Government regulations are 'key factor' driving cellular module demand in auto and healthcare M2M markets

IMS Research IMS Research

Austin, Texas, USA. May 30, 2012 – Government regulations and initiatives will be a key factor driving the market for cellular modules used in machine-to machine (M2M) communications, according to a new report from IMS Research (recently acquired by IHS Inc. (NYSE:IHS)).

IMS Research forecasts that government directives along with other dynamics in the market, most notably dropping module prices, will propel annual module shipments for M2M communications to more than 118 million units by 2016.

According to The World Market for Cellular Modules in M2M Communications, the greatest impact of these government regulations will be in the automotive sector. Separate mandates in Brazil, Russia and the European Union (EU) are expected to require cars to have cellular connectivity in upcoming years. In the EU’s eCall and Russia’s ERA GLONASS initiatives, the inclusion of cellular technology is intended to support mandatory emergency call systems, allowing for immediate notifications to emergency services when an automobile is involved in an accident. In Brazil’s ‘Contran 245′, cellular technology will have to assist in the tracking and recovery of stolen vehicles.

“These government initiatives are intended to address different issues and concerns, and demonstrate the wide variety of uses that cellular technology can have in the automotive market,” says Josh Builta, senior analyst at IMS Research. “It is expected that these regulations, along with consumer demand for connected infotainment systems will result in strong growth in shipments of cellular modules to the automotive market in upcoming years. Furthermore, if these respective programmes achieve their intended results, it could spur governments in other countries to enact similar legislation.”

IMS Research forecasts that in 2016 more than 45.4 million cellular modules will be shipped to the automotive sector. This represents about 38% of total cellular module shipments expected in 2016.

IMS Research believes that government initiatives aimed at reducing cost and improving efficiency could also eventually drive uptake of cellular modules in other markets, such as healthcare. In many countries, governments are already beginning to look at home-based remote monitoring devices, which frequently incorporate cellular technology, as a way to maintain high standards of care in a cost-effective manner. Given the USA’s ageing population and healthcare cost concerns, it is not surprising the US Government has been at the forefront of these efforts with legislation such as the Fostering Independence through the Technology Act of 2011, the Veterans’ Telehealth and Telemedicine Improvement Act and California’s Telehealth Advancement Act.

Builta continues, “To date, the overall uptake of cellular modules in the medical market has been fairly limited. However, considering the size of the ageing population and increasing number of people with chronic diseases, there is no industry other than automotive that has greater potential for cellular M2M communications. As medical expenditures continue to rise, governments worldwide will increasingly promote the use of technology, including cellular, to provide affordable healthcare solutions.”

IMS Research projects that partially due to these increased government initiatives, module shipments into the medical market will grow at more than a 95% compound annual growth rate (CAGR) from 2010 to 2016.

However, while Builta believes the market for cellular modules will grow, he cautions that government regulations can also serve to inhibit uptake of cellular modules in these same markets. “Cellular-enabled medical devices, for example, are typically required to go through a complex and time-consuming approval process through multiple regulatory bodies. Furthermore, government standards are often not the same in each country, meaning this process is even more difficult if manufacturers want to sell their cellular-connected devices internationally.”

The demand for cellular modules in the automotive market could also be negatively impacted by regulations. “Governments actions that aim to reduce distracted driving could force manufacturers to limit the functionality of applications such as connected infotainment systems. This could result in reducing the popularity and consumer demand for such systems,” he says.

IMS Research’s latest report, The World Market for Cellular Modules in M2M Communications – 2012 Edition, assesses the uptake of cellular modules in nine vertical markets. Detailed forecasts are provided through 2016. All module shipment forecasts are split by air interface technology and region. The report also includes discussion of the competitive environment, including market shares for the leading module vendors.

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