences
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