Two years ago, the M2M market was hit by the 2008-9 economic downturn – just like the rest of industry. Given the current financial crisis in the Eurozone and weak economic growth everywhere, what are the prospects for the M2M market now?

Overall, they look pretty good I think. Two years ago parts of the market – in particular hardware sales – experienced retrenchment due to cutbacks in some business sectors for the first time in a decade, but soon recovered in 2010. This year there is also some softness in hardware growth, but nothing like the situation 2 years ago. In contrast, new network connections growth was much less affected 2 years ago. New connections are growing strongly this year. Why?

I think the market segmentation outlined in this article – click here – on M2M Market Dynamics may help to explain this. Originally drawn up to show something else, it does highlight how each of the three application categories require different forms of business justification in order to succeed. Apart from the Regulatory category, these are most often to do with gaining competitive advantage in a business sector by either reducing operating costs, generating new revenue or creating new value in order to differentiate a product or service offering. These are the arguments for investing in M2M when times are good. When times are not so good, if your competitor is already using M2M to deliver something new and competitive, holding back on that investment is not going to improve your prospects.

In other words, once there is real momentum in the M2M market, maybe it becomes self-sustaining and too counter-productive to cut back on. A nice theory perhaps . . . ?