Why Internet of Things Will Change Mobile Networks

Not a week goes by when we don’t hear about some new device with built-in mobile connectivity. It seems we are all heading towards an Internet of things at a rapid speed. Clues to this connected device future comes from the data collected by Swedish research group, Berg Insight. Ericsson (s eric) CEO recently predicted there will be 50 billion connected devices by 2020.

According to their forecasts, about two percent of total mobile network traffic was used for wireless machine-to-machine communications in 2010, thanks to a 46 percent increase in the number of M2M subscribers. I bet the recent bump in sales of Amazon’s Kindle (s amzn) device has to have helped.

In the next five years, the total number of wireless M2M connections is forecasted to grow at a compound annual growth rate (CAGR) of 32.0 percent, to reach 294.1 million connections in 2015. By then, M2M as a share of the total number of cellular connections is projected to reach 4.0 percent. “In Q1-2011, we expect that AT&T will become the first mobile operator (s t) to reach 10 million M2M subscribers after more than doubling the installed base in the past 12 months, largely thanks to a successful strategy for connected consumer electronics devices,” said Tobias Ryberg, senior analyst at Berg Insight.

The connected devices that use machine-to-machine connections include in-car telematic systems, e-book readers, e-frames, cellular-based security alarms and smart meters with GPRS connections. And that’s only a start! Berg forecasts that the majority of next five billion mobile connections would be hooking into consumer devices, machines and sensors. It’s no surprise that mobile operators such as Sprint and Verizon (s s) (s vz) are betting big on M2M communications and have set-up dedicated units to cash in on this opportunity.