Global M2M Communications Test and Monitoring Equipment Market

Global Machine-to-Machine (M2M) Communications Test

and Monitoring Equipment Market Smart Homes, Telematics, and Healthcare Drive Demand for M2M Testing

ND0A–30

December 2013

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Olga Shapiro Program Manager, Measurement and

Instrumentation

Research Team

Lead Analyst

Research Director

Kiran Unni Research Director, Measurement and

Instrumentation

Sujan Sami Industry Manager, Measurement and

Instrumentation

Strategic Review Committee Leader

Jeannette Garcia Corporate Communications, Measurement and

Instrumentation, North America

+1.210.477.8427

[email protected]

For more information:

mailto:[email protected]

3 NDOA-30

Contents

Section Slide Numbers

Executive Summary 5

Market Overview 9

Total Market -

• Value Chain Analysis 30

• External Challenges: Drivers and Restraints 36

• Forecasts and Trends 48

• End-user Analysis 58

• Market Share and Competitive Analysis 70

• M2M Communications Testing and Monitoring—Competitor Profiles 79

Market Trends 83

R&D Segment Breakdown 94

Monitoring Segment Breakdown 99

I&M Segment Breakdown 104

Manufacturing Segment Breakdown 109

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Contents (continued)

Section Slide Numbers

The Last Word (Conclusions and Implications) 114

Appendix 117

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Executive Summary

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Executive Summary—Market Engineering Measurements

Market Stage

Growth

Market Revenue

$3,21.7 M

(2013)

Market Size for

Last Year of

Study Period

$981.1M

(2020)

Customer Price

Sensitivity

9

(scale:1 [Low] to 10 [High])

Degree of

Technical

Change

7

(scale:1 [Low] to 10 [High])

Total M2M Communications Test Equipment Market: Global, 2013

Market Overview

Stable Increasing Decreasing Note: All figures are rounded. The base year is 2013. Source: Frost & Sullivan

Number of

Competitors

60+

(active market competitors in

base year)

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Market Overview—Technology Capability

Definition

• M2M is a technology that allows 2 or more intelligent

machines to communicate with each other without

human intervention via a communication network.

• Once the data is transmitted over the network, it is

collected for analysis and assessed properly to extract

essential information.

End-user Applications

• M2M technology has been used in telematics

applications predominantly. Of late, it has become

important in applications such as smart grids,

industrial automation, retail, healthcare, and

consumer electronics.

• The main advantage of M2M is real-time delivery

of reliable data and easy access to a device or

machine.

Advantage

M2M technology is advancing with the use of embedded

sensors and chipsets in almost every possible device. The

presence of these chipsets makes it possible for end

users to access anything, anywhere. Another important

strength of M2M is the delivery of real-time streaming

information with ubiquitous presence of broadband.

Technologies such as cloud computing and 4G are also

fuelling the growth of M2M.

Impact

M2M is moving from an early growth stage to a

mature stage. Standardization efforts and several

important collaborations across the value chain are

expected to foster the eventual growth of M2M. With

reduced hardware costs, lower data tariffs, and ease

of integration with platform-based services, wider

adoption of M2M communications is expected in

approximately 3 years.

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Definitions and Scope of Research

M2M Communications Test Equipment

Market

Geographical

segmentation*

• North America

• Europe

• Asia-Pacific

• Rest of World (ROW)

End-user segmentation

• Consumer electronics

• Communications Market

• Transportation and Telematics

M2M Communications Market

• Financial Services and Retail

M2M Communications Market

• Healthcare M2M

Communications Market

• Utilities and Industrial M2M

Communications Market

• Security and Safety M2M

Communications Market:

• Others

• Research & Development (R&D)

• Manufacturing

• Installation & Maintenance (I&M)

• Monitoring

• Cellular M2M test equipment

• Satellite M2M test equipment

• Wireless M2M test equipment

Product segmentation

*Note: geographical segments and product segments are not analyzed in detail in this research service. Source: Frost & Sullivan

Application segmentation

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Market Overview—Definitions

• M2M is a technology that allows 2 or more intelligent machines to communicate with each other

without human intervention via a communication network. Once data is transmitted over the network,

it is collected for analysis and assessed properly to extract essential information.

• M2M technology has been predominantly used in telematics applications. More recently, it has

become important in applications such as smart grids, industrial automation, retail, healthcare, and

consumer electronics.

• The main advantage of M2M is real-time delivery of reliable data and easy access to a device or

machine all over the globe. However, M2M has several challenges such as complicated data traffic

management, lack of standardization across communication layers, lack of suitable security over

multiple data hops and high-operational costs.

• Apart from these challenges, the industry is highly fragmented and there is a low rate of end-user

acceptance. In addition, replacement of human machine interface (HMI) with M2M requires a higher

level of education among end users.

• The data flows from the machine over a network, which could be satellite, wireless, or cellular.

Source: Frost & Sullivan

10 NDOA-30

Market Overview—Definitions (continued)

• Cellular M2M Communications are defined as communication taking place over cellular networks.

