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Telecoms operators with a strong enterprise IT presence will be able to compete for revenues in IoT space, according to Machina Research.
The number of Internet of Things (IoT) connections in the world – and associated revenues – will grow fourfold between 2015 and 2025, providing a money-making opportunity for telcos, particularly those with experience in enterprise IT services, according to new figures published on Wednesday.
Global IoT connections will reach 27 billion in 2025, up from 6 billion last year, according to Machina Research’s latest figures.
Over the same period, the IoT revenue opportunity will grow to US$3 trillion from $750 billion, with $1.3 trillion of the total coming directly from end users via devices, connectivity and application revenue, the analyst firm said. The remainder will come from upstream and downstream sources including application development, systems integration, hosting and data monetisation.
Despite the fact that revenues from pure connectivity are relatively small – $50 billion in 2025, Machina Research CEO Matt Hatton told Total Telecom – telcos could be better placed than many industry watchers believe to capture a chunk of the market.
That $50 billion is "a significant chunk of change," Hatton said, but noted that telcos will still focus on the wider opportunity, such as providing actual IoT applications.
"Some, such as Vodafone, are pursuing applications aggressively, while others like Tele2 are focusing more on the horizontal connectivity part," he said, adding that adjacent services like data monetisation and systems integration also represent a big opportunity.
"Inevitably people will trot out the assertion that telcos aren’t great at end services, but that’s too broad," Hatton said. "While they may not be good at developing their own pet tracker, for example, most of the interesting stuff in IoT has a heavy enterprise skew and telcos have done a pretty good job of diversifying into enterprise IT services."
Hatton referred to MK:Smart as a good example, a citywide data capture programme in Milton Keynes that includes BT amongst its partners. "[BT is] involved in some cutting edge IoT developments [there]," he said.
Making connections
By 2025, 72% of all IoT connections will use short-range technologies like WiFi, Zigbee, and in-building powerline, up slightly from 71% at present.
Cellular connections will reach 2.2 billion by 2025, up from 334 million at end-2015, most of which will be LTE-based, Machina Research predicts. The connected car space will be key here; 45% of cellular IoT connections in 2025 will be in that sector.
Low-power wide area options, such as Sigfox, LoRa and LTE-NB1, will make up 11% of connections in 2025, Machina believes.
China will lead the IoT market in 2025, but only just, with 21% of IoT connections compared with the U.S.’s 20%; the U.S. will capture a larger revenue share though, at 22% to China’s 19%. Third-largest market Japan will be home to 7% of connections and 6% of revenues.
By 2025 IoT will generate over 2 zettabytes of data, mostly from consumer electronics devices, according to Machina’s figures.
