Proving the Business Case for the Internet of Things

M2M set for takeoff in 2015-16: Morgan Stanley

Iain Morris
April 30, 2014
Hyped for several years, the M2M industry may finally be heading for the breakthrough it needs to garner mass-market interest, according to one banker speaking at last week’s M2M World Congress in London.

Francois Meunier, the managing director of tech hardware equity research for Morgan Stanley (New York City, NY, USA), said the financial community is taking notice of the M2M industry as investors look for the ‘next big thing’ that will succeed the smartphone boom of the last few years.

“Investment cycles go in waves but the expectation is that things will take off between 2015 and 2016,” he told attendees during a presentation.

Several big M&A deals over the past few months have no doubt helped drum up M2M interest, noted Meunier, including Google’s (Mountain View, CA, USA) $3.2 billion takeover of smart thermostat maker Nest (Palo Alto, CA, USA) and Zebra’s (Lincolnshire, IL, USA) $3.5 billion acquisition of Motorola’s (Schaumburg, IL, USA) enterprise business.

Meanwhile, semiconductor giant Intel (Santa Clara, CA, USA) has begun to break out the revenues it generates from Internet of Things sales, flagging 12.6% growth between 2012 and 2013, to $1.8 billion.

Indeed, the M2M boom could see the balance of power in the chip market shift back in favor of Intel, which has suffered at the expense of ARM (Cambridge, UK) and its ecosystem of manufacturers in the smartphone era.

Meunier also expressed the view that forthcoming 5G technology could become the standard of choice for M2M applications.

“5G will be more ubiquitous than 4G for the Internet of Things,” he said. “4G is more about smartphones – not supporting tens of billions of devices.”

At the same time, however, operators will also need to invest more in “densification” of their networks, including the rollout of new small-cell technologies, to support the expected ramp-up in the use of M2M services.

Meunier joined others at the M2M World Congress in calling for more standardization of M2M technologies, saying that customers “don’t want to be stuck with a customized solution”.

An indication of rising investor interest in M2M is the response to a recent report on the industry published by Morgan Stanley, which was downloaded 8,000 times over a period of just two weeks.

A similar report the bank published a few months ago received 6,000 downloads in total.
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