October 11, 2011
By RYAN KIM
The cellular industry, despite getting more than 100-percent penetration in many countries, is just getting started. According to the GSMA, the number of total wireless connected devices is expected to more than double from 9 billion today to more than 24 billion in 2020. That growth will be paced by strong momentum in mobile connected devices which are expected to increase from 6 billion today to 12 billion by 2020.
This will create a $1.2 trillion market opportunity for the wireless industry, a sevenfold increase from expected revenues in 2011, according to the study conducted by Machina Research.
The big opportunity, as we’ve noted before, is in connecting all the devices around us, from refrigerators and cars to other appliances and consumer electronic devices. Michael O’Hara, chief marketing officer of GSMA, called this the next phase of development for the mobile industry as consumers interact with their surroundings. But he said the opportunity will take collaboration across the entire ecosystem to reach its potential.
Where exactly are the opportunities? The study found that good collaboration with the consumer electronics industry could generate direct revenues of $445 billion. Other sectors that stand to benefit are automotive, which could generate $202 billion in revenues; health, which could see $69 billion; and utilities, which could increase by $36 billion in revenue by 2020. Jim Morrish, director at Machina Research said:
We are moving into a new era in connectivity where we will see the proliferation of billions of connected devices in the world. Most of that growth is coming from machine-to-machine: a new market for communications service providers, and with new dynamics. The way that mobile operators, device vendors, service providers and others in the value chain react to this opportunity will have important implications for their future success. Right now, the mobile industry has a clear opportunity to play a central role in the Connected Life.
This is how the cellular industry expects to grow going forward. We noted that Verizon’s and AT&T’s new subscriber additions this summer were fueled in large part by connected devices such as vehicle tracking, telematics and M2M connections. These aren’t high-revenue connections by themselves, so the ARPU is lower for those users than for a traditional subscriber, but they are still very profitable connections, said AT&T’s John Stephens, senior EVP and CFO, said at the time.