Global IoT connectivity is forever changed. In 2020, in spite of the pandemic, IoT connections in the form of connected cars, smart homes and connected industrial equipment to name a few, outstripped non-IoT connections, such as smartphones and laptops, for the first time.
Analyst firm, IoT Analytics, reports that of the 21.7 billion active connected devices at the end of 2020 there were 11.7 billion IoT device connections, accounting for 54% of connected devices. More is to come.
By 2025, the firm expects there will be more than 30 billion IoT connections, with almost four IoT devices per person on average. IoT Now’s managing editor, George Malim assesses what this means for global IoT connectivity.
This tipping point is borne out by research from Transforma Insights, which reports there were 7.6bn active IoT connections globally at the end of 2019. The firm projects that by 2030, the overall IoT market value will be US$1.1tn with 25.4bn active devices representing a CAGR of 11% per year. Connections over cellular will grow from 1.2bn in 2018 to 4.7bn in 2030.
That’s a lot of connections and, for the first time, resembles the market size predicted at the dawn of IoT. However, counting connections masks how the market for IoT connectivity has been developing. There is now a wide choice of connectivity technologies available extending from low power wide area (LPWA) networks up to 5G, which is newly available in a few markets.
Growth in IoT connectivity has been stimulated by this choice and the proven viability of IoT use cases demonstrated in early IoT adopter markets. IoT Analytics points out that IoT has been booming in China, to the benefit of Chinese telecoms providers. The firm reports that in 2015, Chinese telecoms companies accounted for roughly one quarter (27%) of all cellular IoT connections but this number has grown to 75% in 2020 with China Telecom, demonstrating how China is leading the global cellular IoT connections market. This figure reflects the enormous growth of the Chinese domestic market in IoT but also emphasises that IoT is a truly global market, served by global providers.
The next dynamic singled out by IoT Analytics is the increasingly pervasive use of personal IoT devices such as fitness wearables, smart home devices and, increasingly, connected cars. Omdia has predicted a global figure of 208 million connected car units by 2022 and connected cars can have multiple subscriber identification modules (SIMs) and other connected devices, so they behave more like IoT gateways.
Finally, choice drives uptake and availability of different types of IoT connectivity has driven the market. Counting a mere 10 million connections in 2015, IoT Analytics reports the global market for LPWA was non-existent five years ago but by 2020 had reached 423 million IoT connections and is expected to grow at a CAGR of 43% to reach 2.5 billion IoT connections by 2025. Both cellular IoT – 2G, 3G, 4G, and now also 5G – as well as LPWA – narrowband IoT (NB-IoT), LTE-M, LoRaWAN, Sigfox, and others – have been key drivers of the global IoT connectivity market in the past five years.
The growth reveals the size and value of the global IoT market which GSMA expects to be worth US$900 billion in revenue by 2025, an almost three-fold increase on 2019. However, this is likely to be slowed by the COVID-19 pandemic and GSMA has reduced its forecast by US$200bn over the period. This is still massive growth but the challenge for connectivity providers is that, while IoT connectivity revenue will grow, it is set to account for only around 5% of the total IoT revenue opportunity, according to GSMA. Other commentators such as the Mobile Ecosystem Forum (MEF) expect this figure to be higher at around 10%, with variations according to application and geography.
Certainly, mobile operators have been expanding their capabilities beyond connectivity to capture a larger proportion of the overall market and at the same time IoT deployments are getting larger, enabling economies of scale. Analyst firm, Berg Insight has reported that the largest 450 largest cellular IoT deployments together account for 349 million units. The deployments span all IoT verticals including OEM automotive, aftermarket automotive, transport and logistics, utilities, infrastructure, buildings and security, retail, industrial, consumer electronics, healthcare and others.
In fact, moving assets and tracking shipments are a key market by virtue of the fact they move from one carrier’s market to others’ with challenges regarding coverage, roaming and regulation to be addressed. Transforma Insights forecasts that moving assets will account for 6% of connections by 2030.
The 450 projects on Berg’s list are forecast to grow to 752 million units by 2024, corresponding to an overall compound annual growth rate (CAGR) of 16.6%. Many are focused on what can be described as moving things and therefore have requirements to operate in multiple markets, requiring roaming and global deployment.
The transport and logistics sector is the largest vertical in IoT in terms of the number of projects that made Berg’s list and was followed by retail, aftermarket automotive, utilities, buildings and security, OEM automotive, healthcare and industrial. When comparing the number of active subscriptions represented by each vertical, OEM automotive is instead the largest vertical, accounting for 96 million units, ahead of transport and logistics at 76 million units and utilities representing 68 million units.
These huge multi-national deployments present an opportunity for providers of global IoT connectivity that is being enabled by the emergence of embedded subscriber identification modules (eSIM) and embedded universal integrated circuit card (eUICC) technology. These enable a single stockkeeping unit (SKU) to be achieved even for globally shipped devices because the eUICC-enabled device can automatically select global connectivity when it reaches its deployment location. eSIM will connect 2.4 billion devices in 2025, according to a new study from research firm Kaleido Intelligence. The report, which examines GSMA-compliant eSIMs across consumer and IoT markets, found that eSIM will witness substantial growth into the medium term, with eSIM compatible devices growing at a CAGR of 45% between 2020 and 2025.