• Global system for mobile communications (GSM) is an international standard for cellular

communication in digitized format. It uses the time division, multiple-access (TDMA) format.

• Code division multiple access (CDMA) multiplexes data into a single transmission line, thereby fully

utilizing the available broadband spectrum for digital cellular wireless applications.

• Wideband-CDMA (W-CDMA) is an air interface technology, and UMTS uses this technology for radio

interfacing.

• The 2nd Generation (2G) is a wireless telecommunication standard in which the radio signals in the

form of text and phone data services are encrypted digitally. Technologies such as GSM and CDMA are

used as platforms to operate 2G.

• EGPRS, EDGE, and Evolved EDGE, collectively referred to as 2.5G wireless technologies,

provide upgrade paths for 2G (2nd generation) wireless technologies to achieve higher data rates.

• The 3rd Generation (3G) is an enhanced version of 2G, with extensively incorporated functionalities

such as mobile Internet, email, video calls, and television channels on the mobile, apart from the regular

text and voice services. Technologies such as UMTS and HSPA serve as 3G operational platforms.


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4th Generation (4G) is a form of wireless communication for rapid data transfers retaining all the advanced

features and applications embedded in 3G services. LTE and WiMAX are commonly used technical

launching platforms for 4G services.

Long Term Evolution (LTE) is the superseding technology developed by 3GPP (3rd Generation

Partnership Project) that has resulted in processing larger spectrum requirements. It provides a spectrum

bandwidth of multifold magnitude, compared to the existing technologies, at a lower cost and with faster

data transfer rates.

High-speed Packet Access (HSPA) is a combination of uplink (HSUPA) and downlink (HSDPA)

technologies taking place on a mobile broadband network; it is an advanced version version of UMTS/W-

CDMA.

Wireless M2M Test Equipment

• Broadband Wireless Access (BWA) is the technology through which wireless data is delivered or

provided by means of broadband access.

• Universal Mobile Telecommunication System (UMTS) comprises text data and digital data such as voice,

video, and multimedia.

• High-speed Packet Access (HSPA)is a combination of uplink (HSUPA) and downlink (HSDPA)

technologies taking effect on a mobile broadband network; it is a boosted version of UMTS/W-CDMA.


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Wireless M2M communications

• Worldwide Interoperability for Microwave Access (WiMAX) is an advanced format of BWA, and it

supports wireless cellular mobility and fixed-wireless applications.

• Wireless local access network (WLAN) is a technology by which a mobile device (or computer) can

be connected to the local access network by means of a wireless connection. With WLAN,

connectivity is achieved from an external adapter to a local router and then to the access point of

the device. It includes WLAN technology, 802.11ac and 802.11ad.and emerging technologies such

as MIMO (multiple input, multiple output) in the 802.11n standard

• With Bluetooth, a device-to-device wireless connection can be made for data transfer. WLAN and

Bluetooth vary in hardware composition.

• ZigBee is a low-cost, low-power, wireless sensor network that uses RF signals for communication.

ZigBee’s precision derives from 2-way communication between multiple tags and readers that form

a mesh network. Accuracy increases in conjunction with the amount of points of communication.

• Near field communication (NFC) standards cover communications protocols as well as data

exchange formats. They are based on existing short range, HF technologies working at 13.56

MHz.


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Radio frequency identification (RFID) is a unique method of identifying objects by leveraging

technologies that communicate using radio waves. It includes any technology that communicates by

using radiowaves in low frequency (LF), high frequency (HF (excluding smart cards)), ultra high

frequency (UHF), microwave, ultra wideband(UWB), and other frequencies. RFID devices are designed

to track objects and animals. Therefore, it is capable of long read distances and incorporates security

features.

Satellite M2M communications: Satellite forms a small part of the total wireless M2M market. It is

expected to be a lucrative portion in terms of average sales price for equipment and monthly sales

ARPU. Satellite is mostly used where installations are very difficult. It is also used for transmitting data

safely, especially when cheaper network is being put to use as a primary network for the delivery of

services.


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A smart meter is an electronic device that monitors consumption in more detail than a conventional

meter; and if connected to an M2M network communicates information to the local utility for

monitoring and billing purposes (telemetering). In this study all smart meters are networked via M2M,

smart meters that are not networked are not discussed or quantified.

Hybrid networks can be a combination of RFID, all types of wireless WAN, Wi-Fi, WiMAX, PAN,

wireline, and satellite networks. Hybrid network solutions will increase in popularity during the forecast

period as a way for businesses to ensure data delivery and also decrease service or data transfer

costs. For a small increase in up-front equipment costs, an M2M network can use wireline data

transfer (the cheapest alternative) for the majority of their network traffic, and gain the resiliency of a

fallback wireless or satellite network in case the wireline network is offline.


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Market Overview—Test and Measurement Definitions

Research and development (R&D)

• R&D test equipment includes the RF generators, RF analyzers, load/ functional testers, and protocol

analyzers used in research laboratories during the pre-deployment stage.

