The global market for IoT devices continues to grow at a good pace, it is estimated that by 2025 it will more than double compared to last year, both in number of units and in turnover, although this increase is 20% less than expected before the pandemic. . To meet these forecasts, it will be necessary to develop many more use cases that are easier to implement and manage by user companies. Modules with the NB-IoT specification now account for the vast majority of the market, close to 75%, compared to the other dominant type, LTE-M, which should cover more minority but more socially and industrially relevant applications.
The ecosystem of connections and IoT devices, and especially the NB-IoT specification, is tremendously complex, broad and fractured, as evidenced by a report on the global NB-IoT ecosystem from the consultancy Counterpoint last March. The graph below shows the value chain of NB-IoT, the main standard now used within IoT, with the numerous manufacturers of components, modules and devices, which feed various marketing channels of connectivity and integration systems, as well as of software platforms, implementation and monitoring of applications and data analytics.
The bulk of the value of this supply chain is not carried by the components, modules and devices, but by the operators who carry out the connectivity, the system integrators and the platforms and software necessary to carry them out. As in so many other technological issues, the relatively simpler part to do is the hardware; what is complicated and expensive is that the applications work well.
GSMA Foundry is an initiative to promote the global adoption of IoT, stimulate innovators to develop ideas, accelerate the development of proven solutions on a larger scale and create innovative solutions
The design, management and maintenance of the applications consume many hours of work and it takes a long time to start them up and that they are beneficial and profitable for the users, which makes the proposed solutions more expensive and is more difficult to make profitable. As a result, the applications are more expensive than anticipated and less beneficial in practice, which in turn hampers implementation.
Value chain of the NB-IoT ecosystem and value capture in each tranche
Source: Counterpoint (April 2021)
The GSMA gave several data about the IoT market, reflected in the graph below, at the Mobile IoT Summit on June 30, held on this occasion within the MWC in Barcelona (other years it was held the day before in a hotel near the fair). Noteworthy is the forecast that it will be invoiced 900,000 million dollars in 2025, more than double the 400,000 million estimated for last year.
The number of IoT devices will also double during the same period, the GSMA estimates, from 13,000 million to 24,000 million units, and the number of connections through mobile networks will increase from 1,900 million to 3,800 million while LPWA connections will be of 1.1 billion in 2025, up from 200 million last year.
Source: GSMA (Mobile IoT Summit – MWC 2021, June 30, 2021).
In its Mobile Economy 2021 report, published on the occasion of MWC 2021, the GSMA also indicates that global IoT billing will reach 900,000 million dollars in 2025, but specifies that this estimate is 20% lower than the forecast before the pandemic. The fall in economic activity and the breakdown of the supply chain of many products with the pandemic have caused this lower increase in IoT compared to 2019. However, the GSMA expects that in the end there will be a rebound precisely because the pandemic has put highlight the need, in his view, to accelerate digital transformation.
Solve the challenges of implementing IoT
The motto of the Mobile IoT Summit was “connecting the next billion of anything”, although Richard Cockle, moderator of the day and responsible for IoT within the GSMA, recognized that many challenges will need to be overcome to make IoT scale globally. .
To try to achieve this, he announced that the so-called GSMA Foundry has been launched, a collaboration between multiple industries and business development where members of the GSMA (the association that brings together the majority of telecommunications operators) and industrial leaders meet to “ rapidly develop real solutions to industry challenges “, as well as” cultivate new ideas with initial commercial trials and implement proven solutions on a large scale, regionally and globally. ”
It is about solving the challenges presented by the widespread adoption of IoT in four large vertical sectors, although there are several more: manufacturing, aviation, automotive and mobility and financial services. The objectives of the GSMA Foundry are to influence collaboration to promote the benefits of IoT and achieve its global adoption, to stimulate innovators to develop ideas that generate benefits with commercial trials, to accelerate the development of proven solutions on a larger scale and to unite companies to create innovative solutions together.
The global market for IoT connections is growing at a good pace and the NB-IoT segment much more, from representing 14% this year, with 301 million connections, to 34% of the total forecast for 2025, with 1,214 million connections
It is necessary, added Cockle, to achieve collaboration between industries and be agile, flexible and independent, with the creation of autonomous teams, with their own resources and business plans. In short, “having teams focused on the proposed task, with clear and dedicated objectives.” The main motivators for the implementation of IoT are cost savings and increased billing for 68% of those interviewed by the GSMA, although compliance with the regulation is very important for half of those surveyed. Employee reluctance to launch IoT projects is another concern for companies. The lack of security in some cases is another problem that slows its use.
Two basic systems, NB-IoT and LTE-M
There are several standardized systems of IoT connection devices, with a short radius of action, up to about 100 meters, or much longer, of several kilometers. Among the first, the best known are Bluetooth and Wi-Fi, although there are others like ZigBee. Bluetooth is good for low speeds, up to one megabit per second, and Wi-Fi from one megabit to one gigabit per second, both of which are evolving.
The most universally recognized and used IoT systems are, however, those with low power (and very low power consumption) and wide coverage, known generically as LPWA (for Low-Power Wide-Area). Among them, systems based on 3GPP standardized global NB-IoT or LTE-M specifications are by far the most widely used, mainly because they used 2G and 3G mobile networks from the beginning and, since 2017, are compliant with 4G-LTE. In July 2020, the certification body 3GPP has recognized NB-IoT and LTE-M as also compliant with the 5G standard.
Its continuity throughout this decade and beyond is therefore guaranteed and with the continuous increase of benefits and possibilities. NB-IoT (also known as Cat-NB1) and LTE-M (Cat-M1 or eMTC) have in recent years become the two main narrowband technologies for low-power IoT use cases and wide coverage areas. , especially, as has been said, since they are fully compatible with 4G networks and lately 5G.
