Mobile operator revenues from the Internet of Things (IoT) reached $11.56 billion in 2016, while a handful of operator groups will generate more than $1 billion each next year.
That's according to a new research report from analyst firm Berg Insight AB . According to the report, some of the leading global telecom groups have reported IoT revenues on a regular basis, the report states.
"Until recently, the principal financial metrics for IoT has been projected, not actual, revenues," said Tobias Ryberg, senior analyst and author of the report. "Now the market has entered a new phase in which hard business facts take precedent over lofty projections. Wireless connectivity is now near ubiquitous and there will be half a billion cellular IoT connections in 2017, but revenues are still relatively small."
Identifying and implementing successful strategies for moving up in the value chain is widely recognized as the biggest challenge ahead for mobile operators in IoT, according to Berg. For large mobile operators in vehicle-producing countries, the automotive market has been a natural starting point.
Leading players like AT&T, Vodafone, Verizon and Deutsche Telekom have established dedicated practices to support automotive OEMs in the development of connected car offerings for the global market. 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.
Berg estimates that the global number of cellular M2M subscribers increased by 30% during 2016 to reach over 398 million at the end of the year -- corresponding to around 5% of all mobile subscribers.
Until 2021, the number of cellular M2M subscribers is forecasted to grow at a compound annual growth rate of 26.2% to reach 1.27 million at the end of the period. During the same period, cellular M2M network revenues are forecasted to grow at a compound annual growth rate of 26%.
Meanwhile, the monthly average revenue per user is expected to remain stable at around $1.47. The global cellular M2M market is diverse, shaped by the economic conditions in different parts of the world. Europe and North America are the most advanced regions in terms of adoption.
At the end of 2016, the number of M2M subscribers per 1,000 people was approaching 200.
Verizon, Vodafone and Telefónica, which have a combined share of the global installed base of cellular M2M devices equal to 15 percent or 20 percent, reported an aggregate sum of about $1.47 billion in M2M/IoT revenues for the first nine months of 2016.
If representative of the industry as a whole, the figure suggests that the total yearly revenue contribution from M2M/IoT to the world’s mobile operators was approximately $11.56 billion in 2016. The indirect value was even higher as many telecom operators have sizable system integration businesses which are key partners in customer IoT projects, according to Berg.
— Edward Gately, Contributing Editor, Channel Partners
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