The global M2M Value Added Services (VAS) market grew to $1.5 billion in 2012, according to a new report from IHS, titled "Cellular M2M Ecosystem - Value Added Services - World - 2013." The accompanying figure presents IHS's revenue forecast for the global M2M VAS market.
The VAS market encompasses a range of technical and business services that complement mobile connectivity management and application platform services. These services enable application developers, service providers, and enterprise adopters to create, deploy, and manage cellular M2M applications.
Growth in the VAS market in this area will be driven by the surge in mobile M2M connections. Global mobile M2M connections are expected to increase to 374.9 million in 2017, growing at a compound annual growth rate (CAGR) of 26.5 percent from 91.4 million in 2011.
“The next wave of the internet will be the M2M revolution, where almost anything—from a car to a shipping container to a home electricity meter—can become part of a vast network,” said Sam Lucero, senior analyst for M2M and the Internet of Things at IHS. “Mobile communications will play a key role in this new era of the ‘Internet of Things,’ serving as the glue that binds hundreds of millions of nodes together. However, the cost and complexity of developing, deploying, and operating mobile M2M applications is enormous, leading a growing number of companies to outsource mobile M2M application development, deployment, and, in many cases, operation to VAS providers.”
The Advantages of VAS:
Beyond the complexity of M2M, other factors are driving companies to adopt VAS solutions for M2M applications.
On the one hand, many companies prefer to focus on business issues rather than integrating mobile connectivity into new or existing applications. Furthermore, many developers or adopters lack the in-house expertise to create or implement an application that integrates mobile connectivity using only internal resources. Additionally, the willingness of various mobile M2M VAS providers to collaborate is helping to deliver comprehensive VAS offerings to the market. Moreover, communications service providers (CSPs) want to increase their share of revenue from the value segment of M2M by launching VAS offerings.
Relatedly, VAS will provide a tool for various mobile M2M players to capture more market value for themselves. This is important because it will allow them to increase their revenue opportunities and help them respond effectively to the commoditization of their core markets.
VAS Opportunities:
The mobile VAS segment consists of professional services and managed services. Professional services are upfront or one-time rental offerings, while managed services are ongoing and subscription-based. The majority of the mobile M2M market is focused on managed services because the revenue opportunity is much greater than for professional services.
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