It's a good time to be involved with connected devices. Research firm IDATE forecasts machine-to-machine (M2M) market revenue to reach $54.3 billion by 2017. While Asia is currently the biggest player in the arena, Europe is expected to become the largest market in terms of revenue over the next few years.
Why isn't the United States a more prominent player in this growing industry? The answer, in part, is the difficulty that device manufacturers have in getting M2M products certifies for use on American cellular networks.
Device manufacturers have two options: build in a pre-approved modem, which can be expensive and drives up device price, or design your own and devote substantial resources to have devices certified for each network. In the U.S., adding a cellular modem to a device can cost five times more than adding a Wi-Fi modem, in addition to the cost of certification, which runs upwards of $50,000 per device, per network.
This creates a huge barrier for small and mid-size companies. As a growing industry, M2M needs innovation, which often happens at these smaller competitors.
American cellular companies should look to Europe to see how a robust industry can grow. In Europe, M2M device manufacturers can buy inexpensive SIM cards to build into devices. These cards are loaded with data and can be refreshed as needed. A cellular contract is not needed and the certification process is minimal for manufacturers. This reduces development costs and speeds time-to-market for new products.
Connecting devices to the cloud via cellular networks opens up new markets to cellular companies, manufacturers, and consumer alike. Simplifying the process for getting devices onto cellular networks in the U.S. will spur innovation, benefiting all parties.
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