China Mobile, without much fanfare, is the world’s biggest M2M provider

Machina Research’s M2M CSP Benchmarking Report features China Mobile and China Unicom for the first time, and provides some valuable insight on the strategies of those two Chinese operators as well as implications for the wider global market.

Earlier this month Machina Research published its 2015 M2M CSP Benchmarking Report and for the first time, Chinese operators were amongst the operators profiled. Unlike their counterparts in other regions, the Chinese operators are content, at the moment, to just serve the domestic market. Nevertheless, their sheer size demands that they are included in any comparison of global CSPs. At the end of 1Q 2015 China Mobile have over 50 million cellular M2M connections while China Unicom had around 14.5 million connections. With China’s mandate to become a nation of smart cities, there are no shortage in demand for the Chinese CSPs’ M2M solutions and healthy growth rates are expected to continue for many years to come. During the course of updating the M2M CSP benchmarking report this year, Machina Research has discovered that while the solutions developed by the Chinese CSP are tailored to the Chinese market, the potential for export to other markets around the world is enormous due to the economies of scale those solutions can brings.

A high level summary of the key findings on the Chinese CSPs is as follows:

• China Mobile recently created a wholly-owned subsidiary focused on developing M2M. Headquartered in the National IoT Industrial Park in Chongqing, it is a substantial entity, employee several hundred, demonstrating a significant investment in the sector from China Mobile. The team is responsible for product research, development, operation and business development.
• China Mobile M2M focuses on nine M2M segments: transportation, logistics, power grid, smart home, security, healthcare, manufacturing, agriculture, and environmental protection. It puts a particular emphasis on transportation, logistic, utilities and manufacturing.
• China Mobile recently signed a partnership with a major European CSP to bolster it connected car program, leveraging that player’s experiences in the application and in return giving it access to the vast Chinese market.
• Huawei is the major R&D partner for both China Mobile and China Unicom in the area of platforms. It is clearly using China as a testbed for its broader global M2M ambitions.
• China Unicom has a more international outlook than China Mobile. It’s part of the Bridge Alliance as well as offering multinational customers familiar technologies for their M2M services (e.g. Jasper Platform and WCDMA). Its main focus areas include transportation and logistics.
• China Unicom is more aggressive, compare to China Mobile, in forming partnerships with global players. For example, they signed an agreement with Telefónica for the joint development of products and services in M2M in 2011.

More specific detail on each of these points, and further details on the CSPs’ strategies are available in the report itself.

Commenting on the Chinese M2M CSPs, Research Director and Head of Asia Alex Chau said:
“M2M CSPs around the world will be paying close attention to the developments in the PRC, hoping to take advantage of the economies of scale on devices and modules, as well as the wider technology developments such as whatever Huawei might do.”

“The Chinese market remains the biggest in the world, and the arrival of LTE will provide even more stimulus. The CSPs can now offer high bandwidth and time sensitive services to their customers, opening up new markets”.

While the Chinese M2M market is a somewhat isolated thing, separate from the rest of the global opportunity, developments in China will have significant implications for what happens around the world. It provides a testbed and proof of concept for smart cities initiatives as well as Huawei’s M2M/IoT strategy. It also promises scale, which may help to reduce costs of hardware for M2M.