The Global Wireless M2M/IoT Market

NEW YORK, Feb. 4, 2020 /PRNewswire/ --

The analyst estimates that the global number of cellular IoT subscribers increased by 70 percent during 2018 to reach 1.21 billion at the end of the year – corresponding to around 13 percent of all mobile subscribers. Until 2023, the number of cellular IoT subscribers is forecasted to grow at a compound annual growth rate (CAGR) of 49.4 percent to reach 9.03 billion at the end of the period. During the same period, cellular IoT network revenues are forecasted to grow at a compound annual growth rate (CAGR) of 34.4 percent from € 6.7 billion in 2018 to approximately € 29.4 billion in 2023. Meanwhile the monthly ARPU is expected to drop to € 0.27. 

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East Asia was the largest region with 848.0 million IoT subscribers at the end of 2018, far ahead of Western Europe and North America with 157.6 million and 111.7 million respectively. Altogether the main regions accounted for over 95 percent of the global installed base. Latin America, South Asia, Southeast Asia and Russia & CIS had in the range of 19–32 million cellular IoT subscribers each, while Africa, Middle East, Central Eastern Europe, and Australia & Oceania were in the span 7–19 million. 

China is the world's largest market for cellular IoT connectivity services by volume. According to operator subscriber data, the installed base grew by 124 percent year-on-year to reach 767 million at the end of 2018. This corresponded to 63 percent of the global installed base. The spectacular numbers reported by the domestic mobile operators leave no doubt that China is leading the global adoption of massive IoT. The country has surpassed Europe and North America in terms of penetration rate – 54.7 IoT connections per 100 inhabitants at the end of 2018 – and is on track to reach 1 billion IoT connections during 2019. The Chinese government is actively driving adoption as a tool for achieving domestic and economic policy goals, at the same time as the private sector implements IoT technology to improve efficiency and drive innovation. Berg Insight believes that the role of the government is the main explanation for why China is ahead of the rest of the world in the adoption of IoT. Like other advanced economies, the country has widespread adoption of connected cars, fleet management, smart metering, asset monitoring and other traditional applications for cellular IoT. It has also given rise to new consumer services enabled by connectivity like bike sharing. The most distinctive characteristic of the Chinese IoT market is however the way that the government is systematically using new technology to implement its vision for urban life in the 21st century. 

China Mobile is the world's largest provider of cellular IoT connectivity. At the end of 2018, the operator reported 551 million IoT connections and a year-on-year growth rate of 141 percent. China Unicom and China Telecom ranked second and third with 110 million and 106 million connections respectively. Vodafone ranked first among the Western operators and fourth overall with 81 million connections, followed by AT&T in fifth place with 51 million. Verizon, Deutsche Telekom and Telefónica had in the range 25–35 million cellular IoT connections. Softbank/Sprint and Telenor were the last players in the top ten with 21 million and 17 million connections respectively. Year-on-year growth rates for the mentioned operators were in the span 20–35 percent, except for Softbank/Sprint that only grew 3 percent. 

IoT connectivity revenues are growing at a considerably slower rate than the number of connections. Berg Insight's analysis of the IoT business KPIs released by mobile operators in different parts of the world suggests that global IoT revenues increased by around 19 percent during 2018, while the monthly APRU dropped by 30 percent. Excluding China, the trend was less dramatic with revenues growing by 16 percent and ARPU declining 7 percent. Indeed, there is a negative correlation between growth in connections and monthly ARPU as the bulk of net additions are cost sensitive devices. 

Verizon reported the highest IoT revenues of € 1.4 billion (US$ 1.6 billion) in 2018 and the highest monthly ARPU of an estimated € 3.65. Around 60 percent of sales derived from the Verizon Connect fleet management and telematics business. China Mobile ranked second with yearly IoT sales of € 964 million but had the lowest monthly ARPU of just € 0.21. Vodafone and AT&T were not far behind. Annual IoT revenues for the Vodafone group in 2018 were approximately € 830 million, with a monthly ARPU of € 0.82. AT&T does not report IoT revenues but is believed to have generated approximately € 750–800 million. 

The Internet of Things is weaving a new worldwide web of interconnected objects. At the end of 2018, approximately 1.3 billion devices were connected to wide area networks based on cellular or LPWA technologies. The market is highly diverse and divided into multiple ecosystems. This report will focus on the four most prominent technology ecosystems for wide area IoT networking – the 3GPP ecosystem of cellular technologies, the emerging LPWA technologies LoRa and Sigfox and the 802.15.4 ecosystem. 

The 3GPP family of cellular technologies support the biggest ecosystem in wide area IoT networking. Berg Insight estimates that the global number of cellular IoT subscribers increased by 70.0 percent during 2018 to reach 1.2 billion at the end of the year – corresponding to around 13.0 percent of all mobile subscribers. Yearly shipments of cellular IoT devices increased by 76.2 percent in 2018 to reach 651.9 million units. Growth was fuelled by an exceptional market expansion in China, where the installed base of cellular IoT connections increased by 124.1 percent year-on-year to reach 767.0 million at the end of 2018. 

The cellular IoT technology landscape is in a phase of rapid transformation. Developments in China accelerate a global shift from 2G/3G to 4G technologies. As the initial focus for 5G will be high-bandwidth applications, Berg Insight believes that 4G will become the preferred platform for IoT in the foreseeable future. The move from 2G to 4G began in North America with 3G as an intermediate technology. The region has seen rapid uptake of LTE CAT-1 since 2017 and CAT-M starting in 2018 at the same time as GPRS and CDMA are fading away. Europe began to see adoption of LTE CAT-1 in 2018 and is now followed by an accelerated uptake of LTE-M and NB-IoT in 2019/2020. China is moving fast from GPRS to NB-IoT in the mass-market segment and cumulative NB-IoT shipments are expected to exceed 190 million units by the end of 2019. At the same time there will also be fast-growing demand for LTE CAT-1 and LTE- M, as well as LTE CAT-3+. 2G and 3G will be in steady decline in all developed markets with demand shifting to developing countries with limited availability of 4G networks. The analyst expects that 5G will become commercially available for verticals such as automotive in 2020.

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