The cellular M2M embedded module market experienced a more difficult than expected year in 2010, according to ABI Research. Although total unit volumes continued to rise, reaching nearly 34 million units shipped in 2010, total industry revenue fell from roughly $996 M in 2009 to about $841 M in 2010, reversing the upward momentum in revenue seen in 2009 as the market rebounded from its 2008 lows.
"Although total unit volume continued to grow in 2010, average selling pricings (ASP) fell at a faster rate, leading to an overall decline in revenue," says Sam Lucero, Practice Director, M2M connectivity. "The sharp decline in ASPs is continuing in 2011 and is indicative of the fierce competition in the market, competition that has led to industry consolidation, such as Gemalto's acquisition of Cinterion and Novatel Wireless' acquisition of Enfora, both in 2010."
While module makers are challenged by both competition and an overall trend toward commoditization, the resulting declines in ASPs are broadening the addressable market for cellular M2M connectivity. As module prices decline, it becomes more feasible to embed cellular modules into a growing array of applications ranging from smart utility meters, to automobiles, to remote healthcare related devices, such as cardiac monitors.
"Ultimately, lower prices, combined with other factors that facilitate M2M application development, will lead to overall unit shipment volumes growing faster than prices are declining, and we will see overall module industry revenue grow significantly by 2016," says Lucero. "Consequently, falling ASPs are, in essence, benefiting module vendors as a whole, although individual vendors may not be able to survive the fiercely challenging market environment."