Machine to machine (M2M) is direct communication between devices using any communications channel, including wired and wireless. M2M communication can include industrial instrumentation, where a sensor communicates the data it records (such as temperature or inventory level), as well as telematics, which uses M2M to enable a fleet telematics system to monitor mobile assets. Such communication was originally accomplished by having a remote network of machines relay information back to a central hub for analysis, which would then be rerouted into a system like a personal computer.

More recent machine to machine communication has changed into a system of networks that transmits data to personal appliances. The expansion of IP networks has made M2M communication quicker and easier while using less power, and it is a component of the Internet of Things (IoT). These networks also allow new business opportunities for consumers and suppliers.

Wired communication machines have been using signaling to exchange information since the early 20th century. Machine to machine has taken more sophisticated forms since the advent of computer networking automation and predates cellular communication. It has been utilized in applications such as telemetry, industrial, automation, and SCADA.

Machine to machine devices that combined telephony and computing were first conceptualized by Theodore Paraskevakos while working on his Caller ID system in 1968, later patented in the U.S. in 1973. This system, similar but distinct from the panel call indicator of the 1920s and automatic number identification of the 1940s, which communicated telephone numbers to machines, was the predecessor to what is now caller ID, which communicates numbers to people.

After several attempts and experiments, he realized that in order for the telephone to be able to read the caller's telephone number, it must possess intelligence so he developed the method in which the caller's number is transmitted to the called receiver's device. His portable transmitter and receiver were reduced to practice in 1971 in a Boeing facility in Huntsville, Alabama, representing the world's first working prototypes of caller identification devices (shown at right). They were installed at Peoples' Telephone Company in Leesburg, Alabama and in Athens, Greece where they were demonstrated to several telephone companies with great success. This method was the basis for modern-day Caller ID technology. He was also the first to introduce the concepts of intelligence, data processing and visual display screens into telephones which gave rise to the smartphone.

In 1977, Paraskevakos started Metretek, Inc. in Melbourne, Florida to conduct commercial automatic meter reading and load management for electrical services which led to the "smart grid" and "smart meter". To achieve mass appeal, Paraskevakos sought to reduce the size of the transmitter and the time of transmission through telephone lines by creating a single chip processing and transmission method. Motorola was contracted in 1978 to develop and produce the single chip, but the chip was too large for Motorola's capabilities at that time. As a result, it became two separate chips (shown at right).

While cellular is becoming more common, many machines still use landlines (POTS, DSL, cable) to connect to the IP network. The cellular M2M communications industry emerged in 1995 when Siemens set up a department inside its mobile phones business unit to develop and launch a GSM data module called "M1" based on the Siemens mobile phone S6 for M2M industrial applications, enabling machines to communicate over wireless networks. The first M1 module was used for early point of sale (POS) terminals, in vehicle telematics, remote monitoring and track and trace applications. Machine to machine technology was first embraced by early implementers such as GM and Hughes Electronics Corporation who realized the benefits and future potential of the technology. By 1997, machine to machine wireless technology became more prevalent and sophisticated as ruggedized modules were developed and launched for the specific needs of different vertical markets such as automotive telematics.

21st century machine to machine data modules have newer features and capabilities such as onboard global positioning (GPS) technology, flexible land grid array surface mounting, embedded machine to machine optimized smart cards (like phone SIMs) known as MIMs or machine to machine identification modules, and embedded Java, an important enabling technology to accelerate the Internet of things (IOT). Another example of an early use is OnStar's vehicle tracking system.