Novatel Wireless Inc. (NVTL) has entered into the Machine-to-Machine (M2M) smart devices market through a multiyear Memorandum of Understanding with Cinterion Wireless Modules GmbH. Cinterion is a global leader in M2M communication modules. These two companies will combine their core competencies with Novatel-developed CDMA modules (1X and Rev. A) and Cinterion form factor.
A typical mobile M2M messaging system establishes a wireless communications link to connect a group of devices to a computer server or another device for the purpose of transmitting data contained within those devices. This emerging M2M market provides the opportunity to mobile-enabled millions of devices, like cars, utility meters, vending machines and consumer electronics devices to get connected to a wireless network.
In last July, Verizon Wireless (VZ) and Qualcomm Inc (QCOM) have formed a joint venture to provide M2M wireless communications and smart services offerings across several market segments. Novatel’s closest competitor, Sierra Wireless (SWIR) has already entered into M2M business with both T-Mobile, a division of Deutsche Telekom (DT) and Orbcomm (ORBC). Sprint Nextel (S) has formed a partnership with DataSmart for M2M solutions. Wireless IP specialist InterDigital Inc. (IDCC) is also entering the M2M sector with a deal to license its 2G/3G patents to Cinterion Wireless Modules GmbH.
According to our view, diversification into M2M market become essential for Novatel since the company is facing significant challenges from newly launched products by large manufacturers, including Qualcomm and L.M. Ericsson (ERIC). Huawei Technologies and Foxconn are also on verge of launching embedded wireless products. Furthermore, Novatel announced that its MiFi product line, which generated more than 40% of its recently concluded third quarter revenue, may face sequential demand weakness. M2M is a rapidly growing market opportunity. Globally M2M connections may reach more than 200 million by 2014 with a total market size of about $57 billion.
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