Retail is becoming the fastest growing area within the M2M/IoT space, as businesses look beyond sweating supply chains, new research from Vodafone has claimed.

The operator said it retained a big advantage in complex projects as it released its annual report into the space.

The M2M Barometer 2015 report, which analysed over 650 companies in seven verticals in 16 countries, found adoption rates on the rise across the board.

While energy/utilities and automotive remain the top two verticals in terms of the industries that are adopting M2M, they have been joined by the retail sector, which has seen adoption rates almost double in the past 12 months.

Almost a third of retailers (32 percent) have some form of M2M project in place, up from 17 percent in 2014.

The report found that the sector is adopting solutions such as asset tracking to streamline the supply chain and digital signage to increase interactions with customers.

This was part of a wider trend that saw M2M projects moving beyond focusing on internal processes to tackle areas such as customer experience.

M2M adoption in the consumer electronics space has stagnated, however, due to slow replacement cycles and fragmented standards.

Overall, the number of businesses who said they have an M2M project in place has risen five percentage points to 27 percent.

“We are now entering a new era or phase of adoption in which M2M will be adopted in a broader range of industry verticals. This is partly driven by supply-side factors that have aligned to lower barriers to entry,” said research firm Analysys Mason, who contributed to the report.

When taken from a geographical standpoint, the conjoined Africa, Middle East and Asia Pacific region has the highest adoption rate at 35 percent, up eight percentage points.

Europe has seen the fastest growth in adoption in the last 12 months, rising 10 percentage points to 31 percent.

The report highlighted the impact Germany has made with its government-led Industry 4.0 initiative.

Meanwhile, security and privacy are the two main barriers that businesses see to the increasing use of M2M.

The high costs of adoption relative to the potential benefits also scored highly.

“Security will need to become more pervasive in the network to the needs of a perimeterless security environment,” Analysys Mason commented.

Not one barrier scored more than 33 percent, which Vodafone claimed was a positive.

However, if the barriers are not large they are many; the top 10 barriers all scored 20 percent or higher.

So what does this all mean for Vodafone, which was once again voted the leading M2M service provider in the world, and which saw M2M revenues grow 25 percent last year?

Erik Brenneis (pictured), Director of M2M at the UK-based operator, said the market has now switched from being “very early stage to maturing”.

He pointed to the increased interest that his customers’ CEOs, as opposed to just CIOs, are showing in M2M projects.

This widening of the teams making decisions around M2M was good news for Vodafone, according to Brenneis, as it meant costs were being spread around customers’ businesses rather than being concentrated with one person.

Citing connected clothing, he admitted the mobile network was not suitable for every M2M use case and said Vodafone remained “a challenger” in a number of new verticals.

Brenneis offered no comment when asked whether Vodafone was actively looking at mergers and acquisitions to boost its portfolio.

In terms of the competition with other telcos, he said everyone was upping their game but claimed Vodafone retained “a big advantage” the more complex the M2M project was.

Connecting rural areas remained one of Vodafone’s main challenges in the space, Brenneis said.

He said the company was building more integrated security into its solutions in response to customers’ fears around security/privacy and confirmed “no malicious security breach” had occurred anywhere amongst its customer base.

Overall, Brenneis remains upbeat about the future and said M2M was “proving its worth”.

The operator will need to adapt itself to the ever-changing needs of M2M, but is unlikely to see its leading position in the telco world challenged by rivals in the short term.

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