Analyst: M2M service providers scramble to avoid commoditisation

Europe's Tier 1 machine-to-machine service providers are urgently looking for ways to confront the expected commoditisation of M2M connectivity. The danger is highlighted in a new study from Frost & Sullivan (F&S) that claims the issue is becoming more critical with the entry of operators focused on providing wholesale M2M capacity, albeit without them being able to provide the backend intelligence. 

"The key to revenue in the M2M space is in the intelligence component of the M2M equation," F&S analyst Yiru Zhong said in a statement. "Because intelligence has different meanings and value to different customers, F&S expects an M2M telco market leader to emerge by tailoring a menu of M2M intelligence for a broad spectrum of customers--including small business and SMEs--and by offering both communication and computing capabilities to simplify customers' M2M adoption processes."

Zhong points to Deutsche Telecom's (DT) M2M Marketplace platform as an example of finding new revenue sources as the average income from M2M connections declines.

DT's M2M Marketplace approach is unusual by promoting a technology- and user-agnostic trading market with the aim of bringing buyers and sellers together, indirectly allowing the DT platform to cover a wide range of customers.

Other operators, including Telefónica's O2, Orange Business Services and Vodafone Global Enterprises are also pushing forward with their M2M strategies, according to F&S. But Zhong warned that while many European operators have a strong IT component, only a few have clear and consistent capabilities that match their mobile footprint.

"The first measure of success was winning major car original equipment manufacturer (OEM) contracts and smart meter projects," Zhong said. "The challenge is to convert these relationships into more than M2M connectivity contracts."

For more:
- see this Frost & Sullivan release

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