What is a 'Connected Device,' and Why Does it Matter?

By Gary Kim October 14, 2011
“Connected devices” might represent 24 billion devices in 2020, and represent $1.2 trillion in mobile service provider revenue, according to a GSMA study conducted by Machina Research.

The research shows that the number of “connected devices” will increase from nine billion in 2011 to more than 24 billion in 2020. But there is an important caveat. The term “connected devices” sometimes includes tablets, e-readers and mobile broadband dongle revenue. In other cases the term is used to refer only to new sensors and services that are “machine to machine.”

For analytical purposes, it makes a significant difference which definition is used, since M2M or “Internet of things” revenue is a wholly new business for mobile service providers, while tablet, e-reader and PC dongles are an existing business. We have better clarity on how well mobile service providers are growing the new M2M business when the two types of revenue are kept separate.

But there will be incentives for service providers to lump both sources together, to convince investors that new service initiatives are succeeding at a high level. Some might say that effort obscures what really is happening. More on the GSMA connected devices revenue forecast here.

The GSMA study says “connected devices” include “remote sensors, remote monitoring, actuating devices, associated aggregation devices, PCs, laptops, tablets, eReaders, mobile handsets, femto cells & routers.”

Sprint, on the other hand, uses a more targeted definition. Sprint says its machine-to machine development initiatives are focused on four primary areas: connected transportation; connected meters, sensors and alarms; connected machines, screens and things; and connected personal devices.

Sprint has defined several sub-segments within each of the four M2M growth segments:

1. Connected Transportation – Fleet/Telematics/Inter-Vehicle Communication (IVC)/IVC Original Equipment Manufacturer (OEMS); Usage-Based Insurance (UBI)/Pay As You Drive (PAYD); and Public Safety/Emergency.

2. Connected Meters, Sensors and Alarms – Utility/Smart Grid; Water/Oil/Gas; Security and Surveillance; and Automation and Control.

3. Connected Machines, Screens and Things – Automated Teller Machine (ATM)/Point of Sale (POS)/Access/Vending; Digital Signage and Kiosk; Asset Tracking; and Embedded Routers and Modems.

4. Connected Personal Devices – Personal Gaming and Tracking; Personal Health Management; and Copiers/Printers/Scanners.

“Connected devices” are a vitally important growth opportunity for mobile service providers. But mixing sensor and telemetry applications of the machine to machine sort with service revenue derived from tablet, e-reader or other end user devices will obscure, rather than highlight, the extent of growth. Some service providers will lump M2M and tablet, e-reader or dongle revenue with M2M, for a couple of reasons.

One rationale is that this is a better way of highlighting “non-phone” revenue. Some will say it also is a way to inflate M2M revenue by adding PC dongles, tablet broadband and other sources that are extensions of the existing business more than evidence of growth in the new M2M business.

Gary Kim is a contributing editor for IoTevolutionworld. To read more of Gary’s articles, please visit his columnist page.

Edited by Jennifer Russell
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Contributing Editor

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