While operators are already generating strong revenue from machine-to-machine (M2M) - $US10 billion worldwide in 2013 -- growth opportunities for the sector will occur in emerging regions as applications are tailored to local market and the cost of solutions declines, according to Analysys Mason.

In its 'M2M device connections and revenue: worldwide forecast 2013 to 2023', the analyst firm claims the number of M2M connections in emerging markets will begin to increase by 2015 as operators look to increase their number of connected customers, and costs decrease. This will also cause a decline in developed markets from 68 to 62 per cent during the forecast period.

Learn how smart CIOs are protecting customers from security breaches

The report indicates operators which have assembled the appropriate teams and resources will be poised for greater success as the emerging market begins to grow. Analysys Mason said operators in developed markets have learned it takes 18 months to organise the various aspects of an M2M business.

Operators in emerging markets are currently focused on the growth in the number of mobile handsets as running an M2M business carries a higher risk than a traditional mobile handset and broadband business, the firm said.

M2M solutions in the utilities, automotive and security sectors are predicted to be more easily understood business models by 2016.

The SME space

Analysys Mason predicts small to medium enterprises (SMEs) will be at the core of the increasing percentage in total M2M device connections.

Utilities sector (dominated by large enterprise purchases of M2M solutions and a large number of low-revenue connections) aside, the proportion of SME M2M connections will increase from 14.6 per cent of total connections in 2013, to 24.6 per cent ten years down the track. This represents a compound annual growth rate (CAGR) of 33 per cent.

Although affordability is more of an issue for SMEs than large enterprises and the public sector, Analysys Mason claims it will improve as M2M solutions become less expensive to implement at the application layer, and operators and service providers start offering off-the-shelf solutions. The cost of M2M hardware is also predicted to fall.

The analyst firm believes the opportunity for operators lies in selling security and surveillance, some healthcare solutions and some retail sector M2M solutions to SME buyers.