Jan 08, 2018Operator revenue and connection numbers for the Internet of Things (IoT) continue to grow—annual growth rates of around 20 percent are typical. However, the billion-dollar acquisitions or contract wins of previous years have been absent in 2017. That being said, telecoms operators have been building out IoT connectivity networks—narrowband (NB-IoT) and long-term evaluation (LTE-M), in particular—adding capabilities (such as application- and device-management platforms) and working with the broader ecosystem (including developers, cloud players and hardware vendors). All of this should set the market up for an active 2018. Here's what you can expect to see in the IoT space next year.
Network Technologies
• Operators in China will continue to lead in NB-IoT in 2018.
China is the leading country for NB-IoT because all three Chinese mobile operators are building NB-IoT networks and government support for the technology is strong. We expect that lead to grow in 2018, and probably some large contract announcements (1 million connections or more). The United States will continue to be the leading country for LTE-M developments, thanks to AT&T's and Verizon's investments; large contract announcements are less likely, though.
• Operators will launch NB-IoT and LTE-M (not NB-IoT or LTE-M).
Verizon will launch NB-IoT in 2018, complementing its LTE-M network. Telia has also publicly committed to both technologies, as have several other operators. With the incremental cost of upgrading from one standard to both being relatively small (perhaps only an extra 10-20 percent to do both technologies, rather than just one), for many operators, the question will be which technology to prioritize and when to launch, rather than selecting only one of the technologies.
• 2018 will be a crucial year for the battle between cellular vehicle-to-everything (C-V2X) and 802.11p technologies.
The telecoms industry will increase the pace of development of C-V2X technology. Much attention will be on the European Commission and whether it decides to mandate V2X. A decision either way could have a significant impact on the success of either the LTE-derived C-V2X technology or the 802.11p standard.
Consumer IoT
• Will the next Apple Watch use LTE-M?
The next generation of the Apple Watch could use LTE-M. This is a stretch, given the status of the technology at the end of 2017, but LTE-M will support voice and streaming music (arguably a more important use case than voice) and it uses lower-cost modules and, crucially, provides better battery life. In many countries, at least one operator will support LTE-M by mid-2018. An Apple Watch on LTE-M is not likely in 2018, but it is possible.
• The Kindle 3G model will be applied to consumer IoT.
Vodafone launched its V by Vodafone campaign in 2017, but the four consumer IoT products come with a monthly EUR3–4 subscription fee, a big detractor for many potential customers. Amazon bundles the cost of connectivity into the upfront cost of the Kindle 3G, and we expect other consumer IoT device providers to follow Amazon's example in 2018.
Enterprise IoT
• Further M&A of edge analytics and Industrial IoT (IIoT) firms.
There was significant investment in on IIoT and smart manufacturing in 2017. Startups like FogHorn and ForgeRock have secured large investments, while established companies such as Apple and GE are collaborating on solution development. Platform providers will build on this growth and will acquire or develop features for the IIoT in 2018.
Global Connectivity
• IoT MVNOs will continue to surprise.
In 2017, some relatively small IoT MVNOs won notable contracts with large automobile manufacturers to provide in-car connectivity (for example, Globetouch's contract with GM, Truphone's with Kia, and the continuing relationship between Cubic and Audi). We expect more of these types of contracts to be awarded in 2018, and for this trend to increasingly become a concern for larger MNOs. M&A deals are possible, either between smaller MVNOs or with MNOs buying up their smaller rivals; with more than 20 firms offering global IoT connectivity, the market is ripe for consolidation.
Asia–Pacific
• Operators in emerging the Asia-Pacific region will accelerate their IoT businesses.
China is at the forefront of IoT developments, but many operators in emerging Asian markets have been slow to develop their IoT propositions. This is set to change; regional operators are investing in building IoT connectivity and data-management platforms, primarily through vendor partnerships. Regulatory developments in automotive and electric vehicles, as well as in government-led smart-city and smart-energy initiatives, will start to yield tangible opportunities. We expect the total number of IoT connections in the region to grow by 24 percent in 2018.
Data Protection
• The European General Data Protection Regulation (GDPR) will create opportunities for operators.
Companies operating in Europe need to be GDPR-compliant by May 2018. GDPR will present opportunities for operators to help enterprise customers, especially SMEs, to ensure that all devices—including IoT devices—comply with the regulation. Connectivity and device-management platforms will continue to play an important role in helping clients achieve compliance. Operators such as Deutsche Telekom, Telefónica and Vodafone, with cyber-security business units and a good understanding of the issues, will be well placed to advise enterprises on complying with GDPR for IoT initiatives.
Tom Rebbeck Analysys Mason's research director for enterprise and the Internet of Things, leads the company's enterprise and IoT research practice drawing on more than 16 years of experience in the telecoms sector. He is based in London and works for clients worldwide. Tom is a specialist on the IoT and other enterprise services and has written widely on the role for operators as telecoms markets develop. As well as published research, he has worked on projects for a range of clients, including operators, regulators, industry bodies and vendors. Many of these projects have been supported by original research, such as expert interviews and customer surveys.
Michele Mackenzie, Analysys Mason's principal analyst for research, is an analyst for the firm's IoT and M2M Services research program, with responsibility for M2M and LPWA forecasts. She has 17 years of experience as an analyst. Michele produces reports and forecasts on M2M and IoT in industry sectors, such as transport, health care and smart cities, and analyses the impact of IoT network technologies such as LPWA networks.
Ahmed Ali, Analysys Mason's senior analyst for research, is the lead analyst for the company's IoT Platforms and Technology research program. His research covers IoT software, applications and solutions used by service providers to enable their IoT offerings. Ahmed holds a master's degree in electronics communications and computer engineering from the University of Nottingham and a bachelor's degree in electrical engineering from the University of Khartoum, in Sudan.
