Analyst: Operator focus on M2M connectivity needs to change

Mobile operators are placing too much emphasis on capturing machine-to-machine customers using their connectivity abilities, as opposed to developing services to build sustainable revenue streams, warns a new study from Frost & Sullivan (F&S).

The market research firm maintains that the extent of an operator's geographic footprint is not the only driver behind business profitability in mobile communication services, "nor is it the critical success factor in the M2M market," F&S senior industry analyst Yiru Zhong said in a statement.

"Companies adopt similar ecosystem strategies to create a relevant and diverse portfolio, which along with the ecosystem quality determines the relative success of telcos in M2M."

According to the F&S study, M2M applications will remain cost driven. "While M2M will also allow end users to create new business models, many deployments remain relatively small scale and limited to a small part of an overall business operation," notes Zhong, adding that an operator's strength in ecosystem development will determine its success in capturing higher M2M revenue at this stage.

"In the likelihood of connectivity becoming another commodity, higher revenue must come from additional value, such as using analytics to wrap intelligence for end-users, enabling more relevant application development and utilising computing trends to support different M2M deployment scales," concludes Zhong.

For more:
- see this Frost & Sullivan release

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