IoT a 'huge opportunity' for cellular network providers

Berg Insight has released a report outling the scale of the opportunity that IoT and M2M networking presents to cellular network providers. At the end of 2015, the number of worldwide cellular M2M subscribers will total 265.2m, 23% up on this time last year, with East Asia and particularly China having the highest numbers of connected device subscibers.  Commenting on the report, Senior analyst at Berg Insight, Tobias Ryberg said "Our current view is that the 1 billion milestone for cellular M2M subscribers will be reached in 2022", expanding the compound annual growth rate (CAGR) to 22%, adding that he believes companies at the forefront of cellular IoT networking, such as Vodafone will see $1bn revenues from their M2M divisions within five years. 

Berg Insight, a Swedish research firm specializing in the burgeoning Internet of Things (IoT) market, expects cellular machine-to-machine (M2M) connectivity to take off during the next few years.

By the end of 2015, the number of worldwide cellular M2M subscribers will total 265.2 million, a 23 percent increase, according to the analyst group’s latest report, The Global M2M/IoT Communications Market. With 90.4 million subscribers in the region – 70 million in China alone — East Asia is evidently bullish on cellular-connected IoT technologies. Western Europe and North America placed second and third with 59.0 million and 52.5 million subscribers, respectively.

And that’s just the tip of the iceberg.

“Our current view is that the 1 billion milestone for cellular M2M subscribers will be reached in 2022,” said Tobias Ryberg, a senior analyst at Berg Insight, in a statement. The firm’s projections call for the install base of cellular-enabled M2M devices to grow at a brisk pace, expanding at a compound annual growth rate (CAGR) of 22.9 percent to reach 744.2 million by 2020.

For telecoms, this represents a major opportunity.

“Verizon and Vodafone reported quarterly M2M/IoT revenues in the range of €150–200 million each in the first half of 2015 and could be on track to reach €1 on an annual basis within a few years’ time,” stated Berg Insight. Based on today’s exchange rates, that translates into roughly $1.09 billion for each of cellular providers if the market’s trajectory holds.

Currently, both companies are roughly tied with 21 million subscribers each. Both companies are heavily invested in telematics, providing connected car services, noted Berg Insight.

New, more efficient cellular technologies will help spur adoption.

“In a few years, LTE-M wireless modules will be available for the same price as today’s GPRS [General packet radio service] modules, delivering superior performance using less network resources,” stated the report. “A new generation of LPWA [Low-Power, Wide-Area] technologies hit the market during 2015, offering an alternative roadmap to low cost IoT connectivity outside of the traditional mobile network environment.”

The industry is also banking on the NarrowBand IoT (NB-IOT) standard, which is slated to be included in the January’s 3GPP Release 13 specifications. “NB-IOT has good prospects of becoming the dominant technology for LPWA, although other standards will most likely also remain strong in niche segments,” predicted Berg Insight.

Pedro Hernandez is a contributing editor at Datamation. Follow him on Twitter @ecoINSITE.