The European Wireless M2M Market

The European Wireless M2M Market

There are billions of devices in Europe that could potentially be networked using fixed or
wireless technologies. Generally, the cost of connecting a device to a GSM/GPRS network
must be justified by the perceived value of the information it communicates. The most
obvious cases are remote monitoring of mission critical equipment or tracking of very
valuable assets. This type of applications however tends to be deployed in relatively small
volumes. Mass market opportunities only exist in segments where valuable information can
be generated by a large population of devices. Examples of this are found in the utility,
transportation, security and retail industries. Europe has 360 million energy meters, 255
million motor vehicles, 8 million security alarm systems and 6 million POS-terminals.
Altogether these segments represent a potential market of over 600 million wireless M2M
connections.

Berg Insight estimates that the number of active SIM-cards in use for wireless M2M
applications in EU23+2 will reach 14.1 million at the end of 2008. This means that the total
number of mobile network connections used by machines now equal that of a medium-sized
European country. Until 2013, the number of wireless M2M connections is forecasted to grow
at a compound annual growth rate of 33.0 percent, reaching 52.0 million at the end of the
period. Currently energy meters are estimated to account for the largest installed base, ahead
of private and commercial vehicles. By 2013 the automotive sector is projected to account for
61 percent of the number of wireless M2M connections Europe. Energy meters will remain the
second largest application area ahead of security alarms and POS-terminals. Growing
adoption of remote equipment monitoring will also generate a substantial number of wireless
M2M connections for other types of assets and products from virtually all manufacturing
industries. In light of the recent economic turmoil it is however important to note that the
wireless M2M market is sensitive to fluctuations in shipments of products such as motor
vehicles, energy meters, security alarms, POS-terminals and miscellaneous machinery and
equipment.

Adoption of wireless M2M has been growing rapidly across Europe in the recent years. Berg
Insight estimates that the number of active SIM-cards in use for wireless M2M applications in
EU23+2 was 12.3 million at the end of Q2-2008. This corresponded to 2.2 percent of the total
number of SIM-cards in the region. Sweden and Finland stood out from the rest of the
European countries with M2M accounting for 13.4 percent and 7.7 percent respectively of all
mobile connections. Other countries with high ratios of M2M connections were Denmark with
3.8 percent and Spain with 2.7 percent. All other countries were in the range of 1–2 percent.
In absolute terms, Italy constituted the largest geographical market with 1.9 million
connections, followed by Germany and the UK with 1.8 million and 1.7 million respectively.
Other markets with one million connections or more were Sweden, Spain and France.
Even if wireless M2M is a B2B market in the sense that products and services are sold to
enterprise customers, the underlying demand is in fact to a large extent driven by consumer
markets. That is particularly true for the largest projects that involve hundred thousands of
devices. Nine out of the ten largest wireless M2M deployments in Europe are consumeroriented.

These include smart metering projects in Sweden, Finland, Italy and the
Netherlands; pan-European vehicle tracking solutions for private vehicles; OEM car
telematics solutions from major car brands and the largest solution for monitored security
alarms in Europe. Only the German truck road charging system Toll Collect cannot be
classified as a consumer-oriented application.

Berg Insight believes that the wireless M2M network service value chain will undergo a
significant transformation in the coming years. Until recently the world’s largest mobile
operator groups have shown limited interest in M2M. Top global players such as Vodafone,
Telefónica and Deutsche Telekom have not yet formulated any official group strategies for
exploiting the new market opportunities. Current business development and marketing efforts
are primarily being made by relatively small teams on individual markets. One notable
exception is Telenor which is actively addressing the international M2M market through the
new business unit Telenor Connexion, launched in October 2008.


Which are the largest and most successful wireless M2M applications in Europe?

What are the differences and similarities in how M2M is adopted in different European countries?

Who are the leading providers of GPRS-based vehicle tracking, fleet management and smart metering solutions?

How is fixed to mobile substitution affecting the POSterminal and security alarm segments?

How are the mobile operators positioning themselves on the M2M market?

Which mobile operators have the highest share of M2M connections in their networks?

Which are the main alternative wireless M2M communication providers in Europe?

What impact will initiatives such as Telenor Connexion and M2M Alliance have on the market?

How will the wireless M2M market be affected by the economic downturn?

