opportunities and challenges in the u.s. cellular m2m communications market
TRANSCRIPT
Opportunities and Challenges in the U.S. Cellular Machine-to-Machine Communications Market
Vikrant Gandhi, Senior Industry Analyst
Mobile & Wireless CommunicationsJune 29,2011
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Presenter for Today
Vikrant GandhiSenior Industry Analyst, Mobile & Wireless Communications
Frost & SullivanNorth AmericaSan Antonio
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Focus Points
5 Cellular M2M Communications – Vertical Segmentation
7 Cellular M2M Communications – Key Drivers Summary
2 U.S. Cellular Market—Market Engineering Measurements
1 Connected Devices Ecosystem – Market Segmentation
3 U.S. Mobile Communication Markets – Connections, Voice Revenues, Data Revenues
4 Machine-to-Machine (M2M) Communications – A Simplified View of the Value Chain
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
6 Key Market Realities in Cellular M2M –Past , Present and the Future
12 Cellular M2M Communications – Key Conclusions
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Connected Devices Ecosystem – Market Segmentation
Mobile & Wireless Connected Device Ecosystem
Feature Phones
Smartphones Mobile Computers
Tablets M2M
Notebooks Netbooks Air Cards
Consumer Electronics
Transportation & Telematics
Financial Services &
Retail
Healthcare /Wellness
Smart Grid, Utilities,
Industrial
Security & Home/Building
AutomationOthers
eReaders
Connected Display,
Navigation, Gaming
Vehicle Convenience,
Safety, & Diagnostics
GPS & Fleet Tracking
POS Terminal Solutions
Vending Machines, ATM,
Kiosks
Wireless Patient Monitoring
Patient Care & Scheduling
Smart Metering, Smart Grid,
Utility Routers
Remote Telemetry,
SCADA
Intrusion Detection &
Safety Systems
Remote Surveillance,
Access Control, Building
Automation
Business Apps
Miscellaneous Systems
MiFi
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U.S. Cellular Market—Market Engineering Measurements
Market Stage
Mature
Market Revenues
$172.6 B
(2010)
Mobile Connections
311.5 M
(2010)
Average Revenue Per Connection
~$52.50
Connections at End of Forecast Period
418.0 M
(Projected 2017)
6 Year Forecast Feature Phones
6 Year Forecast Smartphones
6Year Forecast Mobile Computing
6 Year Forecast M2M Market
6 Year Forecast Tablets
Market OverviewMobile Connected Devices Market: 2010-2017
Stable IncreasingDecreasingNote: All figures are rounded. The base year is 2010. Source: Frost & Sullivan analysis.
(Revenue/Connections/12)
(CAGR)
Connections:
Data Consumption:
-21.0%
-2.0%
(CAGR)
Connections:
Data Consumption:
20.4%
49.1%
(CAGR)
Connections:
Data Consumption:
18.4%
36.7%
(CAGR)
Connections:
Data Consumption:
49.0%
91.8%
(CAGR)
Connections:
Data Consumption:
22.3%
38.6%
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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.
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Machine-to-Machine (M2M) Communications – A Simplified View of the Value Chain
Data Collection
Data Sharing
Data Interpretation
M2M Devices and Endpoints
Wireless / Wireline Networks
Enterprise Backend Systems
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.
