Opportunities and Challenges in the U.S. Cellular M2M Communications Market
 

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An analyst briefing by senior industry analyst Vikrant Gandhi, on the

An analyst briefing by senior industry analyst Vikrant Gandhi, on the

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Opportunities and Challenges in the U.S. Cellular M2M Communications Market Presentation Transcript

  • 1. Opportunities and Challenges in the U.S. Cellular Machine-to-Machine Communications Market  
    Vikrant Gandhi, Senior Industry Analyst
    Mobile & Wireless Communications
    June 29,2011
  • 2. Presenter for Today
    Vikrant Gandhi
    Senior Industry Analyst, Mobile & Wireless Communications
    Frost & Sullivan
    North America
    San Antonio
  • 3. Focus Points
    1
    Connected Devices Ecosystem – Market Segmentation
    2
    U.S. Cellular Market—Market Engineering Measurements
    3
    U.S. Mobile Communication Markets – Connections, Voice Revenues, Data Revenues
    4
    Machine-to-Machine (M2M) Communications – A Simplified View of the Value Chain
    5
    Cellular M2M Communications – Vertical Segmentation
    6
    Key Market Realities in Cellular M2M –Past , Present and the Future
    7
    Cellular M2M Communications – Key Drivers Summary
    8
    Cellular M2M Communications – Key Challenges Summary
    9
    Cellular M2M Communications - Market Forecasts
    10
    Cellular M2M Communications - Other Key Highlights
    11
    Cellular M2M Communications – Overview of Operator Strategies
    12
    Cellular M2M Communications – Key Conclusions
  • 4. Connected Devices Ecosystem – Market Segmentation
    Mobile & Wireless Connected Device Ecosystem
    Smartphones
    Feature Phones
    M2M
    Tablets
    Mobile Computers
    MiFi
    Air Cards
    Netbooks
    Notebooks
    Security & Home/Building Automation
    Others
    Financial Services & Retail
    Smart Grid, Utilities, Industrial
    Transportation & Telematics
    Healthcare /Wellness
    Consumer Electronics
    eReaders
    Intrusion Detection & Safety Systems
    Business Apps
    Vehicle Convenience, Safety, & Diagnostics
    POS Terminal Solutions
    Wireless Patient Monitoring
    Smart Metering, Smart Grid, Utility Routers
    Connected Display, Navigation, Gaming
    Remote Surveillance, Access Control, Building Automation
    Miscellaneous Systems
    GPS & Fleet Tracking
    Vending Machines, ATM, Kiosks
    Patient Care & Scheduling
    Remote Telemetry, SCADA
  • 5. U.S. Cellular Market—Market Engineering Measurements
    Market Overview
    Mobile Connected Devices Market: 2010-2017
    Stable
    Increasing
    Decreasing
    Market Stage
    Market Revenues
    Mobile Connections
    Average Revenue Per Connection
    Connections at End of Forecast Period
    Mature
    $172.6 B
    311.5 M
    ~$52.50
    418.0 M
    (Revenue/Connections/12)
    (2010)
    (2010)
    (Projected 2017)
    6 Year Forecast M2M Market
    6 Year Forecast Feature Phones
    6 Year Forecast Smartphones
    6Year Forecast Mobile Computing
    6 Year Forecast Tablets
    Connections:
    Connections:
    Connections:
    Connections:
    -21.0%
    20.4%
    18.4%
    49.0%
    Connections:
    22.3%
    Data Consumption:
    Data Consumption:
    Data Consumption:
    Data Consumption:
    Data Consumption:
    -2.0%
    49.1%
    36.7%
    91.8%
    38.6%
    (CAGR)
    (CAGR)
    (CAGR)
    (CAGR)
    (CAGR)
    Note: All figures are rounded. The base year is 2010. Source: Frost & Sullivan analysis.
  • 6. U.S. Mobile Communication Markets – Connections, Voice Revenues, Data Revenues
    Connections and penetration expected to exceed 400 million and 125 percent respectively by 2017.
    Wireless will become the prime data connectivity medium for multiple types of devices which will drive adoption.
    Total market revenues to reach $ 240 billion by 2017. Within the next five years, data revenues will exceed voice revenues.
    Eventually, all services – including voice will be packet-based and all we will have it plans for ‘data’.
    Source: Frost & Sullivan.
  • 7. Machine-to-Machine (M2M) Communications – A Simplified View of the Value Chain
    III
    II
    I
    Data
    Collection
    Data
    Sharing
    Data
    Interpretation
    Key Functions
    M2M Devices and Endpoints
    Wireless / Wireline Networks
    Enterprise Backend Systems
    Key Enablers
    Key Participants
    Device & Module Vendors
    Access Network Providers
    Application / Platform Providers
    Communication Flow
    In its simplest form, M2M communications refers to data sharing between endpoints (electronic devices) and an enterprise backend systems through a wireless/ wireline channel. The device may be used for monitoring, control and notification, or information sharing and presentation purposes.
  • 8. Cellular M2M Communications – Vertical Segmentation
    Consumer Electronics
    Transportation and Telematics
    •Laptops/Netbooks/Notebooks
    •eReaders
    • Others - Connected Consumer Display, Picture Frames, Others
    • Vehicle Convenience & Safety
    • Vehicle Diagnostics
    • Others - Fleet & Asset Tracking, Others
    Healthcare
    Security & Safety
    • Patient Monitoring & Reporting
    • Adherence & Reminders
    • Others - Patient-Provider Collaboration(video communication, image uploads & management), Others
    • Intrusion Detection & Safety Systems
    • Remote Surveillance & Access Control
    • Others - Roadside Speed Monitors, Automatic Lighting Controls, Others
    Financial Services & Retail
    Utilities & Industrial
    • POS Terminals & Devices
