On the 2nd November the Transforma Insights team will deliver a webinar entitled Forecasting the IoT market opportunity 2019-2030 in which we dig into the key dynamics, both quantitative and qualitative of the IoT market. In this blog post we explore some of the dynamics that we will look at.
IoT use cases break down into three main types. One comprises high volume distributed applications such as smart grid, connected vehicles and asset tracking. These applications naturally favour wide area connectivity technologies. They are also procured and deployed in large volumes and therefore demand scalable solutions, centralised procurement and low cost connectivity. The second group are in-building use cases, such as building automation and consumer electronics. These favour short-range connectivity such as WiFi and therefore represent a limited market for connectivity. This tends to be a highly fragmented space. The third category are what we term ‘specialist’ configurations, which typically have small volumes of devices, and may use short range or wide area networks. Examples include robotics, parking space monitoring and public advertising.
The market for IoT, in terms of volume of devices, is highly concentrated in just a few applications. Just 10 application groups account for 70% of connections. These include smart meters, building automation, alarms, CCTV and track & trace. The market is even more concentrated when it comes to cellular connectivity. Just two use cases (connected vehicles and smart grid) account for over 50% of all cellular connections.
Another interesting finding from the research is that there is a stark contrast between the cellular applications in terms of which will be using mMTC LPWA technologies NB-IoT and LTE-M. There are a set of applications that are almost wholly dependent on ‘full’ LTE (and 5G eventually) and the low power technologies will not get a look in. These are typically high bandwidth applications such as CCTV and connected vehicles. However, in the cases where the LPWA technologies are viable, they will dominate. If NB-IoT and LTE-M had been available to use for the last decade, there is little doubt that the vast majority of IoT applications would have favoured them.
Turning to revenue, there is much less market concentration. High volumes of devices that generate little revenue (e.g. environmental sensors or smart meters) are offset against smaller volumes of higher revenue applications (e.g. CCTV). There are nevertheless a few dominant application groups. CCTV comes out as the highest for spend in 2025, in no small part due to the large volumes of cameras deployed in China in recent years. AV Equipment and Personal Portable Electronics are the next two biggest application groups, reflecting high spend on relatively expensive items. Smart Metering, Payment Processing and Security & Fire Alarms, Connected Car Head Units and Building Automation make up the remainder of the dominant lead group of revenue generators.
In terms of vertical sectors, the biggest spend is seen in the Consumer sector, which comprises dozens of high volume use cases. The next biggest is Government, which accounts for most spend on street lighting, CCTV, public transport and so forth. After that comes Energy, mostly by virtue of billions of smart meters.
All of this provides us with a gentle reminder that IoT is not a single market. The verticals have very different behaviour (for instance government compared to consumers), the use cases demand very different technology solutions, and the scale and complexity of the various use cases is diverse. While the umbrella term of ‘IoT’ is useful for those of us on the inside, it is wrong to think of it as a market.
To find out more about the Transforma Insights forecasts, join us for a webinar Forecasting the IoT market opportunity 2019-2030 on 2nd November 2020 at 08.00 Pacific, 11.00 Eastern, 16.00 GMT, 17.00 CET.
[This article was originally published on IoT Business News]
