As Matt Hatton said in his article last month, the team at Machina Research has just completed its revisions to the annual outlook for the globalM2M market. This is the culmination of the process of updating a bottom-up forecasting model that covers hundreds of applications, 200 countries, a range of communication technologies, and the revenue opportunity for different players in the marketplace. In this article we look at the changes in the forecasts that are driven by some of the major trends that Matt discussed last month, including the impact of LPWA (low power, wide area) technologies such as SIGFOX, LoRA, Telensa and Weightless, delays in mandatory connected car applications, and the rapidly changing world of building automation.
The smart home has the biggest number of devices deployed, both in 2014 and 2024, with consumer electronics accounting for 25% of connections in 2024 and intelligent buildings – security and building automation – accounting for over a third of connections. This is driven by some fundamental human desires: for entertainment, for security, and by the need to improve energy efficiency and reduce our carbon footprint.
Short range connections dominate most M2M categories in 2014, as the majority ofM2M devices connect to some kind of local hub, whether it is a wi-fi router, a smart phone, or a dedicated hub unit. This is one of the areas where LPWA has a big impact, as it becomes possible to ship products with connectivity pre-installed and no need for the user to pair a device with a smart phone or enter a WiFi security key.
By 2024, LPWA will be used for most wide area M2M connections. We expect a big increase in connected devices in healthcare and half of them connected using LPWA.
For assisted living for the elderly and infirm, the pre-installed and pre-configured connectivity is particularly important. We also expect industry to be a major adopter of LPWA to connect a larger number of widely distributed devices using fit-and-forget communication modules, so that these account for one third of devices in connected industry in 2024.
LPWA is a complex area as the space is evolving rapidly and new technologies, vendors and service providers are popping up all the time. The combination of low cost modules and networks and long battery life is a winning formula for many M2M applications and we expect relatively rapid roll out of LPWA networks in countries around the world in the next few years. How much of this will be dedicated LPWA networks, whether public or private, and how much will be achieved through extensions to mobile networks, possibly through implementation of 5G standards, is yet to be determined, and is an area that Machina Research is watching closely.
The connected car market is particularly important to mobile operators, and a sector in which LPWA will have limited impact as many of the applications require true mobility and high bandwidth, two features which LPWA technologies generally sacrifice in the quest for long range and long battery life. As Matt highlighted last month, delays in the introduction of the EU’s eCall initiative and Brazil’s SIMRAV initiative for Stolen Vehicle Recovery have led us to push back the timetable for deployment. Nonetheless, in 2024 we expect that MNOs will derive significant M2M revenues from connected car applications such as navigation, stolen vehicle recovery, in-car entertainment and usage-based insurance.
As regards countries, China continues to lead by device count in 2024 while the US continues to lead by revenues. By device count, Korea and Indonesia overtake the UK and France in 2024 and Korea is number two after Japan for devices per head. By region, Europe will have the largest number of devices in 2024, followed by Emerging Asia-Pacific and then North America.
Wide area M2M connections will be dominated by LPWA technologies