Chinese M2M Module Vendors Take the Lead in Shipments, But Traditional Players Still Hold the Revenue Edge: ABI Research

Today’s machine-to-machine (M2M) module market was more than 20 years in the making, and the casual technology observer may be forgiven for thinking that there is nothing much that is new to say about it. But in a new report, ABI Research reveals the changing fortunes of cellular M2M module vendors.


The M2M module market has been dominated for most of its existence by a small number of independent and dedicated North American and Western European vendors. And while these vendors retained the lion’s share of module revenues in 2017, they dramatically lost out in their dominance of the number of units shipped. The cellular module market has doubled its value within five years and it has become a prize for which more and more vendors are competing.

Of the module revenues in 2017, 60 percent went to the longstanding pioneers of the cellular module market: Sierra Wireless, Gemalto Cinterion, Telit, and u-Blox. But, their share of shipments experienced a decisive about-turn - from 55 percent of the market in 2016 to less than 40 percent in 2017.

These market leaders have been displaced by vendors from China, who have been capitalizing on the prematurely dismissed and highly-commoditized 2G market. 2G may be dead in the USA, but it will continue to be important throughout the rest of the world for several years to come.

The total value of the module hardware shipped in 2017 exceeded $2 billion – an unprecedented amount. These results will be augmented in 2018-19 as it becomes seen which vendors start to take the lead in the new Long-Term Evolution (4G), category M1 (LTE-M) and narrowband Internet of Things (NB-IoT) module markets.

“Cellular module vendors are experts in efficiency and effectiveness – the two operative words in the Internet of Things,” said Jamie Moss, Research Director at ABI Research. “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 percent 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.

“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,” Moss said. “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.”

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