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The Market of M2M Communications in Russia and the World

November 2012

Analytical Report (full version)

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Analytical Report (full version)

The Market of M2M Communications in Russia and the World
The Market of M2M Communications in Russia and the World
November 2012

The Market of M2M Communications in Russia and the World

November 2012

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The company J’son & Partners Consulting presents main finding of the research of M2M communications market in Russia and the world.

 

The study provides the analysis of the consumer segments characteristics of the global M2M market, analysis of the most successful projects of M2M-systems implementation in the world, approaches of mobile operators to M2M business organization in the world, forecasts for the global market by 2016, the research of the Russian market of M2M systems, its size and structure, overview of the competitive situation on the Russian market, key market players and the requirements imposed by customers to M2M solution providers.

 

The Global M2M Market

Currently, the leaders of the global M2M market are U.S. companies (AT & T, Sprint, Verizone, etc.) and European companies (Telenor Connexion, Vodafone, Telstra, etc.). These companies focused on the development of the business in 2008 and made a significant progress in this area for several years.

 

 

Within the research the global market is divided into several regions:

 

      • Europe (Western Europe, Central and Eastern Europe, Russia and CIS);
      • America (North America, Latin America);
      • Asia-Pacific Region (East Asia, South-East Asia, South Asia, Australia and Oceania);
      • Middle East and Africa (Middle East, Africa).

 

In 2011, the total number of wireless M2M connections worldwide reached 108 million (Figure 2). The most significant increase was observed in the market of the Asia-Pacific (APAC), where the number of M2M-connections has grown by about 64%. In Europe and the U.S., the market grew by 26%. According to Berg Insight analysts, Top 10 largest operators in the world by revenue have 68.2 million M2M-connections (or 63% of the market). According to Berg Insight by 2012 the number of wireless M2M connections will grow by 29% in comparison with 2011, and by 2016 - by more than three times.

 

 

The leader in terms of M2M-Connection in 2011 was America (Fig. 3). ATP held the second place. Slightly smaller share was recorded in Europe. In total, these three macro-region account for about 95% of M2M-connections, which is about 103 million in natural terms. The Asia-Pacific region showed the largest growth of connections during the period of 2010-2011, which amounted to almost 45%.

 

 

By the end of 2011, there were three major segments, which accounted for more than half of M2M-connections in the world. A significant part of the market is taken by the public utility segment. The second largest segment is industry. The third one is commercial transport (Fig. 4).

 

Berg Insight analysts point out that the highest growth rates will take place in the automobile telecommunication segment, including systems that are integrated into the automobile at the factory (the most striking example of OnStar GM). By the end of 2016 the number of M2M-connections in this segment can grow almost by 9 times.

 

 

The world market of M2M devices sale amounted to 8.6 billion euros in 2011. Berg Insight analysts expect that in 2012 the market will grow by 21% to more than 10 billion euros.

 

The market size of M2M communication services in 2011 was estimated by Berg Insight at 3.4 billion euros. In 2012, the market could grow by 24% - to 4.2 billion euros.

 

 

The biggest revenues from the sales of devices (about 37%) is generated in America. The highest growth rate in revenues from sales for the period of 2011-2012 will occur in the Asia-Pacific region, where revenue will increase by 40% over the period. The lowest growth rate is expected in Europe - 7% (Fig. 6).

 

Most of the revenue from the telecommunications services is observed in America and amounts to 35%. The largest growth rate for the period of 2011-2012 will be demonstrated in Asia-Pacific - 41%. The lowest growth is expected in the U.S. - 14% (Fig. 6).

 

 

As it is noted above, in 2011 the total world M2M market from the sales of devices amounted to about 8.6 billion euros. The greatest part the accounts for commercial transport (Figure 7). Two major segments should also be singled out "Medicine and consumer devices" and "Industry". Less profitable segments of sale devices are "utilities" and "Safety / Security." As for the rate of revenue growth, the highest rate for the period of 2011-2012 will be observed in the segment of "Health and consumer devices" - 34%.

 

The global market of M2M communication services amounted to 3.4 billion euros in 2011, the largest part of which was generated by the segments "Public Utility" and "Commercial Transport" (Fig. 7). The lowest revenue from the M2M communication services market was recorded in the segment "Financial services and insurance." The highest growth rate of revenue for the period 2011-2012 will also be observed in the segment of "Health and consumer devices."

 

 

By the end of 2011 the world's largest operator by number of M2M subscribers is China Mobile. The second place was taken by AT & T. Vodafone held the third place. Top five operators includes Verizon Wireless and T-Mobile. Top 5 operators account for about a half of the market by the number of M2M-connections.

