​M2M market bounces back in Brazil

Revenue growth picks up again after a period of intense competition and aggressive pricing -- but there are challenges ahead, says research.
Written by Angelica Mari, Contributing Writer on

The Brazilian machine-to-machine (M2M) market has returned to growth after a period of intense competition and aggressive pricing, according to research published by the digital transformation team at consulting firm Frost & Sullivan.

According to the report, the emergence of new applications requiring ubiquitous connectivity and higher-value 3G and 4G services are giving the local market a "much-needed stimulus."

While traditional applications will still dominate the local M2M market in the medium term, the Frost report states that carriers are expanding their portfolios with more consumer-oriented applications such as connected cars, personal care, and smart homes.

These converged, verticalized solutions are expected to account for 35 percent of telcos' global revenues by 2018. Companies within the sector are also looking at expanding into new verticals such as industry and agriculture.

The Brazilian M2M market is expected to grow from $121 million in 2015 to $258.8 million in 2021 at a double-digit compound annual growth rate of 13.5 percent, according to the research, with the financial and automotive segments predicted to account for 77.2 percent of lines in 2021.

Challenges ahead

Despite the forecast growth, local players must overcome a few challenges to drive M2M adoption in Brazil.

New legislation is one of them. A law requiring all new cars to be shipped with embedded SIM cards was revoked in 2015, which negatively impacted the segment.

Industries such as energy and power also need regulatory changes in order to exploit the commercial potential of the technology: they are awaiting the verdict on a proposal to substitute all electricity meters in the country with connected smart meters, which is expected to significantly drive demand for M2M within utilities.

In addition, carriers are lobbying for tax exemptions currently applicable to a few applications such as mobile point-of-sale card payment terminals to all M2M connections, which will help widen service margins.

Unaddressed security issues has been another hurdle to increasing M2M adoption in the country for enterprises and final consumers, according to the Frost report. "Security companies are working to plugging loopholes, but the specific tasks of M2M devices coupled with their dedicated security needs make it unfeasible for manufacturers to include additional security software," the report says.

Affordability, however, is ceasing to be a hurdle within the local M2M space, the report points out. This is encouraging the use of the technology in non-connected devices such as security cameras, alarms, and health monitoring devices, as well as in tracking applications for pets and products in transit.

According to the research, the adoption of mobile M2M is also gathering pace in Brazil as a backup technology or main connectivity solution for existing connected services such as ATMs, digital signage, and smart infrastructure.

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