Machina Research's ten predictions for M2M and IOT in 2014

09 January 2014

Every year Machina Research provides ten predictions for what will happen in the M2M and IOT world. Here are our predictions for 2014:

  1. Dawning realisation of the evolution from M2M to IoT. There has been a lot of buzz around IoT in 2013. This year is when that becomes a reality. The old ‘stove-pipe’ M2M application approach is giving way to a more integrated approach to application development which draws from a wider range of data sources (including M2M connected devices of different types and also corporate and other IT systems) and stitches these together with more sophisticated applications. This evolution presents massive opportunities but also threatens to sideline any company in the M2M ecosystem that does not evolve. For more on M2M platforms and the evolution to IOT, see our recent White Paper. More reports on this critical area are imminent in 2014.
  2. More traffic and more ARPU. The old days when M2M was only about low volume low ARPU sensor networks is passing. There will be more high bandwidth applications, generating higher ARPU.
  3. Fears over 2G refarming will continue to dog the growth of M2M. Buyers of m2m are struggling with how to cope with mobile operators' plans for 2g switch off and the impact it'll have on their technology choices. This will inhibit growth in some geographies in some sectors in 2014. For our views on cellular technologies in M2M see our recent report.
  4. Low power wide area networks will see much more widespread deployment. We’re going to see some much more substantial deployments of low power wide area radio access technologies such as SigFox and Weightless. These networks are perfect for many M2M applications and we expect a number of announcements of network deployments during 2014. In 2013 we published several Research Notes looking at the technologies andcompany strategies and providing our forecasts for the 15.5bn potential global connections.
  5. Customers will move away from roaming-based services, towards localised connectivity using remote provisioning (and MNOs/SPs will resolve associated commercial issues). In December 2013 the GSM Association published its specifications for OTA provisioning of M2M SIMs. This is on the back of pre-standard solutions available from vendors such as G&D and Gemalto. Customers and operators alike will recognise the benefits of multi-national (i.e. relationships with facilities-based operators) in each territory, rather than relying on roaming SIMs. The service providers and operators offering these localisation options will resolve the commercial arrangements necessary to let it happen. We have published numerous Research Notes on this topic during 2013 including here and here.
  6. Those selling to the M2M market will find their focus, and smaller operators will find their feet. Today almost everyone in the M2M value chain is attempting to address all customers: MNOs, service providers, module vendors, systems integrators, and everyone in between, are trying to sell to the same set of M2M customers. As a result they are spreading themselves too thinly trying to be all things to all potential customers. There will be a settling down in the value chain in 2014 as players find their position and the customers to which they should most appropriately be addressing themselves. Smaller, national MNOs will begin to assert their position in the M2M market as they come to better understand their optimum strategy and key market segments. Machina Research published a Research Note in late 2013 looking at the strategies that smaller operators should adopt to succeed in M2M.
  7. The big data analytics star will rise ... and fall. The value of data is in having a monopoly on the right kind of data. Or in being able to use it in some clever way. But the market will come to realise that there isn't much value in the actual analytic part of big data analytics. See our free White Paper, and subscriber-only Strategy Report for more details.
  8. More M&A is coming. The M2M industry is evolving very rapidly and with changing dynamics we’d expect more consolidation, as all major players gear up to become full service providers. Te consolidation will cut across all sectors, including device vendors, service providers and software/cloud platforms. ThingWorx would have been our big tip for acquisition in 2014, if they hadn’t been bought by PTC at the tail end of 2013.
  9. The ratio of products revenue to services revenue will sort the men from the boys. With huge growth expected across all of M2M, it will be those players best able to productise their offerings that will win through. The cost of service provision tracks service revenues, only products scale allowing products-focussed companies to outcompete services-focussed companies in the same domain. For more on M2M platforms and the evolution to IOT, see our recent White Paper. Several reports on this subject are imminent from us in early 2014.
  10. Connected homes finally arrive. They’ve been promising so much for so long, but 2014 looks like it will be the year when it actually gains some momentum. See our December 2013 Sector Report on Intelligent Buildings for more details. 

If you would like to know more, then feel free to contact us.

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