 

 

According to Berg Insight, the main countries who have made the greatest contribution to the number of M2M subscribers in 2011 were the U.S., UK, Ireland, Japan and China. The most rapidly growing number of connections is showed by the Chinese M2M solutions market, which grew by 8.5 million connections in 2011, and the Eastern European Market - 5 million connections.

 

The highest penetration rate of mobile M2M services was recorded in Sweden (27%), Norway (12%) and the U.S. (9%) (Fig. 9).

 

 

The largest country by the number of M2M connections by the end of 2011 was the United States - 26.8 million. The second place is held by China, which has 20 million connections. In the rest of countries the number is less than 6 million.

 

The Russian M2M market

The formation of the Russian M2M market began in the early 2000s - it was then that mobile operators offered corresponding tariffs for corporate users. The first customers were large automobile fleets, tracking the location of their vehicles. Then joined the customers of financial services, applying M2M services for communication with their retail shops. Great impetus for the market development was caused by the ubiquitous payment terminals. This unique for Russia and CIS phenomenon stimulated the development of an autonomous communication between computer devices based on mobile channels.

 

According to the company J'son & Partners Consulting, the Russian market of data services between technical devices through a network of mobile operators increased by more than 70% per year. In the period from 2010 to 2015 the number of SIM-cards used in M2M services will increase by almost 15 times and will exceed 18 million. Today M2M market growth is ahead of the average growth rate of the mobile market in general, which provides operators increase of the revenue from this direction to 80% each year.

 

Due to the development of technologies of global GPS / GLONASS positioning and reduce of the cost of equipment, which combines satellite receivers and GSM/3G-modems, one of the most active areas of the M2M market is the monitoring of the movement of objects (vehicles, couriers, freight). Cellular operators offer services both of permanent monitoring with the ability to analyze the available data on the movement of objects, and services to determine their current position (both on the basis of data from satellite GPS / GLONASS, and by means of the network positioning).

 

By the end of 2011 the Russian market M2M was about 2.4 million units (Figure 10). Increase over the previous year was 60%. The greatest number of devices per segment accounted for "Payment systems and retail." "Transport monitoring and moving objects" is the second highest segment by the number of M2M-devices. The third most important segment is the "Consumer Electronics". The lowest share of devices accounted for the segment "Security systems, control and traffic management."

 

 

In 2011, as compared with 2008 the structure of end users of M2M solutions has undergone some changes: a decrease in the proportion of devices in the corporate segment is observed. In this case, the corporate segment continues to be a leader. The second place holds the segment of private users, the basis of which is made by users of security systems and security vehicles, and personal navigators. The governmental segment has the least number of devices (Fig. 11).

 

 

The total size of the market in monetary terms (including the cost of equipment, communications, and service) in 2011 amounted to about 40.4 billion rubles., the biggest part was generated by the equipment. As compared to 2010 the market grew by 15%, and communication services - by 28%. There is also the increase in the market of operational services (dispatching and managing of M2M-solutions): in 2011, it increased by 38% (Fig. 12).

 

 

For the last three years the market is demonstrating the overall increase in the number of connected devices, however, there is a trend of gradual depreciation of equipment and communications services with relatively stable prices of operation services. It is related to the general decline of prices for data services, as well as a general decline in the prices of telematics equipment (in particular, GLONASS / GPS).

 

At present, in the tariff plans of all the major operators there are tariffs for M2M devices. The last of the largest mobile operators in this market came Tele2 company. At the same time, the records of these devices is complicated by the fact that most consumers either do not know about the special rates for M2M, or they do not like these rates for one reason or another, and they use the standard rates for corporate and residential customers with the low cost of Internet traffic.

 

According to J'son & Partners Consulting estimations, in 2011 the structure of the customer base of mobile M2M distributed among the operators in the following way: the leader by the number of customers of mobile M2M was MTS. The second place was taken VimpelCom and the third by MegaFon.

 

 

In the first quarter of 2012 in Russia in general the penetration rate of M2M services didn’t not exceed 10%, while in Sweden the figure was 27% and in Norway 12%. The highest penetration rate of M2M solutions in Russia was recorded in such sectors as finance, insurance, and mining. Depending on the size of the business, large companies employing more than 250 people (5%) most frequently use the services of M2M are. Penetration rate of M2M services of midsize and small business was about 3%. In the micro business the figure was 2%.

