According to a new research report from Berg Insight, the number of shipped consumer M2M devices with cellular connectivity grew to 7.1 million worldwide in 2011, up from 6.4 million in the previous year.
The consumer electronics market has experienced an incredible growth during the digitalisation era in the last decade. Today, dedicated devices such as PNDs, digital cameras, handheld gaming consoles and PMPs are facing fierce competition from converged multipurpose devices such as smartphones and tablets. Mobility, connectivity and personalisation are three of the most important current trends within consumer electronics. Instant access to information, using social networks and consuming and sharing media are becoming important parts of people’s digital lifestyles. Due to maturing markets and stunted ARPU growth, mobile operators all over the world are showing increasing interest in the consumer electronics market. The growing desire for people to stay connected makes wireless consumer devices an opportunity for the telecom industry to expand their market beyond mobile handsets.
Consumer electronics has emerged as a new major application category for cellular M2M in the past years. Consumer M2M devices are neither classified as handsets, PCs, tablets nor traditional M2M devices.
The product category includes e-readers, portable media players, gaming consoles, digital cameras, digital photo frames, PNDs, traffic information devices, personal tracking devices, wellness & fitness devices and user programmable sensor devices. The reasons for cellular connectivity vary and are often a way to meet the needs for connected features introduced in multipurpose devices. Media and entertainment devices can offer instant distribution of digital content. Imaging devices enable instant media sharing on social networks and seamless usage of cloud storage services. Personal navigation devices and speed camera warning devices can provide users with real time traffic information and other dynamic online content. Personal tracking devices and wellness products enable remote monitoring of sensor statuses such as location, blood pressure and glucose levels. Fitness applications allow for mobility that often is a necessity in these types of products.
The market for consumer M2M devices is still in its early stage. Until now, the most connected device categories are e-readers, PNDs, digital photo frames and handheld gaming consoles such as the recently introduced Sony PlayStation Vita. Berg Insight estimates that total shipments of consumer M2M devices reached 7.1 million devices in 2011. Growing at a compound annual growth rate of 39.8 percent, the shipments are expected to reach 37.9 million devices in 2016. Berg Insight estimates that the number of connected M2M consumer devices reached 12.7 million at the end of 2011. Growing at a compound annual growth rate of 38.6 percent, the number of network connections from consumer M2M devices are expected to reach 65.0 million in 2016. E-readers, PNDs, digital cameras and handheld gaming consoles will then be the most common consumer M2M devices accounting for 45 percent, 32 percent, 8 percent and 6 percent respectively of the total number of connections.
North America is currently the most important market for consumer M2M devices and accounted for about 5 million of the total device shipments in 2011. The second largest market is Europe with 1.7 million device shipments followed by the rest of world with 0.5 million device shipments.
Berg Insight anticipates that North America will remain the largest region with a market share of 40 percent in 2016. Europe and the rest of world will account for 30 percent each of the connected device shipments in the same year.
Continuously decreasing prices of cellular modules and chipsets are key developments for growth in the connectivity market. The deployments of high-speed cellular networks such as HSPA+ and LTE on most markets are another important driver enabling bandwidth-hungry applications. The exploding sales of connected mobile broadband products such as tablets further illustrates the benefits of cellular connectivity and will increase the demand for other consumer M2M devices as well. The telecom industry is depending on multiple connections per user for growth but to make it attractive for consumers to have multiple devices with cellular connections, a great deal of business model innovation is required. In order for the consumer M2M market to take off, price on mobile data has to decrease and subscription fees for every single connection need to be lowered. Instead, more consumers would be willing to have multiple connections, which will allow for an increased total ARPU. Device vendors and network operators are also advised to focus on bundling compelling services and products that include the price of mobile data instead of marketing actual mobile data subscriptions.