Table of Contents........................................................................................................................ i

List of Figures............................................................................................................................ vi

Executive summary.....................................................................................................................1

1 Introduction to wireless M2M and the European market ....................................................3
1.1 Introduction..................................................................................................................3
1.2 Devices ........................................................................................................................5
1.2.1 Chipsets, modules and terminals..........................................................................5
1.2.2 Device design and machine integration................................................................9
1.2.3 M2M device value chain......................................................................................10
1.2.4 Wireless M2M module vendors...........................................................................11
1.3 Networks....................................................................................................................12
1.3.1 GSM/HSPA networks and other wireless infrastructure .....................................13
1.3.2 Mobile network capabilities.................................................................................16
1.3.3 Adapting mobile networks for M2M communication ..........................................18
1.3.4 Ecosystem...........................................................................................................19
1.3.5 Business models .................................................................................................20
1.4 Applications ...............................................................................................................22

2 Mobile operators and M2M communication providers .....................................................23
2.1 Vodafone Group ........................................................................................................23
2.2 Deutsche Telekom.....................................................................................................24
2.2.1 T-Mobile...............................................................................................................24
2.2.2 Toll Collect...........................................................................................................24
2.3 France Telecom.........................................................................................................25
2.3.1 FT Group and Orange M2M strategy..................................................................25
2.3.2 M2M connectivity reseller partnerships in France and the UK ...........................26
2.3.3 Mobistar...............................................................................................................27
2.4 Telefónica Group .......................................................................................................28
2.4.1 Strategy and organisation for M2M.....................................................................28
2.4.2 Market position....................................................................................................28
2.5 Telenor.......................................................................................................................30
2.5.1 Telenor Connexion: A new international M2M operator .....................................30
2.5.2 Telenor Cinclus: End-to-end provider of smart metering ...................................32
2.6 Belgacom...................................................................................................................33
2.7 KPN............................................................................................................................34
2.8 SFR ............................................................................................................................35
2.9 TDC............................................................................................................................36
2.10 Telekom Austria .........................................................................................................37
2.11 TeliaSonera................................................................................................................38
2.12 Wireless M2M communication aggregators..............................................................39
2.12.1 Aspider Solutions ................................................................................................40
2.12.2 Eutelsat................................................................................................................40
2.12.3 Kuantic.................................................................................................................40
2.12.4 Jasper Wireless ...................................................................................................41
2.12.5 Maingate..............................................................................................................42
2.12.6 Mdex....................................................................................................................43
2.12.7 Mobius Networks.................................................................................................43
2.12.8 Netsize.................................................................................................................44
2.12.9 RAM Mobile Data.................................................................................................44
2.12.10 Stream Communications.....................................................................................45
2.12.11 Vianet...................................................................................................................45
2.12.12 Wireless Logic .....................................................................................................45
2.12.13 Wyless .................................................................................................................46

3 Market forecasts and trends ..............................................................................................49
3.1 Summary of the European wireless M2M market .....................................................49
3.2 Mobile operator market shares .................................................................................51
3.3 Vertical market trends................................................................................................53
3.3.1 Car telematics: Anticipated slowdown before eCall comes to the rescue .........54
3.3.2 Fleet management: Mixed impact from economic downturn .............................54
3.3.3 Smart metering: Regulation driven rollouts to go ahead as planned.................54
3.3.4 Other applications: Poor investment climate to hamper growth ........................55
3.4 Regional market trends .............................................................................................56
3.4.1 Benelux and France ............................................................................................58
3.4.2 Central Eastern Europe.......................................................................................58
3.4.3 Germany, Switzerland and Austria......................................................................59
3.4.4 Italy, Spain and Portugal .....................................................................................59
3.4.5 Northern Europe..................................................................................................60
3.4.6 UK and Ireland.....................................................................................................61
3.5 Industry trends and recommendations .....................................................................62
3.5.1 Building a sustainable mobile data business......................................................62
3.5.2 Business models and pricing..............................................................................63
3.5.3 Industry transformation trends ............................................................................64