 

The main barriers hindering M2M market development in Russia are as follows:

 

       • High tariffs for M2M services;
       • Low speed of connection with M2M device.

 

Contents of the full (171 p.) report «The Market of M2M communication in Russia and the world»

 

Introduction
1. The Global Market
       1.1. History
       1.2. Current state of the market of development forecasts
       1.3. Main segments of M2M, ARPU of the service
              1.3.1. Payment systems
                     1.3.1.1. The example of mobile bank «Alpha-Mobile»
                     1.3.1.2. Solutions for retail
              1.3.2. Medicine
                     1.3.2.1. Example M2M-services for health
                     1.3.2.2. Remote monitoring of patients in health care
                     1.3.2.2.1. Remote ECG monitoring using mobile communication
                     1.3.2.2.2. The Global Remote patient monitoring using wireless technologies and
Cloud-technologies
              1.3.3. Safety
              1.3.4. Monitoring and management
                     1.3.4.1. Examples of services of equipment monitoring
                     1.3.4.2. Video monitor of driving
              1.3.5. Smart flat
              1.3.6. Public utility
              1.3.7. Environmental monitoring
              1.3.8. E-Government
              1.3.9. Systems of global positioning
              1.3.10. E-Call
              1.3.11. Monitoring and control of the movement of people and objects
                     1.3.11.1. Examples of the service "Navigator" from "MegaFon"
                     1.3.11.2. Monitoring of people and objects
              1.3.12. Application for emergency services
              1.3.13. Telemechanics
                     1.3.13.1. Solutions for Industry and Energy
                     1.3.13.2. The company collecting and transporting waste
              1.3.14. Consumer M2M
       1.4. Business cases of successful projects in the field of mobile M2M
              1.4.1. Tracking of birds and marine animals for scientific purposes
              1.4.2. M2M solutions to control logging in a large area
              1.4.3. Electric vehicles, "smart" cars
              1.4.4. Perishable goods and farm drugs transportation
              1.4.5. Baby pajamas with M2M
              1.4.6. Medicine smartphone       1.5. Approaches to the organization of mobile operators in M2M business
              1.5.1. Review of existing business models
              1.5.2. Scandinavian model, Telenor example
              1.5.3. American model, AT & T example
       1.6. Forecast of development of the global M2M market up to 2015 by various sectors
       1.7. Conclusions on the foreign M2M market
2. The Russian M2M Market
       2.1. Review of the regulatory framework of the Russian Federation
       2.2. Market size and its structure by business and consumer segments
       2.3. Review of the competitive situation in the market and offerings of key players
              2.3.1. General state of the mobile M2M market
              2.3.2. MTS offering
              2.3.3. Megafon offering
              2.3.4. Beelina offering
              2.3.5. Tele2 offering
              2.3.6. Telposition offering (M2M MNVO-operator for the industry)
       2.4. The market by the main industry segments
              2.4.1. Solutions for transportation, monitoring of mobile objects
                     2.4.1.1. Monitoring of transport means and auto security
                     2.4.1.2. Other types of monitoring (monitoring of people, smart insurance, ERA-GLONASS)
                     2.4.1.3. Examples of service of transport monitoring
              2.4.2. Payment systems and retail
                     2.4.2.1. Universal payment terminals
                     2.4.2.2. ATMs and POS-terminals
                     2.4.2.3. Other solutions in retail (vending, parking, ticket sales, etc.)
              2.4.3. Security systems
                     2.4.3.1. Example M2M-service in security sphere
              2.4.4. Industry, energy, monitoring and management of objects
                     2.4.4.1. Solutions for remote monitoring of heat and electricity consumption
              2.4.5. Other systems of remote objects management (traffic, lighting, weather, environment,
                        etc.)
              2.4.6. Consumer segment (market navigators, E-reader, the "smart home")
                     2.4.6.1. Navigators
                     2.4.6.2. Other devices (E-Readers, the components of the "smart home")
              2.4.7. Other prospective segments
                     2.4.7.1. Healthcare and telemedicine
                     2.4.7.2. Products using RFID and NFC technology
                     2.4.7.3. Other segments (E-Government, advertising, intellectual property)
       2.5. Expectations of developers and consumers of M2M solutions from the mobile operator
              2.5.1. Requirements for the service provider
              2.5.2. Market trends, barriers and current needs
       2.6. Forecast of development of Russian M2M market up to 2015
       2.7. Conclusions on the Russian M2M market
       2.8. Conclusion

 

List of Figures:

