GSMA: U.S. leads M2M market, but global growth could skyrocket to 2B M2M connections by 2020

Thanks to aggressive moves by carriers to expand cellular connections into the automotive and utilities markets, the United States is one of the largest and most advanced M2M markets in the world, according to a new report from the GSMA. The report found that M2M represents one out of every 10 mobile connections in the U.S., compared with one in 20 in Oceania and Europe and one in a hundred in Africa.

Although the U.S. is the clear leader now, the GSMA thinks that that the M2M market is poised to grow around the world. The trade group expects cellular M2M will account for almost 1 billion (974 million) of the 10 billion total mobile connections expected by 2020, if the market develops at its current trajectory. However, a separate study from the GSMA found that there are several factors that could stimulate further M2M growth, potentially leading to as many as 2 billion cellular M2M connections by 2020, double the current forecast.

For now, the U.S. is the clear leader in terms of M2M, and accounted for 35 million connections, or 19 percent of all global M2M connections at the end of 2013, the GSMA reported. The group thinks the number of M2M connections will grow to 41 million in the U.S. this year, driven in particular by advances in the automotive, utilities and oil and gas sectors. The association's reports are being published in conjunction with the GSMA Mobile 360 Series-North America conference taking place this week in Atlanta.

In the years ahead, the U.S. is expected to maintain strong M2M growth thanks in part to several factors, the GSMA said. For one, the U.S. automotive and software industries "are in the vanguard of efforts to develop vehicles that are less reliant on a human driver." Google (NASDAQ: GOOG) is among the companies leading the charge on that front. The GSMA also thinks that as wearables gain more mainstream adoption, consumers will want fitness trackers and other similar gadgets with their own cellular radios. Meanwhile, U.S. companies expanding abroad are likely to call on U.S. carriers to expand their M2M solutions to other markets.

However, the U.S. faces a host of challenges in maintaining its leadership position in M2M, the report added. "Some sectors, such as automotive, healthcare and smart homes, are adopting a wide range of proprietary solutions making it difficult for the industry to interoperate," the report noted.

In some sectors, such as healthcare, regulators need to provide greater clarity around issues such as liability, the report said.

There may be a need for more specialized M2M modules designed for specific vertical sectors, the report said. The GSMA also noted that despite LTE being widely deployed in the U.S., LTE M2M modules are "still significantly more expensive than 2G and 3G equivalents." Meanwhile, many of the M2M solutions already deployed in the U.S. will need to migrate to 3G or 4G networks as 2G networks are shut down during the next few years.

"To fully unlock the M2M market opportunity for both consumers and businesses, we need industry-wide collaboration to address the current fragmented marketplace and to drive economies of scale and global interoperability, which will benefit all players in the emerging M2M ecosystem," Hyunmi Yang, chief strategy officer at the GSMA, said in a statement. Specifically the association is calling for government policies aimed at encouraging wider deployment of cellular M2M in key sectors such as utilities, smart cities, automotive and healthcare; cheaper M2M modules; and the development of standardized APIs.

At the current rate of trajectory, cellular M2M connections will grow at 26 percent per year globally between 2014 and 2020. However, according to the report, this growth rate could accelerate beyond 40 percent a year if "desirable market conditions" are achieved--a situation that would lead to 2 billion cellular M2M connections globally by 2020.

For more:
- see this GSMA release
- see this GSMA report (PDF)
- see this separate GSMA release

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