GSMA Announces the Business Impact of Connected Devices Could Be Worth US$4.5 Trillion in 2020

Mobile Connectivity in Cars Will Be the Top Connected Application in 2020

Mobile World Congress –The GSMA, in partnership with Machina Research, today announced a new study that further examines the market potential of the Connected Life in 2020, when the number of total connected devices will reach 24 billion(1) worldwide. The research explores how the Connected Life will open up new revenue streams, facilitate new business models, drive efficiencies and improve the way existing services are delivered to create a global business impact worth as much as US$4.5 trillion(2).

Today the connected devices market is dominated by mobile phones, but this will change in the future as a new wave of smartphones, tablets, consumer electronics and M2M devices connect everything from cars to health services and even entire cities,” said Michael O’Hara, Chief Marketing Officer, GSMA.
The Connected Life will have a positive impact on many industries; however capitalising on this enormous opportunity requires cross-sector collaboration to fully realise the power of mobile for the benefit of billions of people globally.

The global business impact of the Connected Life can be split into two broad categories: ‘revenues’ and ‘cost reduction and service improvements'(3). In 2020, revenues from the sale of connected devices and services, and revenues from related services, such as pay-as-you-drive car insurance, will be worth US$2.5 trillion, US$1.2 trillion of which could be addressed by mobile operators and the remainder by the broader Connected Life ecosystem.

Cost reductions and service improvements relate to less direct, but tangible, benefits to organisations, governments and consumers through the evolution of the Connected Life. In 2020, this could be worth approximately US$2 trillion: US$1 trillion from cost reductions, such as smart meters removing the need for manual meter readings; and US$1 trillion from service improvements, such as clinical remote monitoring for patients with chronic illnesses.

For instance, in 2020, the global healthcare space alone could recognise US$660 billion in cost savings and improved services from the deployment of mHealth solutions, helping to reduce the cost of universal healthcare. Connecting cars will also help the global automotive industry to profit from the Connected Life, with its ecosystem set to generate US$624 billion in revenues and reap US$727 billion in cost reductions and service improvements.

Matt Hatton, Director, Machina Research, said:
“By 2020, there is no doubt we will live in a much more connected world, which will have a fundamental impact on the way we live and work. This impact will not only open up new revenue opportunities for operators, but it will also facilitate a host of new business models, improve the way that companies do business and improve efficiencies in innumerable ways.

“Our estimate of the value of this is US$4.5 trillion, but the impact on and benefit to society is immeasurable.”

The Top Connected Application in 2020: The Connected Car

By 2020, mobile connectivity in cars will increasingly become a must-have as demand grows for services such as stolen vehicle recovery, insurance telematics and entertainment. This will be driven by manufacturers seeking to differentiate their offering and build new revenue streams, as well as the growth of plug-in electric vehicles, which will demand connectivity. Machina Research anticipates that 90 per cent of new cars in 2020 will have some form of in-vehicle connectivity, adding US$600 billion to value of the Connected Life.

The ‘top ten’ connected applications, listed below, will account for 60 per cent of the global business impact in 2020.

Top Ten Connected Applications in 2020 Value to the Connected Life
Connected Car US$600 billion
Clinical Remote Monitoring US$350 billion
Assisted Living US$270 billion
Home and Building Security US$250 billion
Pay-As-You-Drive Car Insurance US$245 billion
New Business Models for Car Usage US$225 billion
Smart Meters US$105 billion
Traffic Management US$100 billion
Electric Vehicle Charging US$75 billion
Building Automation US$40 billion

(1) Machina Research estimates that the number of total connected devices is expected to increase from more than 9 billion today to 24 billion in 2020, and within that, mobile connected devices will grow 100 per cent from more than 6.5 billion today to more than 12 billion in 2020.

(2) Regional breakdown: Asia Pacific US$1.6 trillion, North America US$1.23 trillion, Europe US$1.12 trillion, Latin America US$272 billion, Africa US$114 billion, Middle East US$63 billion.

(3) An example of the business impact looking at one application: connected car insurance. For this application there are numerous monetary implications. The market revenue comprises the provision of the connectivity and service management, which is typically addressed by the mobile operator, the device itself, and the sale of pay-as-you-drive insurance policies that run over the platform. There are also benefits in terms of allowing the insurance companies to develop new offerings based on driver behaviour, although increasingly usage-based pricing will become the norm.

Connected Life Business Impact: example application Connected Car Insurance. Machina Research.

Category of impact Type of benefit
Connected Life market revenue The connected PAYD insurance device, device/service management, the provision of connectivity and the sale of PAYD insurance.
Connected Life service improvements The ability to better tailor insurance policies to individual driver needs.
Connected Life cost reduction Cost reductions for drivers through only paying for the cover that they need, cost reductions for insurers through better information and the ability to better manage risk and better enforce policy terms and conditions.

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