Operators must move beyond connectivity to seize $1.1tn IoT opportunity, says GSMA
30 May 2018 | James Pearce
The GSMA has warned telecoms operators they must look beyond connectivity if they seek to capitalise on the $1.1 trillion revenue opportunity offered by the internet of things.
According to figures from GSMA Intelligence, the research arm of the mobile industry body, the global IoT market will be worth $1.1 trillion in revenue by 2025, but connectivity will make up just 5% of that amount.
By 2025, GSMA Intelligence estimates there will be 25 billion IoT connections – up from 6.3 billion in 2016 - with growth driven largely by demand in industrial segments. 13.8 billion of those connections will be across enterprise or vertical-specific applications, while consumer IoT applications will account for 11.4 billion connections, driven by developments in the smart home market.
Though the connectivity segment will grow, it is platforms, applications and services that offer the highest revenue opportunities for operators, it adds.
“As the number of connected consumer devices and industrial machines grow rapidly, the IoT ecosystem will evolve to become a trillion-dollar market over the course of the next decade,” said Sylwia Kechiche, principal analyst, IoT, GSMA Intelligence.
“But the IoT revenue opportunity is shifting away from simply connecting devices to addressing specific sectors with tailored solutions, and successful ecosystem players will need to adapt their business models in line with these market trends.”
The platforms, applications and services segment will continue to increase as a share of overall IoT revenue, capturing two-thirds (68 per cent) of the total by 2025.
The category includes application services; cloud; data analytics; and security – all areas that could offer key revenue opportunities for telecoms operators looking to capitalise on the growth of IoT.
The remaining 27% of revenue share will come from the IoT professional services market, which includes the likes of system integration, managed services, and consulting.
“It’s well understood that connectivity will represent only a fraction of the total IoT opportunity. Complementing our IoT connections data with this major new dataset and analysis on IoT revenue provides a comprehensive and realistic view on where market opportunities exist for operators, vendors, integrators, and everyone else playing in the IoT ecosystem,” explained Peter Jarich, head of GSMA Intelligence.