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  Date: 6th Feb 2011

Cellular modules for M2M communications related market-research findings in 2010

As per IMS latest study the shipments of cellular modules for machine-to-machine (M2M) communications will reach over 100 million in 2015. Dropping module prices, reduced connectivity rates from carriers, and increased availability of cellular networks worldwide are all key drivers behind this growth, says IMS.

Josh Builta, IMS Research Market Analyst and author of the study states, "One of the greatest underlying strengths of the cellular module market is the modules are increasingly being utilized in a wide-variety of M2M applications. Diverse industries, ranging from metering to digital signage, are becoming more reliant on cellular technology as a means to transmit vital information. The cumulative effect of increased uptake in so many markets will result in total cellular M2M module shipments growing at over a 24% CAGR throughout the forecast period."

IMS Research does not expect this growth will be evenly spread among all vertical markets though. "Given the assorted nature of these markets, different factors will drive or inhibit the growth of cellular M2M within each," states Builta. Certain vertical markets appear likely to emerge as the forerunners in the use of cellular M2M as they will be driven by government driven mandates. Builta continues, "Probably the best example is the automotive industry, in which stolen vehicle tracking in Brazil and emergency call systems in Europe are forecast to become mandatory as a result of government regulations. Pending legislation in the EU, known as eCall, would be particularly significant as it would drive the penetration rate of cellular modules in new vehicles in Europe to 100%." Partially as a result of these government initiatives, IMS Research forecasts modules used in automotive market will have a 31% CAGR during the forecast period.

IMS warns while the overall outlook is bright, concerns over the cost, reliability, and security of cellular technology will limit uptake of cellular modules in some vertical markets for the near term. According to IMS ,Markets including security and factory automation are likely to rely on wired connectivity as well as alternative wireless options for a good portion of their M2M communications. At the same time, healthcare, a market with great potential for cellular modules, must overcome a series of privacy and liability concerns before it can reach a larger market size.

Another researcher Berg Insight finds 2% of the mobile network connections worldwide were used for wireless machine-to-machine (M2M) communication at the end of 2010. The number of M2M subscribers increased by 46 % year-on-year to an estimated 81.4 million. In the next five years, the total number of wireless M2M connections is forecasted to grow at a compound annual growth rate (CAGR) of 32.0 % to reach 294.1 million connections in 2015. By that year of the period M2M as a share of the total number of cellular connections is projected to reach 4.0 percent.

"M2M and connected devices is now one of the main drivers behind the growth in mobile subscribers in Europe and North America", said Tobias Ryberg, Senior Analyst, Berg Insight. "All of the world's largest telecom operators now have several million M2M subscribers in their mobile networks. In Q1-2011, we expect that AT&T will become the first mobile operators to reach 10 million M2M subscribers after more than doubling the installed base in the past 12 months, largely thanks to a successful strategy for connected consumer electronics devices."

According to Mr. Ryberg, mobile operators are facing a new market landscape where customers no longer have one or two mobile subscriptions, but up to five or more different wireless devices. Besides his smartphone and tablet, a technology-savvy American is likely to own an e-reader and a connected PND, drive a car with an embedded telematics system and have a cellular security alarm installed at home. His Scandinavian compatriot could have a smart electricity meter with embedded GPRS connectivity; a Frenchman may use a cellular speed control warning system and an Italian might have installed a car telematics device from his insurance company. Mr. Ryberg concludes that these are some glimpses of the future that will come and predicts that the vast majority of the world's next five billion mobile connections will be embedded into consumer devices, machines and sensors.

Other highlights from Berg analysis includes:
1. The US and Japan recorded growth rates of 52 % and 60 % respectively, mainly driven by connected      devices such as e-book readers and digital photo frames. Among the world regions, Europe      maintained its number one position as the number of M2M subscribers increased 43 percent to 29.5      million. North America was up 51 percent to 23.6 million, followed by Asia-Pacific, growing by 53      percent to 19.6 million. According to Berg Insight's M2M subscriber data estimates, AT&T became      the world's largest provider of wireless M2M connectivity services last year.
2. Reporting 9.3 million subscribers in Q4-2010. The US operator added 4.7 million machines and      consumer devices with embedded connectivity during 2010, almost doubling its subscriber base.      Meanwhile the previous market leader Verizon Wireless was demoted to second place in the US      and worldwide reporting 8.1 million M2M subscribers at end of 2010, despite adding 1.2 million      connections over the year.
3. Berg Insight estimates that Vodafone, which does not currently disclose its number of M2M      subscribers, ranked third having in the range of 7-8 million connections. China Mobile was      estimated to be in the fourth place with around 6 million connections, followed by T-Mobile at      approximately 5 million. Telefónica, Telenor, Orange, Sprint and America Móvil were other top ten      players with 2-4 million connections each.

<Author: Srinivasa Reddy N
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