Why the M2M excitement NOW?

The major wireless providers have been releasing numerous press releases, and much is being written about the "Internet of Things." Machine-to-Machine communications has been available for a few decades, but the wireless providers are only recently embracing its potential. Why did it take so long? Wall Street was the major obstacle. Investment experts use a metric called ARPU (Average Revenue Per User) to evaluate both the current and future health of wireless providers. The average cell phone ARPU is about $50-60 per month, while M2M ARPU is only about $10-15 per month, and that M2M ARPU has been decreasing as the digital networks were rolled out. Implementing a lot of M2M solutions onto your network lowered your overall ARPU, causing Wall Street to become concerned. Not good for the shareholders.

So, what changed? In short, cell phone market saturation. Not long ago, the wireless carriers began spending most of their time gaining/losing cell phone market share from competitors, with no significant market share gained by anyone. The pie wasn't growing; only the slices were fluctuating. So, the wireless providers concentrated on value-added services (texting, internet access, downloads) that would increase the ARPU. However, most of these value-added services require increased network bandwidth, which strains the capacity of the existing infrastructure. So, the increase in ARPU came at the price of significant capital for infrastructure improvements (think 3G / 4G). Competition to offer these services is a necessary evil, so you could argue that the infrastructure improvements were required to maintain market share. Either way, it is taking a lot of capital to increase ARPU / maintain market share.

M2M is the new frontier for revenue growth. The wireless carriers now realize M2M provides significant revenue potential, at the expense of their ARPU They will have to educate Wall Street and their shareholders on why that is happening, and recommend other measurements of performance. Maybe separating consumer ARPU from M2M ARPU is the answer? A major upside, in addition to a new revenue stream, is that most M2M solutions require very little bandwidth, since they transmit a small amount of data at varying intervals. A lot of this intermittent data transfer occurs during off-hours, when the network is not active anyway. And most M2M solutions don't require the advanced network upgrades of 3G or 4G to be successful, so it is already available from the network's entire footprint. Add to that more aggressive network pricing strategies to attract M2M customers, and literally billions of potential M2M customers, and you can see the logic behind the recent excitement.

M2M Industrial Solutions