4 Private vehicles ..................................................................................................................67
4.1 The European private vehicle market........................................................................67
4.2 Passenger car telematics ..........................................................................................70
4.2.1 eCall and driver assistance .................................................................................71
4.2.2 Stolen vehicle recovery .......................................................................................72
4.2.3 Motor insurance telematics .................................................................................73
4.2.4 Leasing and rental fleet management.................................................................74
4.2.5 Vehicle diagnostics .............................................................................................75
4.3 Aftermarket vehicle tracking solutions.......................................................................76
4.3.1 Octo Telematics: The European leader in motor insurance telematics..............78
4.3.2 Cobra Automotive Technologies: Pan-European SVR provider .........................79
4.3.3 LoJack distributors: TRACKER, Traqueur and Detector.....................................80
4.4 OEM car telematics solutions....................................................................................81
4.4.1 BMW ConnectedDrive.........................................................................................82
4.4.2 PSA RT3/RT4/Navidrive.......................................................................................84
4.4.3 Volvo On Call.......................................................................................................85
4.5 The European eCall initiative.....................................................................................86
4.5.1 A pending political process.................................................................................86
4.5.2 Standardisation work ..........................................................................................87

5 Commercial vehicles..........................................................................................................89
5.1 The European commercial vehicle market................................................................89
5.2 Fleet management solutions .....................................................................................93
5.2.1 Vehicle management...........................................................................................95
5.2.2 Driver management.............................................................................................96
5.2.3 Transport management.......................................................................................97
5.2.4 Mobile workforce management ..........................................................................98
5.2.5 Electronic toll collection ......................................................................................98
5.3 Key market players ....................................................................................................99
5.3.1 Cybit: Growing through acquisitions.................................................................100
5.3.2 Digicore: A global vehicle tracking solution provider .......................................101
5.3.3 Garmin: Taking an indirect approach to the fleet management market...........102
5.3.4 Masternaut: The European fleet telematics leader ...........................................103
5.3.5 Minorplanet: Renewed international focus after financial turnaround ..............105
5.3.6 MiX Telematics: New global brand for telematics services...............................105
5.3.7 Navman Wireless: Fast growing international fleet management provider ......106
5.3.8 Qualcomm Enterprise Services: Global provider of integrated M2M solutions 107
5.3.9 TomTom WORK: Achieved 50,000 subscribers milestone in Q2-2008 ............108
5.3.10 Transics: Pan-European heavy truck and transport telematics provider..........109
5.4 OEM fleet telematics propositions...........................................................................111
5.4.1 Daimler FleetBoard............................................................................................111
5.4.2 Volvo Dynafleet..................................................................................................111
5.4.3 OEM branded van fleet telematics propositions in the UK ...............................112

6 Electricity and gas meters ...............................................................................................115
6.1 The European energy distribution market...............................................................115
6.1.1 Electricity networks ...........................................................................................115
6.1.2 Gas networks ....................................................................................................119
6.2 Smart metering ........................................................................................................120
6.2.1 AMM applications..............................................................................................120
6.2.2 Advanced metering infrastructure.....................................................................123
6.2.3 Regulatory environment ....................................................................................125
6.3 Smart metering industry players .............................................................................127
6.3.1 Metering industry players..................................................................................127
6.3.2 Energy companies ............................................................................................130
6.3.3 IT and telecom companies................................................................................131
6.4 GPRS communication and smart metering.............................................................132
6.4.1 Fortum Sweden rolls out 600,000 GPRS meters with Telenor Cinclus ............132
6.4.2 TRE-FOR deploys GPRS smart metering with TDC in Denmark ......................133
6.4.3 GPRS backhaul for nationwide PLC smart meter systems in Italy and France 133

7 Other market segments ...................................................................................................135
7.1 POS-terminals..........................................................................................................135
7.1.1 Key industry players..........................................................................................136
7.1.2 Fixed-to-mobile substitution trend for POS-terminals.......................................137
7.1.3 Mobile network POS-terminal communication solutions..................................137
7.2 Security alarms........................................................................................................139
7.2.1 Key industry players..........................................................................................140
7.2.2 Wireless alarm signalling...................................................................................142
7.2.3 Mobile network alarm communication solutions ..............................................143
7.3 Miscellaneous assets and machinery .....................................................................144
7.3.1 Konecranes Fleet Management System...........................................................144
7.3.2 QES GlobalTRACS construction equipment monitoring ..................................145
7.3.3 Sensile Technologies tank monitoring..............................................................146
Glossary .................................................................................................................................147

