Keywords : Machine-to-machine, M2M device, M2M communication
“The market for M2M healthcare applications will be huge, EUR69 billion in 2020. We expect that EUR3.1 billion of this revenue will go to mobile network operators for provision of data carriage services, but the rest is up for grabs. Telecoms operators, equipment vendors and various service providers will all want a slice of the pie, and who gets what all comes down to business models”. Jim Morrish, Director 1. Executive Summary...
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“The market for M2M healthcare applications will be huge, EUR69 billion in 2020. We expect that EUR3.1 billion of this revenue will go to mobile network operators for provision of data carriage services, but the rest is up for grabs. Telecoms operators, equipment vendors and various service providers will all want a slice of the pie, and who gets what all comes down to business models”.
Jim Morrish, Director
1. Executive Summary
1.1 Overview
We forecast that the installed base of M2M connected devices within the health sector will exceed 774 million by 2020. North America will be the largest region for the duration of the forecast, with a share of worldwide connected medical devices peaking at 54% and falling back to 42% by the end of the forecast period, as growth in Europe accelerates.
Short range connectivity technologies dominate throughout the forecast due to the typical topology of M2M healthcare solutions: the majority of solutions are characterized by multiple devices, connected to a central hub or aggregation device. Accordingly, we expect that the overwhelming majority of M2M connected healthcare devices will be connected only indirectly to wide area networks.
In terms of wide area mobile connectivity technologies, 3G dominates in the early years of the forecast, mostly transitioning to 4G over a four year period between 2012 and 2016. 2G finds relatively little application in the M2M connected healthcare market.
Total traffic generated by M2M applications in the healthcare sector (and carried over wide area networks) will approach 78 petabytes by 2020, a CAGR of 75% from 2010’s figure of 283 terabytes. The proportion of such traffic carried over mobile networks will remain relatively high throughout the forecast period, falling from 72% in 2010 to 43% in 2020. Total mobile network traffic generated by M2M solutions in the healthcare sector will exceed 33 petabytes by 2020, a CAGR of 66%.
Overall, global network traffic revenues for mobile operators can be expected to exceed EUR3.1 billion in 2020. Revenue for M2M connected healthcare applications will total EUR 69 billion in 2020, with the North America region accounting for 37% of global revenues, Europe 31% and Developed Asia Pacific and Emerging Asia Pacific markets accounting for 12% and 11% of revenues, respectively.
1.2 The market for connected healthcare applications
The market for connected healthcare applications can be divided between two main categories: consumer and non-consumer. These have fundamentally different characteristics:
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Figure 1 1: Characteristics of consumer and non-consumer M2M healthcare markets [Source: Machina Research, 2011] (omitted)
1.3 The scale of the opportunity
Unsurprisingly, given the dynamics described above, the majority of M2M connected healthcare devices will be accounted for by consumer-oriented applications. As illustrated in Figure 1-2 below , in 2020 consumer oriented applications will account for 586 million connected devices, or 76% of all M2M connected devices in the healthcare sector.
However, the majority of revenues will be accounted for by the non-consumer segment, due to the significantly higher average capital cost of such devices. Connected devices in medical environments (for example, hospitals) alone are forecast to account for EUR29 billion in revenues, or 43% of total M2M connected healthcare revenues in 2020. However, the bulk of this revenue will only be addressable by established medical equipment manufacturers (although related revenues opportunities will be available for systems integrators).
Figure 1 2: M2M devices and revenues in consumer and non-consumer healthcare markets [Source: Machina Research, 2011] (omitted)
The following factors will drive growth in the market for M2M connected healthcare:
• People’s concern for their health and well-being. This is the single most significant driver behind the largest M2M healthcare opportunities (remote monitoring and personal monitoring for the worried well).
• Government belt-tightening. Public sector spending is under pressure throughout the developed world, notably as a result of the recent financial crisis, but also often due to imbalances of a more structural nature that have developed over time.
• The ageing population placing further strain on healthcare systems worldwide. In 2010, there were 207 million people worldwide aged over 75 years of age. This figure will rise to 265 million by 2020.
• M2M solutions improving the quality of healthcare. They permit increased frequency and accuracy of monitoring readings, increase the level of trust and reliance that physicians place in data (particularly data gathered by patients themselves), support the extension of clinical environments into a patients’ home through remote monitoring, and enable the effective remote monitoring of patients.
The trend towards consumer-centric healthcare, developments in technology and individually tailored medicine will also all drive the market for M2M healthcare applications in the future.
1.4 A regional perspective
The market for M2M connected healthcare applications will be dominated by the United States on account of a large and wealthy population and a propensity to spend proportionally more on healthcare. Almost 16% of the GDP of the US is spent on healthcare. The next biggest spender is Germany, which spends a little over 10% of GDP. The US also tends to be a relatively early adopter of new technologies, and benefits from the network effects that derive from the relative homogeneity of that market.
Europe and Developed Asia also presents a significant opportunity, as illustrated in figure 1-3 below. Combined, these two regions offer a greater opportunity for M2M healthcare applications (339 million connections in 2020) than does the North American region with 324 million connections in 2020.
Figure 1 3: Global M2M connectivity in the health sector by region 2010-2020 [Source: Machina Research, 2011] (omitted)
Similarly, the North American region will represent the most significant revenue opportunity in 2020, with the market for connected healthcare forecast to be worth EUR25 billion by 2020, compared to Europe at EUR21 billion and Developed Asia Pacific at EUR8 billion.
1.5 Conclusion
The market for M2M connected healthcare applications represents a significant commercial opportunity for a wide range of companies.
To take advantage of this opportunity Mobile Network Operators (MNOs) should focus mainly on the consumer connected healthcare market, where brand assets, distribution channels and billing and customer service capabilities can be leveraged most effectively.
MNOs, Systems Integrators and the manufacturers of medical equipment should consider partnerships to bring to market products and services to support Clinical Remote Monitoring of patients in their homes, and certain Assisted Living solutions.
For Systems Integrators the market for Connected Medical Environments offers a particularly sizeable and well-suited opportunity.
Manufacturers of connected medical devices for the consumer market should consider the benefits of partnering with fixed and mobile telecoms providers as channels to market, and also potentially to take advantage of the ability of such telecoms service providers to support the delivery of differentiated and higher-value service ‘wraps’.
Vendors should target manufacturers of consumer devices and seek partnerships with MNOs to smooth the path the certification for new connected devices to be connected to mobile networks. Vendors should also target Systems Integrators and medical equipment manufacturers with a view to addressing opportunities in Clinical Remote Monitoring and Assisted Living solutions.
About the report
Machine-to-machine (M2M) Communication in Healthcare 2010-20 provides invaluable qualitative and quantitative analysis of the emerging opportunity for machine-to-machine communications in the healthcare sector.
The forecast excel data sheet includes very granular 10 year market forecasts for 54 countries and 6 regions. The forecast covers numbers of connections, traffic and revenue for each of the eight identified healthcare application groups (Worried Well – Home Monitoring, Worried Well – Clinical Monitoring, Telemedicine, First Responder Connectivity, Connected Medical Environments, Clinical Remote Monitoring, Assisted Living and Clinical Trials) with splits by technology (2G, 3G, 4G, short range, MAN, fixed WAN and satellite) and a break-out of mobile traffic revenue.
The report reviews the major drivers and barriers for growth of M2M in the healthcare sector and analyses the key market dynamics, including how MNOs, fixed operators, service providers and vendors might go about identifying and realising addressable opportunities. Each application is examined individually with case studies and forecast analysis.
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