LTE-M is more applicable to mobility environments and NB-IoT allows extreme optimizations in the case of very low bandwidth networks and is very tolerant of delays in data distribution. NB-IoT devices are cheaper than those based on LTE-M, which facilitates the greater implementation of the first.
There are other LPWA technologies on the market, such as Sigfox or LoRa, that strive for greater visibility and implementation, especially in the United States, but it seems that the balance is relentlessly tilting in favor of NB-IoT and, for some specific applications , from LTE-M (or Cat-M1 or eMTC, as it is still known).
Being fully compliant with 4G and 5G, mobile operators around the world are the main interested in supporting them and providing service and applications within their networks, because it provides them with additional billing from their networks. The graph below shows the improvements that NB-IoT has made in its different releases over the years and what remains to be done in the coming years, especially with the implementation of 5G and its future evolution with Release 17.
Currently, the GSMA calculates, there are a total of 158 commercial IoT networks in the world, of which 53 are of the LTE-M type and are in 29 markets and the remaining 105 networks are NB-IoT, present in 54 markets. In most Western European countries, the United States and Canada, Japan, Australia, Thailand, Turkey and some South American countries, such as Brazil, Argentina or Colombia, have LTE-M and NB-IoT networks. Mexico in a particular case, because it only has LTE-M networks. The rest of the world, especially China, Southeast Asian countries, India, South Africa, Indonesia, Saudi Arabia and several countries in Central Europe and Italy, have only NB-IoT networks, with the majority of the world’s population and users. Africa is not covered at all except for South Africa.
Coverage in 2021 of LTE-M and NB-IoT networks, by country. Source: GSMA (June 2021).
In the same GSMA map shown at the IoT Summit in February 2019, coinciding with the previous MWC of 2019, it can be seen that in these almost two and a half years the coverage by countries has increased, especially in those that in 2019 only they had one type of IoT network and now both. For example, in Spain, Germany or Great Britain they only had NB-IoT networks, like much of Europe, and now they also have LTE-M, as can be seen by examining the upper and lower maps.
At the beginning of 2019 there were 94 commercial launches in 50 markets and now, as has been said, 158. The most significant change is that now in much of Europe there is already coverage for the two standards, when a couple of years ago there was only in France. But it also clearly shows another very relevant aspect: all of Asia and part of Europe continue to be covered only by NB-IoT networks and it is expected that by far the most important market, China, will remain focused on NB-IoT.
Coverage in February 2019 of LTE-M and NB-IoT networks, by country. Source: GSMA.
China sets the pace
In a Huawei presentation at the 2019 Mobile IOT Summit, it was reflected that NB-IoT accounted for a quarter of the total market for LTE-based IoT devices (then 2G, 3G and 4G) in that year, with about 200 million units, But already for the following year, 2020, Huawei predicted that NB-IoT would represent more than half of the total mobile IoT, about 500 million, and by 2021 more than 75%, more than 1 billion units.
Progressively, Huawei predicted that NB-IoT devices based on 2G and 3G networks would tend to migrate towards 4G and 5G, in part because 2G and 3G networks would shut down, as is already happening at the moment. The replacement would be slow, as always happens with the legacy, but it was thought that the new applications would already be based on 4G and 5G, which is what is now happening in China.
Source: Huawei, at Mobile IOT Summit 2019 (February 2019)
Huawei’s vision has been largely fulfilled, especially in the dominance of NB-IoT in the global IoT market and despite the pandemic, which has delayed the global rollout of IoT systems. That Huawei has a clear vision of the reality of the market is not strange, because it is one of the world’s leading manufacturers of IoT components, devices and gateways, especially NB-IoT, as reflected in the graph of the IoT ecosystem above. In China there are other manufacturers of IoT components, such as Unisoc and ZTE, or the Taiwanese MediaTek, but another key factor is that Chinese mobile operators have been betting for years on the development of NB-IoT, now on 4G and 5G. With the IoT, the history of 5G networks and China’s strong commitment are repeated.
As seen in the graph below from Counterpoint, the market for IoT connections is growing at a good pace and the NB-IoT segment is growing much more, going from representing the estimated 14% this year, with 301 million connections, to the 34% forecast in 2025, with 1,214 million connections. Last year, worldwide sales of NB-IoT modules were 82.7 million units, according to Counterpoint. Water and gas meters accounted for 22% of the total, but many other applications, such as telematics, logistics, business, and manufacturing are just as important, as seen in the lower graph below.
Global market for IoT connections, in millions
Source: Counterpoint (April 2021)
Global sale of IoT modules, by applications
Source: Counterpoint (April 2021)
By 2025, Huawei now estimates, there will be a park of some 2,500 million accumulated IoT connections, with some 1,200 million NB-IoT connections and another 600 million 4G Cat-1 connections, as seen in the image above, with a sharp drop. module pricing for more sophisticated and 5G-based applications, as the company revealed in a presentation at the IoT Summit on June 30.
Image of Huawei’s presentation at the IoT Summit on June 30.
This increase in accumulated connections up to 2025 will be favored by the continuous drop in the price of modules expected in the coming years. The price of NB-IoT modules in China is already very low now, about 2.2 euros, but it will fall in the order of 40%, to 1.4 euros per unit in 2025, calculates Huawei, one of its large manufacturers.
The graph to the right shows an even steeper 60% price drop for Enhanced Mobile Broadband (eMBB) modules using 5G networks (in green). The use of 5G networks in IoT devices and the improvement of the applications that this will entail was the topic highlighted by Huawei in its presentation at the ioT Summit, which will be discussed in the next analysis this week.