The latest projections for machine-to-machine communications show that worldwide device connections will grow by a factor of 20 in the next 10 years and climb from approximately 100 million to 2.1 billion, according to Analysys Mason. The revenue associated with M2M connectivity will also increase dramatically and reach $50.9 billion by 2021.
The report, "M2M device connections, revenue and ARPU: worldwide forecast 2011–2021," presents the annual update of Analysys Mason’s M2M device connections forecast, which includes detailed ten-year forecasts of connections, revenue and average revenue per user (ARPU) for 7 sectors and 20 M2M applications, in eight geographic regions worldwide. That ARPU, however, will decline throughout the next decade, from a worldwide average of $4.71 per month per connection to just $1.98 in 2021.
“This per-connection revenue decline will be caused by increasing price pressure and growth in the number of M2M device connections in emerging markets," explained Steve Hilton, lead author of the report and principal analyst of Analysys Mason’s Enterprise and SME Strategies research programs. He added that ARPU rates for M2M applications are generally lower in emerging markets than in developed markets.
Developed markets will lose some market share through this time, the report said. The share of worldwide connections attributed to developed markets will decline over the next decade, from 69 percent in 2011 to 59 percent in 2021. Similarly, developed markets’ share of worldwide revenue will have declined from its current level of 76 percent to 64 percent in 2021.
Slightly less than 20 percent of M2M connections were over fixed-line networks in 2011, and it is predicted that this figure will decrease to just 7 percent by 2021. According to the report, almost all fixed-line M2M solutions are in developed countries, because reliable, affordable fixed-line connectivity is difficult to purchase in emerging markets.
"However, mobile operators in developed markets are offering mobile connectivity at attractive prices, and most M2M solutions have fairly low bandwidth requirements. As a result, more enterprises are choosing mobile M2M rather than fixed-line M2M," Hilton said.
Some verticals will see significantly more growth than others. Utility sector solutions will account for 61 percent of worldwide M2M device connections by 2021, growing at a compound annual growth rate (CAGR) of 50 percent. The penetration of M2M connections as a percentage of overall population in developed markets was 5 percent in 2011, but this is predicted to grow to 86 percent by 2021. The automotive and transport sector will have the highest share of connectivity-related revenue by 2021 (43 percent), driven by the increasing adoption of consumer connected-car solutions.