Wireless Carriers Predict Surge in Internet-Connected Machines

Mobile carriers’ connections for devices other than phones, laptops and tablets will rise to 250 million this year as the global market for links to cars, smart watches and thermostats takes off.

That’s up from 195 million worldwide, or 2.8 percent of mobile connections, at the end of last year, the GSMA industry association said in a survey of wireless carriers.

About 40 percent of the world’s mobile operators offer machine-to-machine services or M2M, a market that’s been growing at about 38 percent a year since 2010, the GSMA said. Devices that depend on M2M include vending machines that alert suppliers when they need to be refilled and thermostats that monitor energy use. Carriers are betting that these will provide the next wave of growth as the increasingly saturated mobile-phone and laptop markets slow.

“Operators not only want to provide connectivity, but they are trying to take a larger slice of the overall revenue opportunity,” said Sylwia Kechiche, a GSMA analyst who worked on the report. Carriers are accomplishing this by offering suites of services for connected devices, such as AT&T Inc. (T)’s Digital Life home automation packages that let users control lights and monitor security cameras remotely.

The automotive industry is one of the fastest-growing parts of the market because of services such as in-car Internet access, real-time traffic monitoring, and pay-as-you-drive insurance, the London-based GSMA said.

The market for wireless, Internet-connected devices could create between $2.7 trillion and $6.2 trillion of economic value annually by 2025, according to the McKinsey Global Institute, a research arm for New York-based consulting firm McKinsey & Co. Inc.

Smoke Alarms

Google Inc. (GOOG)’s $3.2 billion acquisition of Nest Labs, announced last month, gives the search giant access to Web-connected thermostats and smoke alarms and data on customers who track their energy use online.

“We are now living in a world where every device, machine or appliance can be wirelessly connected to the Internet, providing a wealth of real-time information,” Hyunmi Yang, the GSMA’s chief strategy officer, said in an e-mailed statement. “There is an opportunity for mobile operators to add value far beyond connectivity, by developing M2M capabilities that reduce fragmentation and stimulate new services.”

To contact the reporter on this story: Amy Thomson in London at athomson6@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net

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