Fig. 1. The history and current state of the global M2M market
Fig. 2. Value chain in M2M
Fig. 3. The number of wireless M2M connections by macro-regions in 2010-2016.
Fig. 4. The size of the mobile M2M market in Asia Pacific region in 2011 (consider all WWAN
          technologies, including mobile communications)
Fig. 5. The size of the mobile M2M market in the USA in 2011 (consider all WWAN
          technologies, including mobile communications)
Fig. 6. The size of the mobile M2M market in the Eastern Europe in 2011 (consider all WWAN
          technologies, including mobile communications)
Fig. 7. Penetration of M2M services (ratio of M2M devices to the number of mobile
          subscribers) in key countries in 2011
Fig. 8. The number of connections in the wireless M2M market by main segments, 2010-2016
Fig. 9. Traffic consumption by various M2M-devices
Fig. 10. Dynamics of changes in communications technology of M2M devices connection, 2010-2020
Fig. 11. The growth dynamics of the users number of "mobile banking" service in the world,
            2008-2014
Fig. 12. Market for medical monitoring at home in 2009-2015. (equipment / services / supplies)
Fig. 13. The patients incidence with diseases in the U.S. and Europe, treatment which is
            possible with the use of remote monitoring systems
Fig. 14. System cardionet (wireless monitoring of heart rate of patients)
Fig. 15. Transmission scheme in GSM alarm system when using SMS
Fig. 16. Organizational scheme of vehicle monitoring system
Fig. 17. The principles of DriveCam driving risk management system
Fig. 18. Mobile terminal, consisting of a laptop, printer and reader of bank cards
Fig. 19. The structure of the issue received by the Prime Minister at the time of the
            "straight line"
Fig. 20. eID
Fig. 21. Mobiil-ID SIM
Fig. 22. ECall implementation plan
Fig. 23. Schematic diagram of the eCall
Fig. 24. Scheme of construction of a two-tier telecontrol system
Fig. 25. Dynamics of sales of electric cars equipped with telematics M2M systems in 2011-2015
Fig. 26. The number of vehicles equipped with SYNC in 2010-2015
Fig. 27. Dynamics of sales of drugs that require low-temperature transport in 2008-2011
Fig. 28. The number of containers, equipped with monitoring M2M systems in 2010-2016
Fig. 29. The number of births in the U.S. in 2006-2011
Fig. 30. Smartphone LifeWatch V to analyzing state of health
Fig. 31. Strategy in the M2M mobile operators market
Fig. 32. SWOT analysis of the strategy Telenor Connexion
Fig. 33. Plans of companies implementing M2M-solutions, the choice of service providers
            among U.S. mobile operators
Fig. 34. Size and structure of the Russian M2M market by business segments by the number of
            devices, 2008-2011
Fig. 35. Size and structure of the market by type of M2M expenses in monetary terms, 2008-2011
Fig. 36. Sectoral structure of the mobile M2M by the number of connected devices, 2010-2011
Fig. 37. The structure of the mobile M2M market by the number of connected devices,
            depending on the type of consumer, 2008-2011
Fig. 38. The structure of the mobile M2M market in 2011 by type of expenditure
Fig. 39. The structure of the mobile M2M market in 2011 by type of expenditure
Fig. 40. The leading operators in the Russian market by the number of M2M subscribers, 2011
Fig. 41. Benefits of M2M Control Center as compared to standard solutions
Fig. 42. The development strategy of Beeline M2M-services
Fig. 43. Structure of the market of solutions for transportation and monitoring of mobile
            objects by the main segments in the number of connected devices M2M, 2008 -2011
Fig. 44. Structure of the market of transport monitoring and autosecurity
Fig. 45. The introduction of intelligent traffic management system
Fig. 46. The direction of information flow in ITS Moscow
Fig. 47. The Market of M2M devices fixating traffic violations in 2009-2016
Fig. 48. Scheme of the system "Parkon"
Fig. 49. The Structure of the market of M2M solutions for payment systems and Retail by key
            sub-segments of in the number of connected devices in 2011
Fig. 50. Market dynamics of payment terminals, which use mobile M2M, 2008-2011
Fig. 51. The Structure of the market of payment terminals that use M2M by the main players
            in 2011
Fig. 52. Approximate layout of vending machines in Moscow
Fig. 53. The scheme of the alert system "Rupor"
Fig. 54. The Structure of the market of M2M solutions for the industrial, energy, monitoring
            and management of objects by the number of connected devices, 2008-2011
Fig. 55. Penetration of automatic control of systems and energy using M2M in different groups
            of consumers
Fig. 56. Scheme of a two-tier system ASKUE
Fig. 57. Scheme of a multi-tier system ASKUE (Variant 1)
Fig. 58. Scheme of a multi-tier system ASKUE (Variant 2)
Fig. 59. Structure of M2M solutions market in the consumer segment by the number of
            connected devices, 2008-2011
Fig. 60. Market structure of navigators monitoring traffic jams in 2011
Fig. 61. The most popular functions of GPS navigators
Fig. 62. The most popular functions of GPS navigators
Рис. 63. The Structure of M2M solutions market in other promising segments in the number of
            connected devices in 2011
Fig. 64. Top 10 Russian regions by the number infomats in 2012
Fig. 65. Preferences for qualities of the operator, providing mobile M2M in Russia
Fig. 66. Preferences for qualities of the operator, providing mobile M2M in Russia and CIS
            countries
Fig. 67. Penetration of M2M services in Russia in various fields
Fig. 68. The main barriers hindering the development of M2M in Russia
Fig. 69. Penetration of M2M-solutions, depending on the size of the company, in Russia in
            general
Fig. 70. The number of connections between M2M devices through the networks of mobile
            operators of Russia in 2008-2016
Fig. 71. Structure of the market by the number of M2M devices in various industry segments
            in 2011-2016
Fig. 72. Size and structure of the market by type of M2M expenditures in monetary terms,
            2008-2016
Fig. 73. Market size of ERA-GLONASS in 2013-2015 by type of expenditure
Fig. 74. The Structure of the mobile M2M market in monetary terms by types of companies,
            2008-2016

