Management Platforms and Advanced Applications Trigger New Growth in the Brazilian M2M Market
Verticalized solutions prove the most viable offering in a highly connected environment, notes Frost & Sullivan's Digital Transformation team
SÃO PAULO, Aug. 29, 2016 /PRNewswire/ -- Novel applications and value-added services such as management platforms are expected to restore the average revenue per line (ARPL) in the Brazilian machine-to-machine (M2M) market. Revenue growth had slowed down during a period of intense competition and aggressive pricing, but the emergence of new applications requiring ubiquitous connectivity and higher value 3G/4G services are giving the market a much-needed stimulus.
Traditional applications will still dominate the M2M market in the medium term, but carriers are expanding their portfolios with more consumer-oriented applications such as connected cars, personal care and smart homes. Such converged, verticalized solutions could well account for 35% of telcos' global revenues by 2018. Telcos are also looking at expanding into new verticals such as industry and agriculture, which have potential to generate higher ARPLs through advanced automation applications.
Telecom carriers are clearly aware that M2M holds much promise; as well as the market's top established players, all new entrants in Brazil's wireless market are focusing on this segment, the latter by leveraging the low-cost structure enabled by the mobile virtual network operator (MVNO) model. According to Frost & Sullivan's latest study, Brazilian M2M Market, the M2M market is expected to grow from $121.0 million in 2015 to $258.8 million in 2021 at a double-digit compound annual growth rate of 13.5%. The financial and automotive segments are anticipated to account for 77.2% of lines in 2021.
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"Telcos need to provide comprehensive solutions by integrating M2M into their B2B portfolio to capture the full value of M2M for clients," explained Frost & Sullivan Digital Transformation Industry Analyst Georgia Jordan. "Additionally, carriers could enter into partnerships with key M2M vendors to offer and monetize end-to-end M2M solutions."
Meanwhile, regulatory initiatives are proving critical to driving M2M adoption in Brazil, particularly in industries such as energy and power. Although a law requiring all new cars to be shipped with embedded SIM cards was revoked in 2015, M2M service providers still have reasons to feel optimistic. They are awaiting the verdict on a proposal to substitute all electricity meters in the country with connected smart meters, which will greatly drive demand for M2M in the utilities segment.
The Brazilian M2M market currently enjoys governmental support in the form of tax exemptions, but these are limited to a few applications such as mobile-enabled point-of-sale (PoS) card payment terminals. Carriers are now lobbying to have them extended to all M2M connections, which will help widen the margins of the commoditized service.
So far, both enterprises and consumers have been cautious in their adoption of M2M technology due to unaddressed security issues. Security companies are working to plugging loopholes, but the specific tasks of M2M devices coupled with their dedicated security needs make it unfeasible for manufacturers to include additional security software.
"The cost issue is rapidly losing significance, as M2M applications are becoming increasingly affordable. This is encouraging the use of M2M modules in otherwise non-connected devices such as security cameras, alarms and health monitoring devices, as well as in tracking applications for pets and products in transit," observed Jordan. "It is also making mobile M2M the preferred backup technology or main connectivity solution for existing connected services such as ATMs, digital signage and smart infrastructure."
Brazilian M2M Market is part of the Mobile & Wireless Communications Growth Partnership Service program. Frost & Sullivan's related studies include: Latin American Mobile Services Executive Analysis, CACAR Telecommunications Services Market, Total Telecommunications Services Market in Colombia, Mexico Total Telecommunications Services Market, 2016 Latin America Outlook for the Information Technology Services Industry and Colombian Machine-to-Machine (M2M) Market Outlook. All studies included in subscriptions provide detailed market opportunities and industry trends evaluated following extensive interviews with market participants.
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Brazilian M2M Market
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