By 2020, the Latin American region is expected to account for U.S.$92 billion of the total potential U.S.$1.2 trillion worldwide revenue for mobile network operators with machine-to-machine applications. “Latin America is [estimated to be] the fourth largest, and we believe it could have a better position,” said Ana Tavares, head of connected living at the operator’s association GSMA, speaking during the Connected Living Latam Summit held in São Paulo this week.
The global revenue impact of M2M is expected to reach U.S.$4.5 trillion by 2020, of which U.S.$2.5 trillion represents the connected life market and U.S.$2 trillion represents cost reduction of the connected life, for example, through service improvements.
Worldwide, GSMA forecasts there will be 24 billion connected devices by 2020, a huge increase compared to the 9 billion devices in 2011. Of all the connected devices, 12 billion will use mobile technologies, such as 2G, 3G and 4G. “The growth will be dominated by machine-to-machine,” noted Tavares.
GSMA’s forecast number is smaller than Ericsson’s estimated 50 billion wirelessly connected devices by 2020. Ericsson expects that there will be about five to eight connected devices for each person. According to Hector de Tommaso, head of marketing for Latin America at Ericsson, Latin America should represent about 10% of total global devices.
Tommaso also noted that Brazil and Mexico might lead adoption in the region in terms of volume and applications.
Across the world, some verticals are seen as more likely to adopt M2M applications: automotive, health, education and smart cities. “There are already 114 smart cities in the world. This includes several aspects: from monitoring and automating utilities to smart and connected homes,” GSMA’s Tavares said.
Regarding revenue potential, Tavares pointed to telematics, especially related to mobile automotive, as having a total potential of U.S.$20 billion by 2020. The revenue potential for mEducation is about U.S.$70 billion by 2020 and for mHealth, global revenue is expected to jump from U.S.$4.5 billion in 2013 to U.S.$23 billion in 2017.
However, M2M adoption has several barriers that challenge its growth, such as regulation and the creation of a complex ecosystem which requires many stakeholders and partnerships. “Four years ago the barrier was the cost of the chip,” Tavares said.
“The verticals that will adopt machine-to-machine are those which have higher demand and fewer barriers, such as legal, regulation, cost and legacy,” Ericsson’s Tommaso said. The technology, he added, is already available in all regions, and a combination of several factors will drive M2M adoption, including the regulatory environment, business plans and case studies, investment capital and social reception. “Culture is very important,” he said.