Connectivity revenues to generate just 14% of addressable IoT market

Internet of Things

The IoT revolution is expected to gather pace in the next decade with total addressable revenue for mobile operators set to pass $200 billion by 2025.

According to the latest IoT report from research house Analysys Mason, the total revenue from solutions supported by traditional cellular, such as 2G, 3G, 4G and LPWA, including NB-IoT and LoRa, is also forecast to reach $201 billion in the same year.

However, the report, entitled “IoT value chain revenue: worldwide trends and forecasts 2016-2025”, added that spend on connectivity will be $28 billion in 2025, which is just 14 percent of the total addressable market.

Report author and principal analyst Michele Mackenzie said mobile operators and other players in the value chain are seeking additional incremental value by offering components in addition to connectivity, hardware and applications.

Mackenzie said that for new LPWA networks, connectivity will generate a much lower share of the total spend than for IoT solutions using traditional cellular.

For LPWA, the largest share of revenue will be generated by hardware at 49 percent, with applications contributing 43 percent and connectivity only eight percent.

In contrast, connectivity will generate 17 percent of the value in 2025 for networks run on 2G, 3G and 4G.

The report said that for traditional cellular the biggest market is automotive, which represents a total value chain of $63 billion in 2025.

Application will be 76 percent of the total value, connectivity will constitute 19 percent and the remainder will be hardware related revenue.

For LPWA, the utilities market will generate $21 billion in 2025 with connectivity contributing six percent.

The report also highlighted how geographic split of the revenue will differ significantly for traditional cellular and LPWA.

It found that emerging Asia-Pacific, mainly China, will be the largest individual region generating 24 percent of traditional cellular revenue in 2025.

Developed regions including Western Europe, Central and Eastern Europe and North America will generate the largest share of LPWA network revenue contributing just over 75 percent of total revenue in 2025.

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