Friday, June 30, 2017

IoT forecasts come into focus

For years now there has been forecast after forecast predicting the size of the IoT market by the end of the decade or ten years hence. There is always a big number of connected things and impressive valuation for the sum of the whole market, and with the large mobile operators such as AT&T and Verizon now including connected things in their quarterly reports there is hard data to back up the rosy forecasts. At an editorial briefing in San Jose last month, Qualcomm executives said it is now shipping one million wireless connections per day - this certainly gives a perspective on how fast IoT can grow. The company has hundreds of OEM design wins for its MDM9206 LTE modem for IoT.

As of June 15th, the GSMA Intelligence services says there are 8,132,111,132 mobile connections, including M2M. The GSMA's online tracker further reports 5,016,263,289 unique mobile subscribers, which are assumed to mean people with at least one mobile phone and SIM card. By subtraction, this means 3.1 billion M2M connections tracked by the GSMA via their mobile operator members.

This piece collects newly published data from several sources. First, IDC recently reported that worldwide spending on the IoT will reach nearly $1.4 trillion in 2021. Second, the Cisco Visual Network Index (VNI) found that M2M connections globally will grow from 780 million in 2016 to 3.3 billion by 2021, a 34% CAGR or fourfold growth. Third, the newly published Ericsson Mobility Study finds that 70% of wide-areas IoT devices will use cellular technology in 2022. While studies from different authors will never precisely line up, this collection of data agrees that real and significant revenue from IoT for carriers has started to materialize and will grow quickly in the near term.

Highlights from IDC’s Worldwide Semi-annual IoT spending guide

The first big finding to notice in IDC's report is that worldwide spending on IoT will reach $800 billion this year, up 16.7% year over year, which means that the market this month must be worth tens of millions of dollars. These numbers are spread out amongst the hardware, software, services and connectivity that enable the IoT. This means splitting the pot between vendors such as Qualcomm, Sierra Wireless, Cisco Jasper, integration specialists, and of course carriers such as AT&T, Orange and Vodafone. There are many others that could be included on this list, especially when considering the global market.  In that sense, the $800 billion is just a starting point. IDC's forecast says that by 2021, global IoT spending will total nearly $1.4 trillion. In a press release announcing the study, IDC's Carrie MacGillivray, vice president, Internet of Things and Mobility, stated that the true value of IoT is realised when the software and services come together to enable the capture, interpretation, and action on data produced by IoT endpoints.

IDC breaks down 2017 investments in IoT as follows: manufacturing operations ($105 billion), freight monitoring ($50 billion), and production asset management ($45 billion), smart grid technologies for electricity, gas and water and smart building technologies ($56 billion and $40 billion, respectively). Looking to 2021, IDC expects these use cases will remain the largest areas of IoT spending. Smart home technologies are forecast to experience strong growth (19.8% CAGR) over the five-year forecast. The use cases that will see the fastest spending growth are airport facilities automation (33.4% CAGR), electric vehicle charging (21.1% CAGR), and in-store contextual marketing (20.2% CAGR).

IDC sees hardware as the largest IoT spending category to 2021, the last year of the forecast, when it is overtaken by the services category. This is to be expected as the various physical sensors and connectivity units must be deployed first before a service can be offered. IDC says hardware spending will be dominated by modules and sensors that connect end points to networks, while software spending will be similarly dominated by applications software. In addition, IDC says services spending will be about evenly split between ongoing and content services and IT and installation services. The fastest growing areas of technology spending are in the software category, where horizontal software and analytics software will have five-year CAGRs of 29.0% and 20.5%, respectively. Security hardware and software will also see increased investment, growing at 15.1% and 16.6% CAGRs, respectively.

Regional highlights:

•   Asia Pacific (excluding Japan, APeJ) will be the IoT investment leader throughout the forecast with spending expected to reach $455 billion in 2021.

•   The U.S. will be the second largest region with IoT spending reaching $421 billion in 2021.

•   Western Europe will reach $274 billion in 2021.

The IDC Worldwide Semiannual Internet of Things Spending Guide is quite comprehensive, covering IoT spending for 12 technologies and 54 use cases across 20 vertical industries in eight regions and 52 countries (for more details see here: http://www.idc.com/getdoc.jsp?containerId=prUS42799917).

Cisco looks wide with its VNI forecast

Generally speaking, Cisco's forecasts have tended to be the most optimistic. This year’s Cisco VNI indicates that its IoT coverage includes both M2M and emerging category of wearable IoT devices. M2M connections, which Cisco defines as home and office security and automation, smart metering and utilities, maintenance, building automation, automotive, healthcare and consumer electronics, are predicted to grow from 780 million in 2016 to 3.3 billion by 2021, a 34% CAGR or fourfold growth.

Wearable devices, which Cisco notes could connect and communicate to the network either directly through embedded cellular connectivity or through another device (primarily a smartphone) using WiFi, Bluetooth, or another technology, include such things as smart watches, smart glasses, heads-up displays (HUDs), health and fitness trackers, health monitors, wearable scanners and navigation devices and smart clothing. The Cisco VNI predicts that by 2021 there will be 929 million wearable devices globally, growing nearly threefold from 325 million in 2016 at a CAGR of 23%. By 2021, Cisco expects that 7% will have embedded cellular connectivity, up from 3% in 2016. As AR/VR headsets enter the market, they could start to have a tangible impact on mobile traffic.

Ericsson looks to short-range and wide-range IoT connectivity

The newly published Ericsson Mobility Report finds that at the end of 2016 there were around 0.4 billion IoT devices with cellular connections. Ericsson's study divides IoT into short-range and wide-area segments, and it provides some guidance as to how IoT is impacting the network. For instance, the report says use cases with VoLTE calls for IoT (Cat-M1) are starting to emerge. This could extend mobile voice service to IoT devices, an interesting possibility.

By 2021, Ericsson expects there will be 2.1 billion devices connected via LTE-M and NB-IoT networks, roughly a 30% CAGR from today. This trend has already started. This year, several prominent mobile operators have rolled out commercial LTE-M networks. For instance, in March, Verizon announced the commercial launch of its nationwide 4G LTE Category M1 (or Cat M1) network. The coverage spans 2.4 million square miles. Verizon will introduce low rate, multi-year plans to match the longer useful life of Cat M1 devices, including data plans that start at $2 per month per device, with customised options available for bulk activations and volume purchases. In May, AT&T followed suit by announcing the deployment of its nationwide LTE-M network ahead of schedule.

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