By Brian Vezza
With the end of the year around the corner, I've been thinking about what's to come on the machine-to-machine (M2M) front. Overall, I believe we’ll see a tremendous acceleration in the investment and adoption of M2M devices, systems, applications and services. This will be due to two primary factors: opportunity and necessity.
The opportunity of M2M gets the most interest with predictions of tens of billions of new connected devices, Big Data, and “smart” systems being widespread across nearly every vertical market. Estimates of trillions of dollars of shifting investments get everyone’s attention. In some ways though, the necessity driver may be more important than the opportunity driver over the next decade. Here are my thoughts:
There are two main reasons why necessity will drive M2M growth. First, developed economies around the world have been remarkably steady in the growth of “per capita GDP” which has averaged ~2% per year, in some cases for over 100 years. This basically tells us that our standard of living has been steadily improving. The two biggest drivers have been population growth and technology innovations. However, working age population growth has slowed around the world which may reduce the growth rate by half or more. For example, according to McKinsey, in Western Europe, because there is no growth expected in the workforce, “100% of GDP growth must come from productivity gains.” It will become absolutely essential for business leaders and governments to invest in “smart” technologies which have the potential for high growth and productivity improvements. The second necessity reason is linked to the first. Companies that adopt M2M and “smart” systems sooner will gain business model advantages over their competition. This will force other companies to adapt and accelerate the cycle of adoption.
When combined, the opportunity and necessity of M2M will show stunning growth rates over the next decade or longer, transforming multiple industries, along with how we live, work, and play.
A couple of data points from the past month illustrate these trends. For example, IMS Research just announced that cellular M2M connections are expected to more than triple from 2011 to 2016 to over 325 million. I wouldn’t be surprised to see actual numbers significantly higher. There are a dizzying number of cellular connected applications and devices from smart meters to connected vehicles, to smart parking meters, and many others. When you add up all connected device types, Oracle says there are more than 9 billion devices connected to the Internet today and this will grow to 50 billion by 2020.
Many more examples could be used, but the key takeaway is that where ever you look, M2M is well on its way…driven by both opportunity and necessity.
For additional information from Wind River, visit us on Facebook.