Verizon’s planned acquisition of major telematics provider Hughes Telematics is indicative of the continued shift in the M2M value chain as providers look to increase their capabilities to deliver value added services. Typically, carriers prefer to partner in vertical M2M segments rather than acquiring system integrators or value-added resellers. However, where there is a major opportunity in a particular segment, Tier 1 carriers will acquire additional expertise, IP and consequently customers to build on their connectivity and wholesale M2M services. Many Tier 1 carriers also have enterprise managed services capabilities and adding value added service providers in a specific segment can get them closer to offering an end-to-end solution.

In January, Verizon acquired the remaining 50% of nPhase, its joint venture for the M2M business it formed with Qualcomm in 2009/ nPhase provisioning and back-end M2M systems combined with Verizon's sales force and distribution channel was envisaged as making it easier and faster for companies to get their M2M devices running on Verizon's network.

With the acquisition of Hughes, Verizon gains access to OEM telematics, as well as fully fledged M2M fleet and mHealth solutions through two Hughes subsidiaries:

1) Networkfleet, Inc. offers remote vehicle diagnostics, GPS tracking and emissions monitoring system for wireless fleet vehicle management

2) Lifecomm offers mobile personal emergency response services through wearable lightweight device with one-touch access to emergency assistance.

Verizon is stating its firm intention to compete aggressively in the M2M market and this will reinforce Verizon’s leadership position in the North American telematics market. Nevertheless, the M2M landscape will remain very competitive. AT&T remains very strong and Sprint has carved out a market in smart metering and utilities.

What is certain is that 2012 will continue to be an exciting year in the M2M market with more mergers and acquisitions to come!

Today's news that Verizon has purchased Hughes Telematics business for a reported $612M is just the latest example of consolidation in the M2M market as noted by our M2M service.

In our February 2012 insight we predicted that ?2012 will represent a year of major change, as consolidation among various players in the M2M value chain continues and mobile operators look to move up the value chain through creation or extension of M2M service platforms. Fragmentation issues will be more readily addressed in 2012 but there is still a long way to go.

The opportunity in M2M is huge. How huge, well somewhere between our conservative 5B+ connections and more bullish 50B from other sources out there.

We have already seen significant consolidation with operators like Deutsche Telekom looking to expand and enhance their position for the next big thing.. the Internet of Things. Now Verizon for a modest sum is beefing up its enterprise solutions assets. Several other examples include: AT&T extending its position in M2M application development with a U.S. reseller agreement with Axeda Corporation, an exclusive among major U.S. mobile carriers. The AT&T M2M Application Platform Powered by Axeda is designed to streamline the development of M2M applications to enable more rapid deployments at lower cost. Verizon acquiring the remaining 50% of nPhase, its joint venture for the M2M business it formed with Qualcomm in 2009 nPhase provisioning and back-end M2M systems combined with Verizon's sales force and distribution channel was envisaged as making it easier and faster for companies to get their M2M devices running on Verizon's network.

2012 will be a transition year that sees large SIs start to look more seriously at very large projects in the M2M market.

Significant consolidation has already happened among module makers and the next phase of market development is likely to be more consolidation but also expanded partnerships.

Strategy Analytics believes that carriers are well placed to offer developer toolkits and also be a forum for developers to share information and knowledge, as well as potentially creating opportunities to aggregate and showcase developer applications.

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