Given the current saturation in many of the mobile communication markets across the globe, it's not surprising that Machine-to-Machine (M2M) and the Internet of Things (IoT) technologies are now a high priority for telecom service providers who seek ways to create new revenue streams.
According to the latest market study by IDC, the global installed base of IoT will reach 28.1 billion devices in 2020, generating a forecast revenue of $1.7 trillion -- with cellular M2M being an important subset of this new growth.
Though mobile connectivity provisioning has historically been the telecom service provider's primary value proposition in M2M, their strategies are now evolving to embrace other parts of the value chain -- particularly those with higher margins, such as software and services.
IDC believes that telecom network operators will continue to play a key role in building the M2M IoT market. According to the IDC assessment, telecom providers should act as hubs for innovation and keep educating the market about the benefits of their M2M solutions.
This transition is most essential in developing markets that are still in the very early stages of maturity -- such as those within the Central and Eastern Europe (CEE) region.
"With the telecommunications services revenues from core voice and messaging services declining, telcos are on the lookout for new growth opportunities. M2M is certainly one of them," said Ina Malatinska, research analyst at IDC.
IDC believes that mobile connectivity represents only about 10-15 percent of the total M2M revenue pie. It has become a commodity and we expect connectivity ARPUs to continue falling dramatically.
Telecom providers are expected to place more emphasis on developing critical data analytics capabilities. As the market evolves from remote monitoring and control to business processes optimization and identification of new business models, data analytics will become essential.
IDC says that in the near future, data will represent the most important enterprise asset, and companies will need capable software tools to extract relevant information from their big data storage.
This is where data analytics delivers value -- enabling enterprises to develop new business models, deploy innovative services, get closer to their customers and generate new revenue streams.