Embedded module shipments rise but revenue falls

The cellular M2M embedded module market experienced a more difficult than expected 2010, according to a report from ABI Research.

Although total unit volumes continued to rise, reaching nearly 34 million units shipped in 2010, total industry revenue fell from roughly US$996m in 2009 to about $841m in 2010, reversing the upwards momentum in revenue seen in 2009 as the market rebounded from its 2008 lows.

“Although total unit volume continued to grow in 2010, average selling pricings (ASPs) fell at a faster rate, leading to an overall decline in revenue,” said Sam Lucero, ABI’s practice director for M2M connectivity. “The sharp decline in ASPs is continuing in 2011 and is indicative of the fierce competition in the market, competition that has led to industry consolidation, such as Gemalto’s acquisition of Cinterion and Novatel Wireless’ acquisition of Enfora, both in 2010.”

While module makers face both competition and an overall trend towards commoditisation, the resulting declines in ASPs are broadening the addressable market for cellular M2M connectivity. As module prices decline, it becomes more feasible to embed cellular modules into a growing array of applications ranging from smart utility meters, to automobiles, to remote healthcare related devices, for example cardiac monitors.

“Ultimately, lower prices, combined with other factors that facilitate M2M application development, will lead to overall unit shipment volumes growing faster than prices are declining, and we will see overall module industry revenue grow significantly by 2016,” said Lucero.

“Consequently, falling ASPs are, in essence, benefiting module vendors as a whole, although individual vendors may not be able to survive the fiercely challenging market environment.”

ABI Research’s report, “Cellular Machine-to-Machine (M2M) Markets,” examines the market for mobile M2M embedded modules by assessing key market trends, the competitive landscape, market shares, and important standards and technologies. It provides a five-year forecast of shipments and revenue for the period from 2010 to 2016 segmented by region, application and cellular air interface standard.

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