Seoul, Hong Kong, New Delhi, Beijing, London, Buenos Aires, San Diego

Sep 26^th, 2018

China will continue to lead by contributing almost two-thirds of the global IoT Cellular Connections. Whereas, Vodafone will continue to be the largest operator elsewhere globally if we exclude China and Chinese operators.

According to the latest research from Counterpoint’s IoT (Internet of Things) service, Global IoT Cellular Connection grew 72 % in 1H18, a considerable increase from the same period last year.

Commenting on the future growth of connected IoT devices, Counterpoint Research Analyst, Satyajit Sinha, noted, “Smart manufacturing, smart utilities and smart mobility applications such as automotive, asset tracking will be the key growth drivers over the next five to seven years. Many of these applications will demand low-power, low-bandwidth, low-cost and ubiquitous cellular connectivity which will be initially satisfied by the emerging Low Power Wide Area Network (LPWAN) cellular technologies like LTE-M, NB-IoT, and EC-GSM-IoT. Further, futuristic applications such as autonomous cars, drones, connected healthcare, and mission-critical IoT applications will be powered by the upcoming 5G technology revolution which promises massive capacities, throughputs, and lower latencies.”

Mr. Sinha, further added, “Emerging markets like India, Brazil and in Africa while can offer tremendous scale but will likely be late followers compared to China in this path to connected everything. However, the massive growth opportunity remains in terms of cellular-IoT connections in emerging markets which will be possibly catalysed by operators such as Jio in India but more specifically from multi-market players such as Telefonica or MTN or Vodafone with plans to deploy LPWAN networks such as NB-IoT leveraging scale across their coverage markets.”

Adding his perspective, Research Director, Peter Richardson, noted, “Most of the IoT connections are still on 2G/2.5G networks. However, the shift to 4G LTE and cellular-LPWAN is already in motion and we expect an ongoing shift to these newer technologies in 2H 2018 and 2019.”

Mr Richardson, also added, “While cellular-LPWAN brings a number of advantages over unlicensed LPWA solutions – there are a number of use cases where unlicensed technologies offer a superior mix of cost and functionality. Over the short to medium term, we expect co-existence and even the combined use of both licensed and unlicensed LPWA technologies.”

Exhibit 1: Global Cellular IoT Cellular Connection market share in 1H 2018 vs 2025

Source: Counterpoint Research: 2010-2025 Global IoT Cellular Connection Tracker

Highlighting the latest trends in IoT connectivity strategies, Research Director, Neil Shah added, “Revenue generation from the IoT ecosystem is not siloed to any one specific segment of the value chain, rather it is distributed among all segments. On an average for a cellular IoT solution deployment, connectivity represents around 12%, whereas hardware components, modules and devices represent 22%. The rest of the bulk of the value in an IoT solution is captured by system integrators, middleware, software platforms, and cloud analytics vendors. Hence, if operators are looking to capture maximum value, the strategies need to provide an end-to-end IoT solutions by bundling IoT devices, secure connectivity, platform, and data management to capitalize on the overall opportunity.

Some bigger operators have already chosen specific IoT solutions and verticals to offer a comprehensive IoT solution, but it won’t be practical for the operator to offer similar end-to-end solutions across every vertical and hence partnerships across the IoT value chain will be the key to capture value.”

Mr Sinha, though highlighted, “Consumer IoT is still largely an untapped opportunity for cellular operators and probably the toughest one. This is partly due to device and connectivity costs and, to some degree, due to data privacy & security concerns. The continuous growth in security and data privacy policies, such as GDPR, will help and grow consumer confidence. We expect cellular consumer IoT will form an important revenue stream for operators starting with smart home and wearables to be top IoT applications by 2025.”

Exhibit 2: Global IoT Cellular Connection by Technology Market Share in 1H 2018 vs 2025

Source: Counterpoint Research: 2010-2025 Global IoT Cellular Connection Tracker

IoT Connectivity by Technology Market Analysis – By-2025

• 2G IoT connections will occupy less than 1% of global IoT cellular connections by 2025; increasingly being replaced by NB-IoT.
• 3G IoT connections face the same fate as 2G. However, 3G will go extinct much faster than 2G.
• 4G LTE IoT connections (high bandwidth & low latency) will grow at a much faster rate till 2022 due to global adoption of LTE Advanced and Advanced Pro. However, post-2022 we expect a smooth transition from 4G LTE family to 5G. 4G LTE IoT connections will hold slightly more than a third of global IoT cellular connections in 2025.
• LTE-M Connection will have a presence until 2022. However, we expect its growth to be limited as both NB-IoT and unlicensed LPWA will take away its opportunity and share. LTE-M connections will be around 6% of global IoT cellular connections in 2025.
• NB-IoT will dominate the market with 45% of global IoT cellular connections, due to the wide variety of application opportunities and faster adoption rates in the overall ecosystem.
• 5G will be crucial for some sectors, for example automotive, especially for V2V and V2X. The adoption of 5G cellular will depend on the availability, cost of modems from companies like Qualcomm and Huawei as well as coverage area. We expect 5G to account for around 10% of global IoT cellular connections in 2025.

 Background:

Counterpoint Technology Market Research is a global research firm specializing in Technology products in the TMT industry. It services major technology firms and financial firms with a mix of monthly reports, customized projects and detailed analysis of the mobile and technology markets. Its key analysts are experts in the industry with an average tenure of 13 years in the high-tech industry.

Analyst Contacts:

 Satyajit Sinha

[email protected]

@Satya_Analyst

 Peter Richardson
+44 20 3239 6411

[email protected]

@MobilePeter

Neil Shah
+91 9930218469

[email protected]

@neiltwitz

 Counterpoint Research

[email protected]

@CounterPointTR