It expects three billion IoT devices will be installed with an eSIM in 2024, with growth driven bysmartphones alongside IoT demand. A marketplace of specialist global IoT connectivity providers has developed to address IoT service providers’ needs to provide global connectivity and harness the opportunities of eSIM. Berg Insight says that IoT managed service providers have more than 50 million IoT subscribers worldwide. In Europe and North America, these players hold a combined market share of 15- 20%. While most IoT managed service providers operate as full MVNOs using their own core networks and platforms featuring connectivity management controls and other value-added services, a key differentiator is ability to aggregate multiple wireless wide area networks and thus provide superior coverage, multi-domestic footprints and multi-technology connectivity on a single platform.
Berg Insight reports that Aeris and KORE Wireless have consolidated their positions as leading players in North America, with 14 million and 13 million cellular IoT subscribers respectively at the end of 2019. Sierra Wireless has established a trans-Atlantic subscriber base with 3.6 million IoT connections in both Europe and North America. In Europe, Wireless Logic is the largest IoT managed service provider with about 3.5 million subscribers. 1NCE has grown rapidly to become the runner up in Europe since its launch in 2018, providing cellular IoT connectivity to about three million devices at the end of 2019.
Additional IoT managed service providers are Cubic Telecom, BICS, Arm, Transatel and Eseye which Berg Insight says have between two and three million cellular IoT subscribers each.
Jamie Moss, the M2M, IoT and IoE research director at ABI Research, sees a new generation of connectivity management platforms (CMPs) emerging which are set to support the market of 5.7bn cellular IoT devices by 2026. “It is clear the ability to connect diverse IoT device types, with different needs, at massive scale, and with global coverage is needed now,” he says. “Next-gen CMPs and global connectivity coverage solutions are key to accomplishing this task.”
Moss thinks there is a need among enterprises for a one-stop-shop for IoT connectivity. There are only a few large multinational corporations that can afford to employ systems integrators to assemble customised systems and, while they were some of the earliest IoT adopters, they only represent part of the market. Most enterprises do not have the funds or appetite to engage in this level of investment and with unproven business cases and uncertainty regarding user uptake, it’s likely that more organisations will turn to providers who will simply make connectivity work for them. “Next-generation CMPs, such as floLIVE, can provide international connectivity for enterprises by allowing carriers to become international mobile virtual network operators (MVNOs),” adds Moss. “The core network of a CMP vendor can collectively manage the routing of IoT traffic across many carrier customers’ radio access networks (RANs), allowing them to sell international IoT services with the guarantee of a single price point for data and a consistent quality of service (QoS).”
These next-generation CMP capabilities build on traditional systems by adding options that solve problems on the business side, not just the technical side. Roaming agreements are replaced with local connectivity, reducing risk thanks to partners having done this work for the carrier. This means faster time-to-market, fewer carrier resources consumed, carrier access to extra resources, and no large capex investment, just opex.
The moving objects of IoT mean a global market for IoT-enabled devices has arrived and it is commonplace for these to traverse multiple countries and regions and connect via multiple carriers. Larger MVNOs already have roaming agreements in place to support multi-national requirements of organisations that require IoT connections and these global MVNOs are therefore well positioned to capitalise on IoT roaming opportunities. Those that focus strategically on specific sectors can differentiate because of their ability to understand and cater for the needs of their customers. However, too niche can be too small to meet the global connectivity requirements of large deployments. Nevertheless, IoT roaming traffic is posed for huge growth. Kaleido Intelligence predicts that this will rise from 127 petabytes in 2020 to more than 560 petabytes in 2025.
Mobile network operators won’t be able to handle all of this in their retail operations and MVNOs, CMP providers and others will serve the growing demand. This will make wholesale roaming connectivity an important part of MNOs’ businesses. However, it is likely they will be cautious in this as they seek to provide a wide range of services to enterprise and multinational corporations. To an extent, these MNOs can play both sides of the market, adding value for their enterprise customers and generating revenue with their wholesale partners.
Strategies will differ according to use cases, carrier strategy and the regions in which services are provided.
After the delays IoT has experienced in hitting the mainstream, there is now pent up momentum as end users, enterprises and the networks are now ready to use IoT services, generate revenue from them and support the sheer volume of bandwidth and data involved. This need for speed is helping crystallise the roles of organisations in the IoT value chain, with specialists more acceptable than ever before.
This is also true in connectivity. Few enterprises want to become network experts. They don’t want to manage roaming relationships for a 40-country deployment, and they don’t want the management headaches of contract management, billing and quality assurance.
Instead, they can get their IoT services to all their markets more quickly by hiring an expert that takes care of the connectivity, allowing them to focus on their business case. Whether this expert is a traditional systems integrator, an MNO, an MVNO, a CMP provider or another type of specialist remains to be seen. Most likely, all will find a part in this vast market of connected things.
Learn more about how to select the right IoT connectivity for your device or how to choose an IoT connectivity partner.
This report first appeared inside IoT Now magazine.
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