M2M: The Next Big Mobile Opportunity? - Sponsored Whitepaper

M2M: The Next Big Mobile Opportunity?
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There is a growing sense that Machine-to-Machine (M2M) technology now offers a significant opportunity for operators to grow revenues through service innovation and diversification. M2M has been around for some time, and some companies have been employing a form of M2M operation for over a decade. It is only now, however, that the concept is really starting to permeate the mainstream mobile operators’ psyche. Key variables, such as technological advances in mobile, supply-chain maturity and the need for operators to offset declining voice revenues in the Person-to-Person (P2P) space are spurring interest. Regulation will undoubtedly play a part in defining the market too over the next five years, but the revenue-generating opportunity that M2M represents is now too great for operators to ignore. The fact that some tier one mobile operators are already cranking up their investment in this market testifies to this.

Observers’ growth predictions may vary - with forecasts ranging from hundreds of millions to billions of deployed M2M devices by 2014 - but there is a growing consensus that M2M is set to be a major growth area over the next five years. Sceptics may question whether the extremely low value of transactions renders M2M worthwhile for operators, but this is more than offset by the sheer volume of transactions that M2M promises. It is a volume-driven business. And this requires a separate business model and appropriate BSS infrastructure if operators are to capitalise on revenues from incremental network traffic.

In essence, M2M is a new type of business, and certainly one that owes more to existing wholesale rather than retail models. Treating M2M as a separate operation, with a dedicated business model will be critical to success. Employing a retail telecoms approach would be futile, as retail is characterised by direct relationships with a live customer. This may deliver greater ARPU than M2M, but customers are fickle and increasingly disposed to churn in competitive markets. The cost of retaining customers is considerable too, whereas in an M2M environment there are no live customers to retain, so there is no need for elaborate and costly customer care operations. Likewise, retail-style above the line marketing would be superfluous in a M2M model, reducing the operating cost base still further.

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