m2m set for short-term pain in tough market

In recent weeks, there has been something of a flurry of activity in the mobile machine-to-machine (m2m) space, in order to meet anticipated growth in the market for remote monitoring applications among corporates. This technology provides a number of benefits for companies, enabling them to gather information from remote and distributed sites without the need to deploy field services staff, both cutting costs and improving efficiency.

But as with any technology, the tough economic conditions are impacting m2m. Integrated Solutions magazine published a report discussing this, which can be summed up as short term pain, long term gain.

Authored by analyst firm ABI Research, it was said that respondents to a late 2008 survey were "cautiously optimistic" for this market. Reasons for this optimism include the fact that m2m applications are not directly subject to negative trends in consumer spending; the money-saving potential for corporate end-adopters; the fact that m2m can enable new revenue streams for enterprises; and the fact that in some markets, m2m applications such as smart metering are subject to regulatory mandates.

But the tough economic conditions are taking their toll, with a mixed picture with regard to how long the malaise will last. The most optimistic forecast that these will abate by the third quarter of 2009, while the most negative is that the market will remain tough until the fourth quarter of 2010.

The manner in which negative sentiment will affect the m2m market is broadly the same as for the technology sector as a whole. Access to credit is being interrupted, R&D budgets are being cut, customers are cautious about making new investments, and currency effects will force contracts written in US dollars but paid by non-dollar businesses to be renegotiated.

While m2m is seen as primarily a business-to-business play, there are several consumer applications, and these are likely to suffer as a result of weakened confidence. Home security is one area that is likely to be impacted, as are certain telematics applications.

Interesting as they may be, ABI's findings do have some limitations. Of 38 individuals asked to respond, only 17 did, making a limited survey even more constrained. And the respondents primarily came from the m2m supplier ecosystem, rather than from businesses, which would slant the outcomes -- although the findings do reflect a degree of realism from this market, rather than blind optimism.
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