IMS Research of IHS has reported cellular machine-to-machine (M2M) based value-added-services (VAS) to expand by a factor of seven and reach $10 billion by 2017 from the $1.5 billion in 2012.
Details of IMS findings and analysis includes:
The VAS market represents an array of business and technical services that complement managed cellular connectivity and application platform services. These services enable application developers, service providers and corporate adopters to create, deploy and manage cellular M2M applications.
The growth of the VAS market in this area will be driven by the boom in cellular M2M connections. Global M2M cellular connections are expected to rise to 374.9 million by 2017, expanding at a compound annual growth rate (CAGR) of 26.5 percent from 91.4 million in 2011.
“The next Internet wave will be the M2M revolution, where almost anything—from an automobile, to a shipping container, to a home electricity meter—can become a part of a vast network,” said Sam Lucero, senior principal analyst for M2M & Internet of things at IHS. “Cellular communications will play a key role in in this new era of the ‘Internet of things,’ serving as the glue that connects hundreds of millions of nodes together. However, the cost and complexity of developing, deploying and operating cellular M2M applications is daunting, leading increasing numbers of companies to outsource cellular M2M application development, deployment and—in many cases—operation, to VAS providers.”
The advantages of VAS
Beyond the complexity of M2M, other factors are driving companies to adopt VAS solutions for M2M applications.
For one, many companies would prefer to focus on core business issues, rather than the integration of embedded cellular connectivity into new or existing applications. Furthermore, many developers or adopters lack the internal expertise to create or deploy an application that integrates cellular connectivity using entirely in-house resources. Also, the willingness to partner on the part of different cellular M2M VAS providers is helping to bring comprehensive VAS offerings to market. In addition, communications service providers (CSPs) want to increase their share of revenue in the M2M value stack, causing them to launch VAS offerings.
In a related issue, VAS will provide a means for various cellular M2M players to garner more of the value of the market for themselves. This is important because it will allow them to increase their revenue opportunity as well to help them to respond effectively to the commoditization of their core markets.
The cellular VAS segment consists of both professional services and managed services. Professional services are upfront/one-time, fee-for-hire offerings, while managed services are ongoing and subscription-based. Most of the cellular M2M market is focused on managed services because the revenue opportunity is so much greater than for professional services.
The VAS provider landscape is fragmented and complex, with a strong degree of competition and also a significant opportunity for cooperation.
For instance, AT&T and systems integrator Wipro are engaged in collaboration for cellular M2M. Owing to specific resources owned by each company, AT&T sometimes will take the lead, while other times it is more appropriate for Wipro to initiate the effort. In the latter case, Wipro would be the channel for AT&T, while in the first case AT&T would be a channel for Wipro.
MNOs and system integrators (SIs) are the primary competitors/partners in the cellular M2M VAS market. Other types of providers—including MVNOs, module vendors, platform providers and enterprise IT vendors—are also key providers of VAS in the cellular M2M market.
Source: IHS Inc. July 2013