Figure 1.1: Core elements of wireless M2M solutions................................................................4
Figure 1.2: Cost versus time diagram for wireless technology integration ................................6
Figure 1.3: Examples of wireless M2M modules ........................................................................7
Figure 1.4: Examples of wireless M2M terminals .......................................................................8
Figure 1.5: System architecture for an end-to-end M2M solution ..............................................9
Figure 1.6: M2M device value chain overview..........................................................................10
Figure 1.7: Top suppliers of wireless M2M modules by unit shipments (World 2007) ............11
Figure 1.8: Top GSM/HSPA operators by proportionate subscriber base (EU27+2 2007) ....14
Figure 1.9: Example of point-to-multipoint wireless M2M communication solution.................16
Figure 1.10: Peak and average data rates in the evolution from 2G to 3G ..............................17
Figure 1.11: Functional roles for key players in the wireless M2M ecosystem ........................20
Figure 1.12: Overview of business models for wireless M2M connectivity services ................21
Figure 1.13: M2M applications by industry sector....................................................................22
Figure 2.1: Examples of Telefónica group M2M customers.....................................................29
Figure 2.2: Telenor Sweden M2M SIM-cards (2003–2007) ......................................................31
Figure 2.3: Telenor Sweden’s M2M tariffs (September 2008) ..................................................32
Figure 2.4: SFR’s M2M tariffs (September 2008)......................................................................36
Figure 3.1: Wireless M2M SIMs by segment (EU23+2 2007–2013) ........................................49
Figure 3.2: Average expected lifespan for common wireless M2M applications .....................50
Figure 3.3: Estimated number of M2M SIMs by operator group (EU23+2 Q2-2008)..............51
Figure 3.4: Estimated number of M2M SIMs for some national operators (2007/2008) ..........52
Figure 3.5: Top ten wireless M2M projects by number of SIMs (Europe, Q3-2008)................53
Figure 3.5: M2M SIMs as share of total number of SIMs, by country (Q2-2008) .....................56
Figure 3.6: Thousand wireless M2M SIMs by country and segment (EU23+2 Q2-2008) .......57
Figure 3.7: Examples of M2M tariffs for some mobile operators (September 2008) ...............64
Figure 4.1: Vehicle registration data (EU23+2 2007)...............................................................68
Figure 4.2: Passenger car manufacturer market shares (EU-15+2 2007) ...............................69
Figure 4.3: eCall application lifecycle .......................................................................................71
Figure 4.4: SVR application lifecycle ........................................................................................72
Figure 4.5: Motor insurance telematics application lifecycle....................................................74
Figure 4.6: Leasing and rental fleet management application lifecycle ...................................75
Figure 4.7: Vehicle diagnostics application lifecycle................................................................75
Figure 4.8: Top five aftermarket vehicle tracking solution vendors (Europe 2007)..................77
Figure 5.1: Commercial vehicles in use (EU23+2 2006) .........................................................90
Figure 5.2: New registrations of commercial vehicles (EU23+2 2007)....................................91
Figure 5.3: LCV manufacturer market shares (EU25+2 2007).................................................92
Figure 5.4: Trucks (>3.5t) market shares, by group and brand (EU25+2 2006) ....................93
Figure 5.5: Fleet management infrastructure overview ............................................................94
Figure 5.6: Key players on the EU fleet management market, by installed base (Q2-2008) ...99
Figure 5.7: Masternaut’s solution platform .............................................................................104
Figure 5.8: Transics on-board computers ..............................................................................110
Figure 5.9: Volvo Dynafleet hardware.....................................................................................112
Figure 6.1: Electricity market statistics (EU23+2 2007) .........................................................116
Figure 6.2: Top 25 electricity DSOs (EU23+2 2007)..............................................................117
Figure 6.3: Top 10 gas DSOs (EU23+2 2008) .......................................................................119
Figure 6.4: Advanced metering infrastructure ........................................................................122
Figure 6.5: Examples of smart electricity meters....................................................................123
Figure 6.6: PLC point-to-multipoint communication infrastructure for AMM..........................124
Figure 6.7: Final year for deployment of smart electricity meters by country ........................126
Figure 6.8: Major AMM projects initiated in Europe since 2001.............................................129
Figure 7.1: POS-terminals and ATMs by region (EU, Q1-2007) .............................................135
Figure 7.2: Estimated data for top five POS-terminal suppliers (World 2008)........................136
Figure 7.3: Selected mobile operator tariffs for POS-terminals..............................................138
Figure 7.4: Monitored security alarms by region (EU, Q4-2007)............................................140
Figure 7.5: Estimated data for top ten monitored security alarm providers (EU Q2-2008)....141