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May 03, 2007
The market for cellular radio modules that target M2M (machine-to-machine) communications applications will grow from 18 million units in 2006 to 90 million units in 2012, forecasts ABI Research. However, commoditization and shrinking margins make for an "extremely difficult market" for module vendors, the market research firm said.
ABI expects growth to be driven by telemetry and wireless local loop (WLL) applications, both slated for 30 percent CAGR (compound annual growth). Telematics shipments will also increase at "moderate double-digit growth rates," according to the firm.
Despite rapid growth, vendors "can be squeezed," however -- for example, by Asian and particularly Taiwanese vendors that are "operationally more efficient" than counterparts in North America and Europe, ABI said, citing Shanghai-based SIM Technologies as a "key vendor in this area."
According to ABI principal analyst Sam Lucero, "Some M2M module vendors are trying to increase their share of the silicon content in the application, integrating more powerful processors and hoping to host more of the end application's total value. Because there are certain M2M applications that benefit from high speed connectivity -- video surveillance, digital signage, and fixed wireless terminals, for example -- others have taken the tack of including 3G technologies in the mix. These companies have existing businesses in 3G PC cards and laptop PC cellular broadband connectivity, so they're using those as a launching pad into the M2M space."
Another vendor strategy involves creating business "wrappers" around the module, Lucero said -- for example, by removing RF (radio frequency) development and/or supply chain burdens from application vendors.
