SA Enterprises Adopt Smart M2M

Solutions to Improve Operational

Efficiency

Machine-To-Machine Market Opportunities in South Africa -

Vertical Focus

Source: Frost & Sullivan analysis.

Research Preview

Contents of Full Research

Section Slide Number

Executive Summary 7

Research Objectives and Scope 11

Market Definitions 16

Market Overview 20

Drivers and Restraints 25

Forecasts and Trends 37

Automotive Vertical Analysis 42

Retail and Finance Vertical Analysis 53

Utilities Vertical Analysis 61

Telecoms and Platform Providers 73

Strategic Recommendations and Conclusions 80

Appendix 84

The Frost & Sullivan Story 86

Research Objectives and Scope

Research Aim and Objectives

To provide an analysis of

selected verticals in the

South African M2M

market

To provide an overview of the key trends in the South

African M2M market

To quantify the size of selected verticals of the M2M

market and provide a forecast for the period 2014–2018

To highlight M2M opportunities in the automotive, retail

and finance, and utilities verticals

To provide strategic recommendations to providers of

SIM cards, access networks, and M2M platform vendors

Aim

Objectives

Source: Frost & Sullivan

• Equipping vehicles with SIM cards adds value to manufacturers and

drivers. Examples range from in-car entertainment over remote

maintenance to monitoring of functionalities to pay-as-you-drive

insurance models and tracking of vehicles in case of unauthorised use.

• M2M projects in this vertical are related to the point-of-sale terminals,

kiosks, vending machines, and ticketing machines. Other applications

may include inventory updates across distributed locations or

warehouses.

• Utilities and municipalities are expanding their focus on SIM-enabled

smart meters to manage the consumption of water and electricity. M2M

deployments in this vertical are largely driven by the growing need for

revenue protection through remote access to water and electricity

meters.

• Other verticals such as consumer electronics, manufacturing, and

healthcare are also expected to experience further growth, but have not

been included in this study. Consumer-driven M2M include applications

on consumer devices such as eBooks, home appliances, and other

digital devices.

Research Scope—Verticals

M2M Market: M2M Vertical Applications, South Africa, 2013

Source: Frost & Sullivan

Automotive

Retail and Finance

Utilities

Other Verticals

Drivers and Restraints

Drivers 1–2 Years 3–4 Years 5th Year

There is growing support of Tier I mobile

operators for M2M solutions. H H H

Enterprises are moving towards smart solutions

to improve operational efficiency. H H M

The rising availability of high speed networks

has expanded the coverage of M2M applications. H H M

There is growing public support for smart

solutions and green governance policies. M M M

Impact ratings: H = High, M = Medium, L = Low

M2M Market: Key Market Drivers, South Africa, 2014–2018

Source: Frost & Sullivan

Key Market Drivers

Key Market Restraints

Restraints 1–2 Years 3–4 Years 5th Year

A lack of device and module standardisation limits

the implementation of M2M. H M M

Security and privacy concerns will slow the

deployment of M2M solutions. H M M

Solutions have been predominantly targeted at

niche markets with limited focus on other

segments.

M M M

There is a limited specialised M2M technical

workforce. M M L

Impact ratings: H = High, M = Medium, L = Low

M2M Market: Key Market Restraints, South Africa, 2014–2018

Source: Frost & Sullivan

Automotive Vertical Analysis

Automotive Vertical—Unit Shipment and Revenue

Forecast

Automotive Vertical: Unit Shipment and

Revenue Forecast, South Africa, 2011–2018

Revenue CAGR = 4.6%

Units CAGR = 8.3%

Note: All figures are rounded. The base year is 2013. Source: Frost & Sullivan.

0

500

1 000

1 500

2 000

2 500

3 000

3 500

4 000

0

5

10

15

20

25

30

35

2 011 2 012 2 013 2 014 2 015 2 016 2 017 2 018

Revenue ($ M) 18.9 21.4 24.5 26.0 26.8 28.3 29.7 30.7

Units (000) 1 950 2 203 2 508 2 689 2 879 3 124 3 409 3 729

Un

its

(00

0)

Rev

enu

e ($

mill

ion

)

Year

Automotive Vertical—M2M Application Potential

Application

Commercial Vehicles

Passenger Vehicles

Emerging Trends Growth Potential

1–3 Years 4–5 Years

Fleet Management

Real-time video monitoring an emerging component of the solution

Medium High

Navigation Applications to include real-time traffic and weather updates and road hazard alerts

High Medium

eToll M2M demand will be driven by fleet and car rental companies

Low Medium

Vehicle Tracking Becoming an important part of vehicle insurance offerings

High Medium

UBI Insurers using it to boost customer loyalty by offering additional savings on premium

Medium High

Infotainment The connected car to enable in-car Wi-Fi, Internet radio, and multimedia streaming

Low Medium

Strong Unimportant Medium Very Important

Source: Frost & Sullivan

Less Important

Automotive Vertical: Key Trends, South Africa, 2014-2018

Retail and Finance Vertical Analysis

0

200

400

600

800

1 000

1 200

1 400

0

2

4

6

8

10

12

2 011 2 012 2 013 2 014 2 015 2 016 2 017 2 018

Revenue ($ M) 4.5 5.1 5.9 6.6 7.5 8.6 9.8 10.9

Units (000) 460 500 595 702 832 985 1 142 1 231

Un

its

(0

00

)

Reve

nu

e (

$ M

illi

on

)

Year

Note: All figures are rounded. The base year is 2013. Source: Frost & Sullivan

Retail and Finance Vertical: Unit Shipment and Revenue Forecast, South Africa, 2011–2018

Revenue CAGR = 13.0%

Units CAGR = 15.7%

Utilities Vertical Analysis

Utilities Vertical—Unit Shipment and Revenue Forecast

0

200

400

600

800

1 000

1 200

1 400

1 600

1 800

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

2011 2012 2013 2014 2015 2016 2017 2018

Revenue ($ M) 2.6 2.9 3.4 4.0 5.1 6.3 7.2 8.2

Units (000s) 312 347 425 538 740 992 1 273 1 532

Un

its

(0

00

)

Reve

nu

e (

$ M

illi

on

)

Year

Note: All figures are rounded. The base year is 2013. Source: Frost & Sullivan

Utilities Vertical: Unit Shipment and

Revenue Forecast, South Africa, 2011–2018

Revenue CAGR = 19.4%

Units CAGR = 29.2%

Telecoms and Platform Providers

Source: Nokia Siemens Network; Frost & Sullivan

Mobile Operators

• Mobile operators’ share of the M2M market comes from SIM connections and the consumption of data

on connected devices.

• Despite owning the communication platform, connectivity revenue (network access and service

management) is estimated to account for a 30% share of the overall M2M market, which is expected

to fall to 16% by 2020.

• With the price of data expected to continue falling, the contribution of data revenue will dwindle

further, especially for less bandwidth-intensive applications that require basic connectivity.

2012 2020

$52 billion $214 billion

$37 billion

30% 16%

$170 billion M2M Applications Data

M2M Market: M2M Connectivity, Data, and Application

Revenue Breakdown, Global, 2012 and 2020

$44 billion $15 billion

Interested in Full Access? Connect With Us

Name Samantha James Corporate Communications

(+27) 21 680 3574

Samantha.james@frost.com

Research Authors

First Name Last Name Lehlohonolo Mokenela

Research Analyst Information & Communication

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