Connected devices build $1.2tn revenue opportunity by 2020
The number of mobile connected devices in the world is set to grow 100 per cent from more than six billion today to 12 billion in 2020, according to research unveiled by industry association the GSMA.
This growth will create revenue opportunities for mobile operators of nearly $1.2tn by 2020, marking a sevenfold increase from expected revenues in 2011. It will also provide significant growth potential for the entire ecosystem, said the body.
“We are entering the next phase in the development of the mobile industry, one where we will see mobile connect everything in our lives,” said Michael O’Hara, chief marketing officer, GSMA.
“In this new Connected Life, mobile will transform society and will have a profound effect on the way we interact not only with each other, but also with our surroundings. However, capitalising on this enormous opportunity requires collaboration across the entire ecosystem to demonstrate how mobile technology in everything from tablet PCs to new healthcare devices can enhance people’s personal and business lives.”
The research was undertaken for GSMA, with the support of AT&T, Deutsche Bank, KT, Telenor Connexion and Vodafone, and in partnership with Machina Research.
Machina Research said that the opportunities for mobile operators will depend on individual business strategies. Mobile operators are uniquely placed to work in partnership with other industries to enable this opportunity because they provide ubiquitous network connectivity; deliver proven customer care, billing and distribution capabilities; and represent a trusted brand for consumers and businesses, the firm said.
“Most of the growth is coming from machine-to-machine: a new market for communications service providers, and with new dynamics,” said Jim Morrish, director at Machina Research.
“The way that mobile operators, device vendors, service providers and others in the value chain react to this opportunity will have important implications for their future success. Right now, the mobile industry has a clear opportunity to play a central role in the Connected Life.”
The rapid and escalating growth in the machine-to-machine (M2M) market represents a great and growing opportunity for wireless operators across the world, and it is true that they are well placed to provide the ubiquitous connectivity required.
However, they do face significant challenges in serving this market, starting with its fragmentation into a variety of industries, business models, devices and connectivity requirements. In many of these M2M segments, the value chain and per-device revenues will be very different from the mobile phones and other mobile devices sold by network operators today: the opportunity comes through volume, rather than value per-device.
So, for operators, the economics of the way they provide connectivity for M2M devices and services is critical. They need to ensure that they take this into account when building support for M2M: treating them like current mobile devices and simply provisioning them in the same way the network, is probably not going to add up economically and may also present some functional limitations.
Operators are already building systems that allow M2M customers to manage their devices and obtain data from them, and allow the operator to bill for this. It is also important that they build the right infrastructure to support the very different connectivity requirements of M2M devices – and do this before the real growth in device volumes, which will otherwise drive costs that outweigh the revenue opportunity.
Bill Chard, VP Product Management, Evolving Systems