ABI Research began tracking the cellular M2M (machine-to-machine) module market in 2003, and for five years shipments increased on average more than 25% per year. In 2007 module shipment growth peaked at a phenomenal 45%.
The economic collapse of 2008 put paid to such double-digit growth rates, but even in that dismal year, the M2M market was up 4%. “In some industry segments a 4% rise in shipments would be considered quite satisfactory,” observes practice director Sam Lucero. “But in the M2M space, it was, compared to previous performances, lackluster at best. In fact, due to falling module prices vendors’ revenues actually shrank in 2008.”
However feedback from vendors indicates that most feel the market bottomed out in the fourth quarter of 2008 and the first quarter of 2009. Starting in 2Q 2009, they report, activity seems to be picking up again.
ABI Research now forecasts that 2009 will show modest growth, with unit shipments projected to be about 16% higher than in 2008, and revenue up 10%.
While there is some help for this industry in the US federal government’s stimulus package for smart grid applications, it will not, Lucero believes, deliver any kind of sea-change. “More important than stimulus money is the fact that the federal government is getting much more actively involved in creating standards for the smart grid,” says Lucero. Other market drivers include telematics services and road safety regulations, both in the US and Europe.
While recent conditions have seen some vendors exiting the market and consolidation elsewhere, the outlook is good for those who have made it through the tough times. Success in the cellular M2M module market, however, requires that some conditions be met. “Cellular M2M module vendors need customers with access to credit,” says Lucero. “They also need customers who recognize the operational efficiency benefits of remote monitoring and control.”
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