Report: M2M connections to soar to 359M in 2016

The global machine-to-machine market is just getting going, and will soar to 359.3 million total M2M cellular connections in 2016, according to a new report from Berg Insight.

Click here (PDF) for details from Berg's forecast.

According to Berg, shipments of cellular M2M devices increased 35.3 percent in 2011 to a record level of 50.8 million units. Adjusted for churn, the research firm said this resulted in net additions of 29.3 million M2M connections in 2011, taking the worldwide number of cellular M2M subscribers to an estimated 108.0 million.

Interestingly, the report found that due to the wide adoption of M2M across many vertical industries, a large portion of M2M device shipments is now due to replacement sales. As a result, Berg believes that the net increase of M2M subscribers will be substantially lower than M2M device shipments.

The research firm also noted that despite a consolidation among Western M2M vendors--which include the likes of Sierra Wireless and Gemalto--average selling prices for wireless modules have continued to decline, cutting into industry revenues. "Well executed transformational strategies will be the key to success for wireless module vendors in the years to come," the firm said. "Extended value propositions, product innovation and more mergers and acquisitions are some of the things to expect."

Carriers have obviously been keen to take advantage of the market, even if they often have been unable to agree on common M2M standards and metrics for subscribers and usage. According to Berg, the world's ten largest operators by revenues had 68.2 million M2M subscribers at the end of 2011, an increase of around 38 percent year-over-year.

At the end of the first quarter, AT&T Mobility (NYSE:T) had the largest number of M2M connections, with 13.3 million, up 25 percent year-over-year. Vodafone counted 7.8 million, up 47 percent from the year-ago period, Sprint Nextel (NYSE:S) counted 3 million, up 15 percent and T-Mobile USA counted 2.7 million, up 29 percent. 

Verizon Wireless (NYSE:VZ) indicated during its first-quarter earnings conference call that it would no longer disclose total network connections, explaining that M2M is more complicated in terms of how plans and device connections are formulated.

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

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