Industry Watch: 2021 LTE will become the leading technology of M2M market

Ovum said that in the current generations of mobile technologies, LTE will become the dominant M2M technology in the long run, reaching 212 million connections in 2021.

Jamie Moss, principal analyst for consumer technology at Ovum, said the increasing competition in the M2M market requires more detailed and accurate forecasts. As industry transparency increases, more and more operators announce their M2M connections, and Ovum has taken the opportunity to revolutionize its forecasting methodology.

Ovum's Cellular M2M Forecast: Forecast for 2016-2021, based on consolidated data from 589 carriers from different countries and then by technology (eg 2G, 3G and 4G). The forecast covers only the traditional cellular M2M market and does not include NB-IoT data.

During the five-year forecast period, M2M service revenue will grow at a compound annual growth rate of 13.3%. By 2021, the global M2M annual revenue will reach 67 billion U.S. dollars. The regions with the highest incomes will be Asia and Oceania, North America and Western Europe (20.2 billion U.S. dollars, 16.0 billion U.S. dollars, and 14.0 billion U.S. dollars in 2021). However, the fastest growing income will be the slowest growth rate Markets - the Middle East and Africa, the compound annual growth rate in the region will reach 16.7%.

In 2021, the number of M2M connections occupied by 2G and 4G is the same, both of which are 212 million; 3G will occupy 172 million connections. However, by then 2G and 3G will stagnate, and LTE will rise steadily.

Machine-type connections need to be stored for many years, and naturally will not be transferred to the new air interface technology. Doing so breaks the economics of deploying fully autonomous nodes. In contrast, M2M connections are usually maintained until the end of their lifecycle before any migration takes place. Therefore, 2G technologies, especially GSM, will last longer in the M2M field.

Large operator groups that already have M2M operations will not start shutting down 2G networks until 2020, some even until 2025. But this decision is not just for reasons of legacy technical support: 2G M2M connectivity will continue to increase as 2G is still the most affordable technology and is the most widely-deployed network in the world.

WCDMA is the most pervasive in the M2M space, but as a default it will be very useful for operators and service providers that currently have only a small amount of M2M or none at all. While WCDMA has been shown to be cost-effective for some time, it has neither the flexibility of LTE nor the inherent economies of scale of GSM and NB-IoT.

LTE is an exciting technology for machine communications because, unlike 2G and 3G, LTE is "tunable." LTE is designed for high-speed data, but it does not require its full spectrum of capabilities to be used. With Cat-0, Cat-M and NB-IoT specifications, data traffic for different throughput needs can also be provided in a very cost-effective manner. Therefore, in the current generations of mobile technologies, LTE will be the dominant M2M technology in the long run.

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