Mobile operators have been told they will need to offer services and products, not just connectivity, if they are to maximise returns offered by the Internet of Things (IoT).
New figures from the GSMA industry body estimate that the IoT will offer a $1.1 trillion (£830bn) revenue opportunity by 2025. By this time, the body thinks there will be 25.2 billion connections by then, a significant increase from the 6.2 billion in 2016. Of that larger figure, 13.8 billion will be from the Industrial Internet of Things (IIoT), while 11.4 billion will be consumer connections.
However just five per cent of all revenue will be from connectivity, with platforms, applications and services gathering 68 per cent. This includes apps, cloud services and security.
The remaining 27 per cent will be generated from professional services such as system integration, managed services and consulting.
“The IoT revenue opportunity is shifting away from simply connecting devices to addressing specific sectors with tailored solutions, and successful ecosystem players will need to adapt their business models in line with these market trends,” warned Sylwia Kechiche, Principal Analyst, IoT, GSMA Intelligence.
Many mobile operators already do this, setting up dedicated IoT business units that work with customers to solve business challenges. Others are also intent on ensuring their networks aren’t just ‘dumb’ pipes that provide connectivity for other vendors who create the applications that generate the lion’s share of revenue.
However with traditional revenue streams challenged by over the top (OTT) services, intense competition and regulatory changes, harnessing this IoT opportunity will become critical.
“It’s well understood that connectivity will represent only a fraction of the total IoT opportunity,” declared Peter Jarich, head of GSMA Intelligence. “Complementing our IoT connections data with this major new dataset and analysis on IoT revenue provides a comprehensive and realistic view on where market opportunities exist for operators, vendors, integrators, and everyone else playing in the IoT ecosystem.”
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Steve McCaskill is TechRadar Pro's resident mobile industry expert, covering all aspects of the UK and global news, from operators to service providers and everything in between. He is a former editor of Silicon UK and journalist with over a decade's experience in the technology industry, writing about technology, in particular, telecoms, mobile and sports tech, sports, video games and media.