    • ATMs, Vending Machines, Kiosks
    • Others - Digital Signage, Asset Tracking
    • Smart Grid Components
    • Industrial Monitoring & Control Applications and Devices
    • Others - Industrial Routers, M2M Gateways, Agriculture Systems, Others
  • 9. Key Market Realities in Cellular M2M – Past , Present and the Future
    2000-2008
    2009-2011
    2012-2016
    Market Adoption
    Customer Care Requirements
    ARPU
    Bandwidth Consumption
    3G/4G Usage
    Medium
    High
    Low
    Source: Frost & Sullivan.
  • 10. Cellular M2M Communications – Key Drivers Summary
    Support & Focus of Mobile Operators
    Independent M2M Service Providers and M2M MVNOs
    Other Unique
    Aspects
    of Cellular M2M –
    Mobility, Location
    Strong Demand from Different Industry Verticals
    Lower Pricing for Modules & Data – Esp. over 2G-2.5G
    Proven Benefits & Industry’s Experience with M2M
    Source: Frost & Sullivan.
  • 11. Driving Adoption
    of 4G
    Immense Service & Support Requirement for Evolving M2M Market
    Device & Module Certification
    What to Focus On – Connections or Revenues?
    Cellular M2M Communications – Key Challenges Summary
    Need to Generate
    Price Premium –
    ‘Beyond
    Bandwidth’
    Pricing
    Source: Frost & Sullivan.
  • 12. Cellular M2M Communications - Market Forecasts
    M2M connections on cellular networks in the United States to exceed 75 million in 2017.
    These figures do not include laptops, netbooks, notebooks and tablets, which would be in tens of millions as well .
    Top three categories by connections will likely be Transportation and Telematics, Consumer and the Utilities and Industrial.
    In many cases, a single endpoint (such as a rugged router) will support a large number of other connected devices. The ‘wireless-supported’ vertical breakdown will likely look very different then.
    Source: Frost & Sullivan.
  • 13. Cellular M2M Communications - Market Forecasts (contd..)
    Source: Frost & Sullivan.
    A large majority of cellular M2M connections still use 2G-2.5G networks. This is changing rapidly due to a strong adoption of consumer devices as well as various other high-bandwidth applications across the other verticals ( in-car infotainment, security and surveillance, digital signage, and others).
  • 14. Cellular M2M Communications - Other Key Highlights
    1
    Annual data consumption of nearly 7000 million MB by 2017
    2
    Base data access revenues of more than $ 4.0 billion by 2017
    3
    4G module pricing to become less than half of what it is today
    4
    Tiered pricing for high-bandwidth M2M applications to become more prevalent
    5
    Different pricing for different speeds
    6
    Role of M2M cloud to become increasingly important going forward
  • 15. Cellular M2M Communications – Overview of Operator Strategies
    • Tiered Pricing
    • 16. Low pricing for slower networks, off-peak hours
    • 17. Position high-speed networks for high-bandwidth M2M apps
    • 18. Complete network enhancements to support M2M
    The
    Network
    Optimize
    Data
    Pricing
    • Reduce time for network certification
    • 19. Approve devices with approved modules faster
    • 20. M2M innovation centers
    • 21. Partner with specialized M2M platform vendors to simplify device on-boarding and management
    • 22. Focus on vertical solutions
    Operator Strategy for M2M
    Partnerships
    &
    Ecosystem
    Certification
    & Training
    • Multiple pricing options – large vs. smaller upfront investments
    • 23. Reduced limits of liability
    Other
    Value-added
    Services
    Promote
    M2M
    MVNOs
    • Rely on specialized M2M service providers
    • 24. Enable business collaborations through their network platforms
    Source: Frost & Sullivan.
  • 25. Cellular M2M Communications – Key Conclusions
    • Strong growth expected in the M2M communications market in the United States
    • 26. Virtually all segments of the value chain working hard to support growth of the M2M segment
    • 27. Ease of deployment ,and ease of management of existing implantations will be the key to achieving long-term success in this market
    • 28. Frost & Sullivan believes that eventually, both direct connections and revenues from M2M could become larger than traditional mobile phone business in several regions of the world, including the United States – this could take anywhere from 12 to 24 (or 30) years.
  • Next Steps
    • Request a proposal for or Growth Partnership Services or Growth Consulting Services to support you and your team to accelerate the growth of your company. (myfrost@frost.com) 1-877-GoFrost (1-877-463-7678)
    • 29. Join us at our annual Growth, Innovation, and Leadership 2011: A Frost & Sullivan Global Congress on Corporate Growth (www.gil-global.com)
    • 30. Register for the next Chairman’s Series on Growth: Driving Innovation – The What, Why, and How. Visions and Benchmarks as the Innovation Key(October 5th)(http://www.frost.com/growth)
    • 31. Register for Frost & Sullivan’s Growth Opportunity Newsletter and keepabreast of innovative growth opportunities(www.frost.com/news)
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  • 33. For Additional Information
    Mireya Espinoza
    Corporate Communications
    Information & Communication Technologies
    (210) 247-3870
    Mireya.espinoza@frost.com
    Craig Hays
    Sales Manager
    Information & Communications Technologies
    (210) 348-6420
    chays@frost.com
    Brent Iadarola
    Global Research Director
    Mobile & Wireless Communications
    (210) 481-0752
    biadarola@frost.com