 

List of Tables:

Table 1. Major events in the market of mobile M2M from 1989 to 2011
Table 2. The number of wireless M2M connections by macro-regions in 2010-2016
Table 3. M2M market size of sales of devices by macro-regions in 2010-2016
Table 4. The market size of M2M communication services by macro-regions in 2010-2016,
             million euros
Table 5. M2M market size of sales of devices by the main segments in 2010-2016, million euros
Table 6. Market size of M2M communication services by the main segments in 2010-2016, million
             euros
Table 7. Major countries by the number of M2M-Connections in 2011
Table 8. Major operators by the number of M2M-subscribers in the world, 2011
Table 9. Leading developers of M2M-platforms
Table 10. Vertical markets for M2M in the classification of Jasper Networks
Table 11. Financial performance of mobile services and mobile M2M
Table 12. M2M ARPU tby he main segments in 2011
Table 13. Number of connections in the wireless M2M market by the main segments, 2010-2016
Table 14. The number of installed POS-terminals in the world, 2010
Table 15. Providers of remote monitoring services in medicine, using mobile M2M
Table 16. An overview of business cases using the mobile M2M
Table 17. Dynamics of supplies of new M2M-devices, 2009-2015
Table 18. Dynamics of supplies of new M2M-devices by segments, 2009-2015
Table 19. Sales dynamics of cellular M2M devices by region, 2009-2015
Table 20. Mobile M2M market by major customer segments and their expenses in 2008-2011
Table 21. Number of mobile M2M devices by the consumer segment, 2008-2011
Table 22. The number of connected M2M devices in the segments of transport and monitoring
               of mobile objects by segment, 2008-2011
Table 23. Large projects to equip passenger and special transport systems, satellite 
               monitoring in 2011-2012
Table 24. Services are based on M2M equipment of transport monitoring
Table 25. The largest providers of transport monitoring and autosecurity services in 2010
Table 26. The list of projects implemented by "M2M telematics" in 2008-2010
Table 27. The largest manufacturers of payment terminals
Table 28. The largest banks by the number of ATMs as of January 1. 2012
Table 29. The largest banks by number of information kiosks with RBS features as of
               January 1. 2012
Table 30. Location of vending machines installation in Moscow and their number 
Table 31. The main sub-segments of M2M-security
Table 32. The main sub-segments of M2M-systems of consumer electronics
Table 33. Manufacturers of M2M solutions in the field of medicine, in the Russian market
Table 34. Expert assessments of trends, barriers and needs in the Russian M2M market by
               industry
Table 35. Growth drivers of the mobile M2M segment and assessment of the number of devices
               in 2016, th

 

 

This Information Note is Prepared by J’son & Partners Consulting, We strive to provide factual and prognostic data that fully reflect the situation and are available to us before issuing the material. J’son & Partners Consulting reserves the right to revise the data after publication of new official information by the market players.

 

J’son & Partners Consulting presents main finding of the research of M2M communications market in Russia and the world.