Nov 1, 2012

M2M Corporate Transactions Q3-2012

Please check the "Corporate Initiatives" navigation tab for the most recent market developments.

M2M started to develop as a sizable and strategic market for the mobile industry around 2008. This was the year that consumers and mobile operators began to appreciate the novelty of Amazon's Kindle connected eReader.

The Kindle offered an innovative eBook service enabled initially by Sprint's mobile network and now supported by AT&T in the USA. It employed a smart pricing model that did not force readers into a mobile data contract. It also did not oblige users to think about how much data they were downloading. Amazon's business model was also intriguing in positioning the device as a way to drive revenues in Amazon's core eCommerce business rather than a standalone commercial proposition.

In the market evolution of M2M, 2008 is also important for another reason. This was the year that mobile operators as a group addressed the market potential for connected devices through the GSM Association's Embedded Mobile market development campaign.

Since then, there has been a steady rise in the amount of corporate activity as organizations have developed M2M strategies, implemented new business models and entered new connected-device market segments. We have tracked these events, focusing on the following categories of activity:

  • Market entry - this applies to the case of an organization either entering the M2M market or expanding into a new M2M business segment.
  • Partnering - this label is applied to initiatives where one organization partners with another to address some aspect of the M2M market. Partnering can take different forms ranging from agreements to cooperate on business and product development, some of which may be opportunistic and others more formal joint-ventures.
  • M&A - this applies to corporate initiatives involving mergers, acquisitions or investments by one organization into another.
  • Distribution agreement - this label applies to situations where one organization enters into a distribution relationship with another organization for products or services related to M2M solutions. 
  • Technology innovation - this applies to M2M market developments that entail some form of technology innovation.
By the end of Q3-2012, there were 186 corporate events across these five categories. Partnering dominates the business approach of market participants, accounting for over 60% of all events as illustrated below.

Partnering is important because it provides rapid access to expertise; mobile operators that are entering new verticals such as automotive or health care, for example, partner with sector specialists to tailor their offerings and package them according to the buyer norms in these verticals. At the same time, device vendors that are embedding connectivity in their devices and services have a vested interest in tapping into the communications and IT expertise of mobile operators and other eco-system suppliers.

As the market develops and higher value services are deployed, the nature of partnering is likely to evolve as companies see value in the need for greater control and closer integration. This is likely to  lead to mergers and acquisitions as providers seek to internalize critical skills and resources and eventually to consolidate the industry. 

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