Strategy Report : Advancing LTE migration heralds massive change in global M2M modules markets.
The LTE network migration initiatives in top 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 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 today 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 wireless wide area network (WWAN) M2M connections in 2013, 99.5% was 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.
Andy Castonguay, Principal Analyst at Machina Research and author of the new report stated:
“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. 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.
