The Nordics - at the forefront of the MM-revolution

The Nordics - at the forefront of the M2M-revolution

24 February 2014

The number of connected things in the Nordics has already surpassed the region's total population and the market is expected to grow roughly twice as fast as the global M2M market. This according to a new report by the region's leading operator TeliaSonera and Arthur D. Little, a global leading management consultancy.

Machine-to-Machine (M2M) communications, or Internet of Things, is about to radically transform society, industry and the way we live. Myriad things are being connected, everything from remote ECG-monitoring devices to traffic control. The Nordic countries Sweden, Denmark, Norway and Finland are hot spots for M2M growth. The number of Connected Things[1] has already surpassed the region's total population. TeliaSonera and Arthur D. Little estimate that by 2017 there will be 2.6 Connected Things per person.

Number of Connected Things per country in the Nordics

- The right conditions for early M2M adoption and further growth can be found in the Nordics, which has excellent ICT infrastructure, a stable regulatory environment, early adopting customers and innovative players driving the uptake of M2M solutions. We can also see companies, in several industries, that are willing to take the main responsibility for the customer value proposition. This is essential for mass market deployment, says Hans Dahlberg, Vice President and Head of TeliaSonera Global M2M Services.

Market size and growth in EUR (example: Swedish market size in 2017 is estimated to 2 034 million EUR)

- We expect the Nordic market to grow annually at around 30 percent, roughly twice as fast as the global market, reaching a market size of roughly EUR6.1 billion by 2017. M2M solutions for connecting buildings, vehicles, people and consumer gadgets will be important drivers of growth, says Martin Glaumann, Partner & Head of Telecommunications in the Nordics at Arthur D. Little.

The report identifies seven connected groups or industry segments in the region where M2M is happening now and where rapid growth is expected until 2017.

In 2012, the largest connected group in the Nordic region was Connected Building (EUR568 million(2)), including both M2M solutions within homes and offices. Security applications are the leading and most mature application types in the group. Energy management applications offer the potential for up to 30 percent energy savings. The segment is expected to grow by 13 percent year-on-year, reaching EUR1,050 million in 2017.

Connected People (EUR88 million(2)), with health care-related applications such as remote measurement of bio-markers, is yet a small and immature segment, but with immense growth opportunities. M2M solutions in this area could reduce up to 50 percent in hospital nights and re-hospitalization for patients with chronic diseases and significantly improve quality of life for patients and the elderly. It is expected to grow by 47 percent year-on-year, reaching EUR600 million in 2017.

Connected Vehicle is expected to show 47 percent growth year-on-year, the strongest growth rate driven by solid uptake in the number of connected cars, which will not only be pushed by OEMs, but also other stakeholders, such as repair shops, insurers, rental providers and car pool service providers. In Norway, an electric car subsidy is expected to drive the number of new connected cars, and in Finland, there is an estimated rapid uptake of Pay as you drive insurance policies connecting not only new but also aged cars. The segment is expected to grow from EUR196 million in 2012 to EUR1,321 million in 2017.

Connected Consumer Gadget (EUR457 million(2)) was the second-largest segment in 2012, and is expected to grow by 42 percent year-on-year, reaching EUR2.6 billion, the largest segment in 2017. Growth is driven by numerous consumer devices (e.g. cameras, consumer wearables, white goods, music players and TVs) that are being connected.

Connected Infrastructure (EUR279 million(2)), which includes Smart meters deployed in Sweden and Finland, has been a key driver for growth in M2M mobile subscriptions in the region. In terms of revenue per device, this segment is likely to face further price pressure, in particular on connectivity services of installed Smart meters. The segment is expected to grow by 3 percent year-on-year, reaching EUR323 million in 2017.

Connected Industrial Process (EUR51 million(2)) is a rather relatively small segment in terms of M2M solutions. The segment is driven by underlying industry demand to improve productivity and competiveness, but faces some challenges that limit growth, such as high integration costs and long asset lifetime of industrial equipment. The segment is expected to grow by 11 percent year-on-year, reaching EUR86 million in 2017.

Connected Money (EUR38 million(2)) is a relatively small segment, but includes some mature applications such as point-of-sale terminals. In some countries, such as Sweden, growth has been driven by regulations requiring restaurant owners to exercise the credit card payment process at customers' tables. Other application types, such as connected vending machines or parking meters, are yet immature in the Nordic region. The segment is expected to grow by 11 percent year-on-year, reaching EUR64 million in 2017.

- The Nordics is spearheading the M2M revolution. I would encourage decision makers around the globe, whether you're an start-up, internet giant or traditional manufacturing company, to keep a close eye on the Nordic markets going forward and embrace the opportunity to engage in a pioneering eco-system, concludes Hans Dahlberg.

1 Excluding mobile phones, PCs and ICT infrastructure

2 Market size 2012. Source: Arthur D. Little analysis, Machina Research

About TeliaSonera Global M2M Services TeliaSonera Global M2M Servi

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