Skip to main content

Mobile Network Providers Move Up the IoT Value Chain

Telecommunication service providers are exploring new business models, and some have already experienced growth. Mobile network operator revenues from the Internet of Things (IoT) has reached €11 billion in 2016, according to the latest worldwide market study by Berg Insight.

During the course of 2016, a few leading telecom service providers have reported impressive IoT revenues on a regular basis. In the third quarter (Q3) of 2016, Vodafone and Verizon generated around €200 million each in direct sales from IoT connectivity and other associated services.

Next year, Berg Insight predicts that a handful of established network operators could generate more than €1 billion each from the Internet of Things related products and services.

Service Provider IoT Market Deveopment

"Until recently, the principal financial metrics for IoT has been projected, not actual, revenues. Now the market has entered a new phase in which hard business facts take precedent over lofty projections," said Tobias Ryberg, senior analyst at Berg Insight.

According to the analyst's market assessment, even with wireless connectivity now somewhat ubiquitous -- half a billion cellular IoT connections are forecast for 2017 -- near-term revenues will be relatively small.

They estimate that the global monthly average revenue per user (ARPU) for cellular IoT devices was €1.40 in 2016. However, there were significant variations between different regions -- from less than €0.30 in some emerging economies to over €3.00 in less competitive developed markets.

Therefore, identifying and implementing effective market development strategies, for moving up in the value-chain, is likely the biggest challenge ahead for mobile network operators that are active in the competitive IoT marketplace.

For large mobile network operators located within vehicle producing countries, the automotive market has been a natural starting point. Leading national and regional service providers have established dedicated practices to support automotive OEMs with connected car solutions for the global market.

Case in point: Verizon and Vodafone made strategic acquisitions of telematics businesses to accelerate their strategies, while AT&T and Deutsche Telekom developed their platforms in close cooperation with customers.

Outlook for Mobile IoT App Growth

Berg Insight analysts believe that an alternative strategy, better suited for smaller mobile network operators, is to develop a broad ecosystem and sell IoT solutions from preferred partners through existing B2B channels.

By partnering with leading IT solution providers, the mobile network operators can make sure that they offer the best products available to their enterprise customers -- without having to invest in significant new product development.

Pre-packaged solutions from ecosystem partners can range from wholesale network connectivity for software application developers to bespoke solutions that meet more complex and customer-specific IoT use case requirements.

Popular posts from this blog

Why GenAI Investment will Double in 2024

In 2024, every business can be a technology-driven business. The quest for business technology leadership skills, and digital transformation, will gain new momentum as more organizations seek ways to drive net-new digital growth. Large enterprises will invest more than $19.4 billion worldwide in Generative Artificial Intelligence (GenAI) solutions in 2023, according to the latest market study by International Data Corporation (IDC). This spending, which includes GenAI software as well as related infrastructure hardware and IT or business services, is expected to more than double in 2024 and reach $151.1 billion in 2027 -- that's with a compound annual growth rate (CAGR) of 86.1 percent over the 2023-2027 forecast period. Artificial Intelligence Market Development Despite the recent IT headwinds in 2023, business leaders accelerated their exploration of GenAI solutions to help boost their digital business transformation. "In 2024, the shift to AI everywhere will enter a critic