LONDON — The number of cellular network connections used for machine-to-machine communication will grow from 37.5 million in 2007 at a compound annual growth rate (CAGR) of 37.9 percent to 186 million connections in 2012, according to Berg Insight (Gothenburg, Sweden).

GSM and legacy mobile phone technologies dominate the market at present and accounted for about 71 percent of the total number of active connections at the end of 2007. CDMA was the second most prevalent technology with a strong foothold in North America and parts of Asia-Pacific. WCDMA has so far primarily been adopted for machine-to-machine applications in Japan. Elsewhere the adoption is held back by high component costs and limited network coverage. Berg Insight said machine-to-machine applications correspond to between 1 and 3 percent of the reported number of mobile subscribers in developed markets. In the more mature Swedish and Finnish markets the M2M share is closer to 10 percent due to extensive use of GPRS for reading utility meters.

Vehicle telematics applications are set to dominate the M2M cellular market in most parts of the world and account for more than half of all network connections in 2012, Berg said.

"Safety and security concerns, manifested either in public regulations or customer preferences, are tipping the balance in favor of massive rollouts of telematics applications by the global automotive industry," said Tobias Ryberg, senior analyst at Berg Insight. "In North America, OnStar already gives peace of mind to millions of drivers. Europe is well on the way to introducing the eCall automatic emergency call system and several Latin American countries are considering mandatory tracking devices on all new cars to combat epidemic vehicle crime."

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