Advancing LTE migration heralds massive change in global M2M modules markets, says Machina

Andy Castonguay, Machina Research

London, UK — The LTE network migration initiatives in top macine-to-machine (M2M) markets are creating a virtuous cycle of key changes in module design, pricing and the product design process for embedding connectivity in products and devices.

New, lower priced LTE modules expected to reach the market in 2014 will begin to upset the balance of value in the modules industry and force enterprises to recalibrate their decision-making process when choosing wireless wide area network (WWAN) modules for their M2M deployments.

The M2M modules industry is on the verge of dramatic shift as key markets continue to expand LTE network coverage and deployments, according to a new study, Global M2M Modules Report: Advancing LTE migration heralds massive change in global M2M modules market published by Machina Research. To date, the demand for 4G connectivity within an M2M context has been restricted to a select few high bandwidth applications such as emergency response, security video and automobile entertainment. But evolving market dynamics in countries committed to the early adoption of LTE are creating a ‘perfect storm’ of circumstances involving the decommissioning of 2G networks, rapidly expanding LTE network coverage, and large scale LTE deployments that are ushering in a new era of LTE-based M2M modules with improved module design and pricing.

Of the global 266.5 million WWAN M2M connections in 2013, 99.5% were comprised of 2G and 3G connections. However, as the initial wave of LTE migration transforms the M2M markets in the US, Japan, South Korea, China and top European markets, the mix of WWAN module technologies will change dramatically in the next 3-5 years, as shown in the figure below.

This coming wave of LTE modules and connectivity is driving innovation in module design and forcing the migration of modules among existing M2M deployments in more advanced LTE markets. While the immediate impact of this process will be felt predominantly in early adopter markets, the migration dynamics in these markets serve as important case studies for all markets in the midst of LTE transitions.

“A key impact of this technology migration is being felt by companies that currently have large scale 2G M2M deployments or are looking to deploy new devices over the next few years,” stated Andy Castonguay (pictured above), principal analyst at Machina Research and author of the new report. “The combination of network decommissioning and evolving LTE module options presents a new challenge to product designers of connected devices and M2M solution providers.”

The migration to LTE will have major implications for how enterprises choose which technology to use in both their existing and future M2M initiatives. “For most M2M deployment decisions today,” Castonguay stated, “the primary issues are module and device costs in the context of what the specific application needs today and in the short term.”

The conventional product development analysis will need to evolve quickly to consider long-term availability of the network, total cost of ownership for the M2M integration and intended lifespan of that asset. As a result, for enterprises embedding connectivity in devices with useable lifespans of more than 2-3 years, they will need to evaluate their choice of module technology not only to meet the immediate needs of their specific application, but also to take into account the longevity of the host network, so as to avoid costly module replacement in the future.

A central element of research for this report involved extensive interviews with 20 module manufacturers, mobile network operators, M2M service providers and M2M device manufacturers in order to assess current pricing trends for the 13 most common variants of M2M modules available in the global market.  As a result of heavy competition among global module makers and growing economies of scale, the pricing levels for WWAN modules has declined in recent years, making modules increasingly affordable for M2M projects and deployments.  The rapid shifts in LTE network coverage are also establishing a foundation for the deployment of LTE-only modules which are expected to have a substantial impact on LTE-module pricing.

In addition to the introduction of LTE-only modules, manufacturers are exploring new module designs and product line formats to further lower the costs of 4G connectivity. The report identifies several key trends in module design that will contribute to continued improvement in both cost and performance that will help drive greater scale into the M2M module industry. These, and numerous other elements of the WWAN M2M modules market, are addressed in the report.

The report, Global M2M Modules Report: Advancing LTE migration, heralds massive change in global M2M modules market is focused on the rapidly evolving market dynamics related to WWAN M2M modules and the future market opportunity within the M2M modules industry. As the primary radio access point for a significant portion of the wirelessly connected M2M market, WWAN modules represent a crucial component in the overall M2M supply chain and their costs and technical capabilities comprise fundamental elements of M2M solution and product design. The report is based on detailed and extensive discussions with key relevant stakeholders, supplemented by Machina Research’s extensive understanding of the changing dynamics of the industry. Leveraging Machina Research’s comprehensive forecast database, this report also outlines the growth of shipments for M2M WWAN modules across global regions as well as top industry verticals and associated applications.

This report examines several key drivers of M2M module design, pricing and expected shipment volumes for a 10-year forecast period. In particular, the report provides detail and analysis of the changing network technology landscape in top global markets that is transforming the demand for LTE modules and, as a result, altering the balance of global module pricing and design. The report also examines how the increasing availability of LTE modules and improved price points will fundamentally alter the decision-making process of companies looking to integrate M2M modules and connectivity into their products and services portfolio as well as into their own business operations and processes.

The report is available as part of the Machina Research Advisory Service.

Machina Research is a technology research and consulting firm focused on the emerging opportunities associated with new forms of connected device. They provide market intelligence and strategic insight to help their clients maximise opportunities from these rapidly emerging markets.



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