• Conformance or certification testers are also R&D solutions. Such solutions are used to test protocol

implementation and check whether equipment conforms to standards. They include one-box testers

that are used to test the performance, protocol, and capability of cellular access devices such as cell

phones and smartphones, as well as connected devices, such as laptops, netbooks, notebooks,

tablets, and wireless-enabled PDAs. It also includes design software used at the R&D level.

Manufacturing

• The test equipment covered includes the systems used to test user equipment and services. These

devices include bench-top as well as single-box testing systems Within the manufacturing segment,

one-box testers is a sub-segment. These testers are simple performance protocol testing solutions.

• It also includes test equipment used for functional testing, at the product level.


16 NDOA-30

Market Overview—Definitions

I&M

• I&M test equipment primarily comprises RF handheld instruments for troubleshooting and the

maintenance of wireless base stations and repeaters. Access networks, air interfaces, base

station testers, drive tests, and network performance test equipment are included in this segment.

• It also includes equipment used to monitor the network interference.

Monitoring

• The network monitoring systems covered in this segment include both probe-based and software-

based solutions that deliver end-to-end quality of service (QoS) and quality of experience (QoE)

visibility and real-time IP service monitoring and verification.

• Monitoring protocol analyzers and active and passive monitoring systems are also included.

• The study covers the use of test equipment at the chipset and the module level in the M2M

communications value chain.


17 NDOA-30


Consumer electronics Transportation and telematics

Healthcare Security and safety

Utilities and industrial Financial services and retail

• Laptops/netbooks/notebooks

• eReaders

• Others—connected consumer display and

picture frames

• Vehicle convenience and safety

• Vehicle diagnostics

• Others—fleet and asset tracking

• Patient monitoring and reporting

• Adherence and reminders

• Others—patient-provider collaboration (video

• communication and image uploads and

management)

• Intrusion Detection and Safety Systems

• Remote Surveillance and Access Control

• Others—roadside speed monitors and

automatic lighting controls

• Smart grid components

• Industrial monitoring and control

• Applications and devices

• Others—industrial routers, M2M gateways and

agricultural systems

• POS terminals and devices

• ATMs, vending machines, and kiosks

• Others—digital signage and asset tracking


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Geographic Segmentation Europe—Europe includes the EU states, the

Commonwealth of Independent states (CIS) in Europe,

Turkey, and the Caucasian Republics.

APAC—This region includes

Central Asia, the CIS states in

Asia (Kazakhstan, Kyrgyzstan,

Tajikistan, Turkmenistan,

Uzbekistan, Azerbaijan, and

Armenia), East Asia, Australia,

and Oceania.

Americas—

This region

includes

North, South,

and Central

America as

well as the

Caribbean

islands.

Rest of World—

This region

includes Africa and

the greater Middle

East, which is

comprised of the

Persian Gulf

states, Lebanon,

Jordan, Syria,

Israel, Iran,

Afghanistan, and

Pakistan.


19 NDOA-30

Market Overview—Key Questions This Study Will Answer

Is the market growing, how long will it continue to grow and at what rate?

Are the existing competitors structured correctly to meet customer needs?

Is this an industry or a market? Will these companies/products/services continue to exist or will they

get acquired by other companies? Will the products/services become features in other markets?

How will the structure of the market change over time? Is it ripe for acquisitions?

Are the products/services offered today meeting customer needs or is there additional development

needed?

Are the vendors in the space ready to go it alone, or do they need partnerships to take their

business to the next level?


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Drivers 1–2 Years 3–4 Years 5–7 Years

Improved wireless standards for smart device

communications H H H

Growing adoption in smart homes, electronics,

and healthcare sectors H H H

Increased collaborations H M M

Increasing government regulations M H H

Growth in ubiquitous computing M H H

Emerging 4G/LTE networks M M H

Impact Ratings: H = High, M = Medium, L = Low

Market Drivers—Impact and Duration


Total M2M Communications Test Equipment Market: Key Market Drivers, Global, 2013–2020

21 NDOA-30

Restraints 1–2 Years 3–4 Years 5–7 Years

Lack of standardization across layers H H M

Existing fragmentation H H M

Low scalability and reliability H M M

Traffic management is complicated H M L

High operational costs M M M

Impact Ratings: H = High, M = Medium, L = Low

Restraints—Impact and Duration


Total M2M Communications Test Equipment Market: Key Market Restraints, Global, 2013–2020

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Appendix

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Market Engineering Methodology

One of Frost & Sullivan’s core deliverables

is its Market Engineering studies. They

are based on our proprietary Market

Engineering Methodology. This approach,

developed across the 50 years of

experience assessing global markets,

applies engineering rigor to the often

nebulous art of market forecasting and

interpretation.

A detailed description of the methodology

can be found here.


http://www.frost.com/prod/servlet/me-research.pag

25 NDOA-30

Interested in Full Access? Connect With Us

Name Jeannette Garcia

Corporate Communications

(+1) 210.477.8427

[email protected]

Research Authors

Olga Yashkova-Shapiro

Program Manager

Communications Test and Measurement

Measurement and Instrumentation

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26 NDOA-30

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27 NDOA-30

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