Chinese machine-to-machine market is set for explosive growth

LONDON, June 28, 2016

China leads the global machine-to-machine (M2M) market and will continue to see explosive growth over the next five years, according to the EY report: M2M in China: Opportunities to build on global leadership. M2M – which means direct communication between connected devices – is an essential component to enabling the Internet of Things (IoT). Several advantages unique to China will aid in extending its global leadership in M2M, most notably, its large smartphone base and ambitious government plans for IoT.

Steve Lo, Greater China Technology, Media & Telecommunications Market Segment Leader, Ernst & Young, says: “Support from the Chinese Government and its mandate for China to become a nation of smart cities has been crucial to building the necessary critical mass for M2M to drive the country’s future mobile internet era. Together, Chinese operators and the Chinese Government have enabled the market to grow dramatically in a relatively short time, laying the foundation for further expansion and accelerated development of the IoT.”

Deployment of smart-city pilots has accelerated adoption of M2M solutions in several key industries. China’s telecoms operators, in particular, are set to capitalize on the IoT opportunity by leading the development of services related to IoT and engaging with the smart-city projects initiated by many Chinese city authorities to expand their M2M and IoT businesses.

Energy and transport also stand to benefit with new network technologies supporting future market growth. At the same time, logistics, securities and health care are increasingly using M2M technology to deliver services, such as fleet management, asset tracking, surveillance and smart health. Going forward, the wearables and connected-car markets also will see significant growth potential.

The report identifies third-party collaboration, alliances with competitors and cross-sector partnerships as critical success factors for telecoms operators to develop and deliver targeted M2M solutions effectively across industries.

While partnership provides a fast route to market, bold acquisition strategies can bring a mixture of customers, vertical expertise and development capabilities to operators and service providers. Utilities and transport are two priority sectors where, according to the report, operators may need to consider investment.

Holger Forst, Global Telecommunications Assurance Leader, Ernst & Young says: “To succeed in the long term, operators must also look at revamping their organizational model to increase agility. Engaging in partnerships and alliances is vital to delivering robust and innovative solutions. Pursuing acquisitions can also position service providers for a greater share of M2M industry revenues. Meanwhile, sharper focus on big data analytics also provides opportunities for further differentiation by delivering greater insights for customers.”