Special Feature
Part of a ZDNet Special Feature: Tapping M2M: The Internet of Things

Mobile operators: Get ready for the M2M explosion

Telcos need to start developing applications and services if they want to make money from machine-to-machine technology.

A report by market researchers Frost & Sullivan warns that mobile network operators need to be ready for the day when machine to machine (M2M) communication really takes off.

M2M, or the "internet of things", involves two or more objects talking to each other online. The objects use small sensors to collect data, which can be turned into meaningful charts and dashboards to help businesses get real-time insights and make more informed decisions.

For example, an M2M-enabled thermometer might link to the temperature control system on a subway, telling it to turn up the air conditioning on a particularly hot day.

Another example of an M2M application that has been developed in the EU for the automotive industry is eCall. This initiative involves fitting all new cars with an internet-enabled tracking device that automatically connects with emergency services in the event of an accident.

But countries in Europe aren't embracing M2M technologies at the same rate, according to the Frost & Sullivan report European Machine to Machine (M2M) Connectivity Outlook — Part 1.

"At the moment, the Nordics and the UK are the ones that seem more ready to go into M2M," Saverio Romeo, Frost & Sullivan's telecommunications and connected public sector industry manager, told ZDNet.

He said Germany was also in a good position because of its strong automotive industry, while markets such as Poland and Russia were definitely catching up.

The number of M2M SIM connections is expected to grow significantly between now and 2016 (Source: Frost & Sullivan)

The M2M market is expected to grow 33 percent year-on-year between 2011 and 2016, according to Frost & Sullivan, taking the total number of SIM connections to 75 million by 2016.

"We are going towards an internet of things region in which there will be object-to-object communication," Romeo said. "This is an area in which you need to be there and you need to be prepared for the moment there is an explosion."

However, for the surge to occur, consumers need further education, and Frost & Sullivan argues that telcos must continue to provide consulting services to build use cases and define an acceptable return on investments.

Making money from M2M

Romeo said M2M profits for mobile operators were going to come from developing applications and services as opposed to delivering the connectivity itself.

These applications and services were likely to be developed for healthcare, manufacturing and consumer electronics, he said, and there would also be a steady demand for remote surveillance and retail.