Sunday, October 12, 2014

Internet of Things Will Create World's Largest Device Market

“The Internet of Things will be the largest device market in the world,” Business Insider predicts.  “We estimate that by 2019 it will be more than double the size of the smartphone, PC, tablet, connected car, and the wearable market combined.”

And each of those constituent market segments--such as the connected car market--could be substantial for Internet service providers.

AT&T expects meaningful subscriber growth for its connected car services in the next three to five years, and already supplies connections for almost two million vehicles already.
About 500,000 accounts were added in the third quarter of 2014.

In 2015, AT&T expects to serve nearly half of new mobile-connected U.S. passenger vehicles and also expects to serve more than 10 million vehicles by the end of 2017.

AT&T expects revenues from its connected cars to be driven initially by wholesale customer relationships with auto manufacturers, with the opportunity to develop a direct retail relationship with drivers.

Wholesale average monthly revenue per subscriber, paid for by auto manufacturers, is expected to be in the low single digits and retail ARPU, paid for by the car owners, is expected to be similar to that of a tablet on an AT&T Mobile Share Value Plan, or about $10 a month.
The market for cumulative mobile machine-to-machine (M2M) connections will rise from about 110 million connections in 2011 to approximately 365 million connections by 2016, according to ABI Research.

This represents a compounded annual growth rate of roughly 27 percent by 2016 and translates to about $35 billion in connectivity services revenue.


The two largest cellular M2M market segments over the forecast period, by revenue, will be automotive telematics and smart energy, ABI Research estimates.

Automotive telematics, including factory-installed systems such as GM’s OnStar service, aftermarket services such as usage-based insurance, and fleet management systems, will together represent more than $15.5 billion in 2016, ABI Research estimates.

Meanwhile, smart energy, specifically cellular connectivity to smart meters and data concentrators, will represent more than $7.5 billion in 2016.

Device shipments will reach 6.7 billion in 2019 for a five-year CAGR of 61 percent, according to Business Insider. Revenue from hardware sales will be only $50 billion or eight percent of the total revenue from IoT-specific efforts.

The IoT will result in $1.7 trillion in value added to the global economy in 2019, based on  hardware, software, installation costs, management services, and economic value added from realized IoT efficiency.




The enterprise sector will lead IoT investments, accounting for 46 percent of device shipments this year, but that share will decline as the government and home sectors gain momentum. By 2019, government will be the leading sector for IoT device shipments, Business Insider predicts.

Nobody knows for sure, yet, how big IoT will be, and how much revenue mobile service providers, among others, might stand to make. But estimates suggest IoT is a “billions of dollars” sized mobile access services opportunity.

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