Chinese machine-to-machine market is set for explosive growth

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Jun 28, 2016, 08:02 ET

LONDON, June 28, 2016 /PRNewswire/ -- China leads the global machine-to-machine (M2M) market and will continue to see explosive growth over the next five years, according to the EY report: M2M in China: Opportunities to build on global leadership. M2M – which means direct communication between connected devices – is an essential component to enabling the Internet of Things (IoT). Several advantages unique to China will aid in extending its global leadership in M2M, most notably, its large smartphone base and ambitious government plans for IoT.

Steve Lo, Greater China Technology, Media & Telecommunications Market Segment Leader, Ernst & Young, says:

"Support from the Chinese Government and its mandate for China to become a nation of smart cities has been crucial to building the necessary critical mass for M2M to drive the country's future mobile internet era. Together, Chinese operators and the Chinese Government have enabled the market to grow dramatically in a relatively short time, laying the foundation for further expansion and accelerated development of the IoT."

Smart-city pilots accelerate growth across industries

Deployment of smart-city pilots has accelerated adoption of M2M solutions in several key industries. China's telecoms operators, in particular, are set to capitalize on the IoT opportunity by leading the development of services related to IoT and engaging with the smart-city projects initiated by many Chinese city authorities to expand their M2M and IoT businesses.

Energy and transport also stand to benefit with new network technologies supporting future market growth. At the same time, logistics, securities and health care are increasingly using M2M technology to deliver services, such as fleet management, asset tracking, surveillance and smart health. Going forward, the wearables and connected-car markets also will see significant growth potential.

Collaboration and partnerships form path to growth

The report identifies third-party collaboration, alliances with competitors and cross-sector partnerships as critical success factors for telecoms operators to develop and deliver targeted M2M solutions effectively across industries.

While partnership provides a fast route to market, bold acquisition strategies can bring a mixture of customers, vertical expertise and development capabilities to operators and service providers. Utilities and transport are two priority sectors where, according to the report, operators may need to consider investment.

Holger Forst, Global Telecommunications Assurance Leader, Ernst & Young says: "To succeed in the long term, operators must also look at revamping their organizational model to increase agility. Engaging in partnerships and alliances is vital to delivering robust and innovative solutions. Pursuing acquisitions can also position service providers for a greater share of M2M industry revenues. Meanwhile, sharper focus on big data analytics also provides opportunities for further differentiation by delivering greater insights for customers."

For a full copy of M2M in China: Opportunities to build on global leadership, visit ey.com/GL/en/Industries/Telecommunications/EY-M2M-in-China.

About EY

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About EY's Global Telecommunications Sector

Telecommunications operators are facing a rapidly transforming business model. Competition from technology companies is creating challenges around customer ownership. Service innovation, pricing pressures and network capacity are intensifying scrutiny of the return on investments. In addition, regulatory pressures and shareholder expectations require agility and cost efficiency. If you are facing these challenges, we can provide a sector-based perspective on addressing your assurance, advisory, transaction and tax needs. Our Global Telecommunications Sector is a virtual hub that brings together people, cultures and leading ideas from across the world. Whatever your need, we can help you improve the performance of your business. Visit us at ey.com/telecommunications and follow us on Twitter @EY_Telecoms.

About the M2M in China: Opportunities to build on global leadership report

M2M in China: Opportunities to build on global leadership has been developed with the help of first-hand market perspective from industry practitioners, input from EY's subject matter professionals and supporting insights from EY's sector professionals and secondary research. It attempts to assess the evolving landscape of China's machine-to-machine and Internet of Things industry, with a focus on opportunities and challenges facing both telecommunications providers and the extended value chain, and provides a view on the critical factors that will determine success in the Internet of Things.

Virginia Milazzo
EY Global Media Relations
+1 212 360 9261
[email protected]

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