Transportation & Logistics, Energy, Healthcare, and Industrial Automation sectors are main demand sectors
Sydney, Australia, 20 January, 2014 – The Machine-to-Machine (M2M) communications market in Australia is measured by the number of M2M Subscriber Identification Module (SIM) connections activated. Market revenues are measured by SIM activations, including costs of hardware, applications, installation and connectivity. In 2013, the number of SIMs activated was estimated at 400,000 to 450,000; an increase of 20% from 2012.
Frost & Sullivan’s new report, Australian Machine-to-Machine (M2M) Communications Market Report 2014 says that the market will display high growth rates over the next five years, peaking at over 30% revenue growth by 2016, and doubling its 2013 value. Demand for M2M solutions from existing markets such as transportation and logistics, as well as the new opportunities in Energy, Healthcare and industrial automation sectors will keep growth rates over 25% in 2017 and 2018.
Audrey William, Head of ICT Research, Frost & Sullivan Australia & New Zealand said that although the M2M market is at an early stage of growth, it has not yet experienced high growth rates as usage is currently limited to a small number of industries. However, the sustained growth expected over the next five to seven years will largely be due to uptake from a wider market base of industries, and the huge opportunity for connecting a variety of objects with SIMs and sensors.
Transportation and Logistics and Energy and Utilities are the key markets for M2M adoption, and currently account for the majority of deployments. These sectors have the strongest business case for using M2M solutions to increase efficiency, and as a result have a much higher awareness and understanding of M2M solutions.
“Although other verticals will increase their uptake of M2M solutions, these sectors will remain significant for driving growth. However, demand from sectors such as Healthcare, Retail, Agribusiness and Banking will increase over the next few years. This will also coincide with the expansion and maturity of the M2M market, where a wider range of industry requirements are addressed,” William said.
“As the M2M market moves from a nascent stage of growth towards mainstream uptake, it will attract new players, which will increase competition. This market commoditisation will put pressure on the lucrative profit margins currently enjoyed. Solution providers with a hardware based strategy will find it increasingly challenging to generate growth,” she added.
“Local telcos are already building strong service capabilities to address a wider range of requirements. In the next three to five years, although the average revenue per SIM will decline, the telcos will continue to benefit from the larger volumes of deployments,” William explained.
The competitive landscape of the M2M communications market is highly concentrated. In 2013, the three main telcos – Telstra, Optus and Vodafone accounted for more than 95% of the market in Australia. Telstra and Optus have a wide breadth of ICT capabilities and their strong networking and infrastructure capabilities enable them to easily integrate M2M solutions with critical backend systems. The established brand name of these telcos in the local market further strengthens their market position and new entrants will be challenged to oversome these competitive barriers.
Frost & Sullivan’s Australian Machine-to-Machine (M2M) Communications Market Report 2014 report forms part of the Frost & Sullivan Australia and New Zealand Enterprise Communications program. All research services included in this subscription provide detailed market opportunities and industry trends evaluated following extensive interviews with market participants. Interviews with the press are available.