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  4. > Seg116 M2M Market Opportunities in South Africa—Vertical Focus

This research service provides an overview of the machine-to-machine (M2M) market in South Africa, specifically in the automotive, retail and finance, and utilities verticals. A sharper focus was maintained on the three verticals due to the growing relevance and adoption of M2M applications for enterprises and customers in these areas. The research service highlights key customer and technology trends as well as the overall M2M market trends.

• Three verticals—automotive, retail and finance, and utilities—were reviewed in this study on the
deployment and connectivity revenue from machine-to-machine (M2M) solutions in the South African
market:
o The automotive vertical accounts for over ?% of the connectivity revenue generated by the selected
verticals. The number of connections is expected to grow at a compound annual growth rate (CAGR)
of?% over the period 2013 to 2018.
o The retail and finance vertical, which made up ?% of the revenue in 2013 is expected to grow at an ?
% CAGR over the same period, while the utilities vertical is expected to grow at ?%. Retailers
and financial institutions play a critical role in the ecosystem of payment solutions, such as point of
sale (POS) and near-field communication (NFC), as a result for the purposes of the study, the 2
verticals were clustered as 1.
• Growth in the number of deployments will be driven by the growing demand for enterprises and
consumers to have greater visibility and control over devices:
o Emerging applications, such as user-based insurance (UBI) in the automotive vertical, will be a key
driver of M2M deployments. Video applications for fleet management solutions will slow the decline
in data average revenue per user (ARPU) in this vertical. Digital signage solutions and vending
machines will boost the uptake of solutions in the retail and finance vertical.
o M2M solutions in the utilities vertical will play an important role in the development of smart grid and
smart home solutions. This vertical is currently a low-data business for operators, as it is mainly
based on monitoring. However, the acceptance of technology protocols will drive smart metre
deployments.
• While the number of M2M deployments will continue to increase over the long term, the mobile
operators share of the M2M revenues will dwindle over time. This is attributed to the falling ARPU, as a
result of the falling cost of data.
o Operators should not view M2M opportunities purely from the perspective of the number of
connections, as M2M connectivity is primarily a low-ARPU business.
o Moreover, the high cost of data locally is driving M2M providers to pursue connectivity alternatives,
such as roaming plans from overseas operators, which are more affordable than local plans.
• Mobile operators can boost their data ARPUs through investment in more advanced 3G and 4G
networks in order to support bandwidth-intensive applications such as video. The local operators may
have to adopt more customised pricing plans for M2M solutions, based on solutions’ predictability of
data flow.
• Moreover, operators can protect their share of the M2M revenues by moving along the value chain,
beyond pure connectivity and more towards the development of applications. As they tend to have fairly
little experience in this segment of the market, operators should rely more on acquisitions.
o There is growing evidence of operators acquiring M2M solution providers both abroad and locally,
such as Vodacom’s acquisition of a controlling stake in XLink.
• The technical complexity of developing M2M solutions in verticals such as the utilities is expected to
force more partnerships among service providers.

Table Of Contents

Seg116 M2M Market Opportunities in South Africa—Vertical Focus
Executive Summary

Research Objectives and Scope
Research Aim and Objectives
Research Scope
Research Scope—Ecosystem
Research Scope—Verticals

Market Definitions
Abbreviations

Market Overview

Drivers and Restraints
Key Market Drivers
Drivers Explained
Key Market Restraints
Restraints Explained

Forecasts and Trends
M2M Market—Unit Shipment and Data Revenue Forecast
M2M Market—Unit Shipment and Data Revenue Forecast Discussion
M2M Market—Per cent Revenue Forecast by Vertical
Per cent Revenue Forecast by Vertical Discussion

Automotive Vertical Analysis
Automotive Vertical—Market Overview
Automotive Vertical—Unit Shipment and Revenue Forecast
Automotive Vertical—Unit Shipment and Revenue Forecast Discussion
Automotive Vertical—M2M Application Potential
Automotive Vertical—Competitive Environment
Altech Netstar

Retail and Finance Vertical Analysis
Retail and Finance Vertical—Market Overview
Retail and Finance Vertical—Market Evolution
Retail and Finance Vertical—Unit Shipment and Revenue Forecast
Retail and Finance Vertical—M2M SIM and Revenue Forecast (continued)
Retail and Finance Vertical—Competitive Environment
XLink

Utilities Vertical Analysis
Utilities Vertical—Market Overview
Utilities Vertical—AMI Landscape
Utilities Vertical—Market Overview
Utilities Vertical—Smart Metre Trends
Utilities Vertical—Unit Shipment and Revenue Forecast
Utilities Vertical—Unit Shipment and Revenue Forecast Discussion
Utilities Vertical—Competitive Environment
Competitor Profile—Power Meter Technics

Telecoms and Platform Providers
Vodacom
Telkom
Platform and Module Providers

Strategic Recommendations and Conclusions
Legal Disclaimer

Appendix
Additional Sources of Information on M2M

The Frost and Sullivan Story
Value Proposition: Future of Your Company and Career
Global Perspective
Industry Convergence
360º Research Perspective
Implementation Excellence
Our Blue Ocean Strategy

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