While Chinese Vendors Take Lead in M2M Module Shipments, Traditional Players Still Hold Revenue Edge

Commenting on the M2M module market and its vendors Jamie Moss, Research Director at ABI Research, said, "Cellular module vendors are experts in efficiency and effectiveness – the two operative words in the Internet of Things. They were optimizing the performance-to-cost ratio of cellular terminal hardware long before LTE-M and NB-IoT were thought of. They created wireless wide-area communications products tailored to specific verticals, notably automotive and industrial, out of general-purpose standards. Their future is in lock-step with the future of WWAN IoT - and will be determined by LTE. High-Cat. LTE products will drive the revenues while the ultra-paired-back LTE-M and NB-IoT will drive the volume."

Commenting on the M2M module market and its vendors Jamie Moss, Research Director at ABI Research, said, "Cellular module vendors are experts in efficiency and effectiveness – the two operative words in the Internet of Things. They were optimizing the performance-to-cost ratio of cellular terminal hardware long before LTE-M and NB-IoT were thought of. They created wireless wide-area communications products tailored to specific verticals, notably automotive and industrial, out of general-purpose standards. Their future is in lock-step with the future of WWAN IoT - and will be determined by LTE. High-Cat. LTE products will drive the revenues while the ultra-paired-back LTE-M and NB-IoT will drive the volume."

Currently, the historic Western vendors control the revenue and the high LTE category market. The Chinese vendors control the volume, with the bulk of their revenue coming from their portion of global high-Cat. sales. No one can be said to own the cellular Low Power Wide Area (LPWA, i.e. LTE-M and NB-IoT) market. But it is there, especially in the supply of NB-IoT, that the number of Chinese vendors is proliferating. With more than 60% of all module shipments in 2017 falling to them, they are being taken increasingly seriously. For instance, there were three attempts to buy Shanghai-based SIMCom Wireless Solutions for progressively larger sums in 2017. One bid was made by the Swiss-based u-Blox, before it was ultimately sold to Shenzhen Sunsea.

Looking to the future for vendors Moss concluded, "NB-IoT brings with it designed-in commoditization, so success in terms of shipments will not directly translate into success in revenue generation without exponential scale in volume. This means that NB-IoT will need to be monetized differently, the hardware share of the technology's value will be at an all-time low – even by the acutely-optimized standards of the module market. It is the vendors that can lever platform competency into their module offering, to allow hardware sales to become the lead for alternative revenue streams, that will be most successful. Sierra Wireless has been a vocal proponent of this approach and it may be prescient that it took a market-leading 23% of all module revenue in 2017."

These findings are from ABI Research's M2M Cellular Module Vendor Market Share report. This report is part of the company's M2M, IoT & IoE research service, which includes research, data, and Executive Foresights.

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