US operator Sprint claims its nascent M2M division is generating ARPU of around US$5-$10 each month, a figure which generates a very high profit margin.
Speaking at the operator’s new M2M Collaboration Centre in Burlingame, California, during an Ericsson media roadshow this week, Geoff Martin, Manager of Platforms and the Collaboration Center for Sprint’s M2M Business Unit, revealed that the varied sectors supported by M2M services generate wildly fluctuating revenue figures. Digital signage, for example, can create ARPU of around US$150, while smart grids are sub-US$1.
“M2M is one of the most profitable customers we have,” said Martin. He explained that the M2M business is not subject to large subsidy requirements (as in its smartphone sector). “It’s pure hardware, no subsidy. There’s no customer care cost for M2M either. M2M is clean and profitable and not burdened with subsidies.”
Like its rivals, Sprint is putting a great deal of focus on M2M, claiming to have 400 unique ‘non-phone’ products able to run on its network. “There’s not too much with an electrical current running through it that will not be wirelessly enabled in future,” predicted Martin. “In five years’ time you won’t be able to buy a digital camera that won’t give you a way of uploading your photos to Facebook…. Every single auto manufacturer will be coming out with one flavour of M2M.”
Although Sprint currently has three networks running different technologies (CDMA, WiMAX and iDEN) – at least until its Network Vision project kicks into gear – Martin revealed that its M2M modules based on WiMAX are significantly cheaper than its others. Citing the “Qualcomm tax” that all CDMA-based products are subject to, he commented that “CDMA module costs are 15-20 percent higher than a GSM module,” while “WiMAX modules are almost half that of CDMA modules.” He also pointed out that, despite the operator’s heavy marketing over its superfast ‘4G’ speeds, M2M is not reliant on such networks.
“Most M2M apps just need a few hundred kilobits a month. Very few are streaming high-def video. Most are low bandwidth. A lot of M2M apps don’t need speed.”
Martin did add that Sprint is busy evaluating LTE as a future network technology and “there’s a high likelihood an element of LTE will feature in our future plans.” However, he warned that the cost of today’s LTE modules must come down from around US$60-US$70 in order to kickstart this section of the market.