Key Functions
Key Enablers
Key ParticipantsDevice & Module
VendorsAccess Network
Providers Application /
Platform Providers
IIIIII
Communication Flow
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Cellular M2M Communications – Vertical Segmentation
•Laptops/Netbooks/Notebooks•eReaders• Others - Connected Consumer Display, Picture Frames, Others
•Laptops/Netbooks/Notebooks•eReaders• Others - Connected Consumer Display, Picture Frames, Others
Consumer ElectronicsConsumer Electronics
• Vehicle Convenience & Safety• Vehicle Diagnostics• Others - Fleet & Asset Tracking, Others
• Vehicle Convenience & Safety• Vehicle Diagnostics• Others - Fleet & Asset Tracking, Others
Transportation and TelematicsTransportation and Telematics
• Patient Monitoring & Reporting• Adherence & Reminders• Others - Patient-Provider Collaboration(video communication, image uploads & management), Others
• Patient Monitoring & Reporting• Adherence & Reminders• Others - Patient-Provider Collaboration(video communication, image uploads & management), Others
HealthcareHealthcare
• Intrusion Detection & Safety Systems• Remote Surveillance & Access Control• Others - Roadside Speed Monitors, Automatic Lighting Controls, Others
• Intrusion Detection & Safety Systems• Remote Surveillance & Access Control• Others - Roadside Speed Monitors, Automatic Lighting Controls, Others
Security & SafetySecurity & Safety
• Smart Grid Components• Industrial Monitoring & Control Applications and Devices• Others - Industrial Routers, M2M Gateways, Agriculture Systems, Others
• Smart Grid Components• Industrial Monitoring & Control Applications and Devices• Others - Industrial Routers, M2M Gateways, Agriculture Systems, Others
Utilities & IndustrialUtilities & Industrial
• POS Terminals & Devices• ATMs, Vending Machines, Kiosks• Others - Digital Signage, Asset Tracking
• POS Terminals & Devices• ATMs, Vending Machines, Kiosks• Others - Digital Signage, Asset Tracking
Financial Services & RetailFinancial Services & Retail
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Key Market Realities in Cellular M2M – Past , Present and the Future
2000-2008 2009-2011 2012-2016
Medium HighLowSource: Frost & Sullivan.
Market Adoption
Customer Care Requirements
ARPU
Bandwidth Consumption
3G/4G Usage
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Cellular M2M Communications – Key Drivers Summary
Other Unique Aspects
of Cellular M2M – Mobility, Location
Strong Demand from Different
Industry VerticalsProven Benefits &
Industry’s Experience with M2M
Support & Focus of Mobile Operators
Independent M2M Service Providers and M2M MVNOs
Lower Pricing for Modules & Data – Esp. over 2G-2.5G
Source: Frost & Sullivan.
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Device & Module Certification
Immense Service & Support
Requirement for Evolving M2M
Market
Need to Generate Price Premium –
‘Beyond Bandwidth’
Pricing
Driving Adoption of 4G
What to Focus On –
Connections or Revenues?
Cellular M2M Communications – Key Challenges Summary
Source: Frost & Sullivan.
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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.
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Cellular M2M Communications - Market Forecasts (contd..)
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).
Source: Frost & Sullivan.
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Cellular M2M Communications - Other Key Highlights
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6
2
Different pricing for different speeds
Role of M2M cloud to become increasingly important going forward
Base data access revenues of more than $ 4.0 billion by 2017
1 Annual data consumption of nearly 7000 million MB 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
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Cellular M2M Communications – Overview of Operator Strategies
Optimize Data
Pricing
Certification & Training
Other Value-added
Services
Promote M2M
MVNOs
Partnerships &
Ecosystem
The Network
• Reduce time for network certification
• Approve devices with approved modules faster
• M2M innovation centers
• Tiered Pricing• Low pricing for slower
networks, off-peak hours
• Position high-speed networks for high-bandwidth M2M apps
• Complete network enhancements to support M2M
• Partner with specialized M2M platform vendors to simplify device on-boarding and management
• Focus on vertical solutions
• Rely on specialized M2M service providers
• Enable business collaborations through their network platforms
• Multiple pricing options – large vs. smaller upfront investments
• Reduced limits of liability
Source: Frost & Sullivan.
Operator Strategy for
M2M
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Cellular M2M Communications – Key Conclusions
Strong growth expected in the M2M communications market in the United States
Virtually all segments of the value chain working hard to support growth of the
M2M segment
Ease of deployment ,and ease of management of existing implantations will be
the key to achieving long-term success in this market
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.
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For Additional Information
Mireya EspinozaCorporate CommunicationsInformation & Communication Technologies (210) [email protected]
Craig HaysSales ManagerInformation & Communications Technologies(210) [email protected]
Brent IadarolaGlobal Research DirectorMobile & Wireless Communications(210) [email protected]