Analysys Mason forecasts that total addressable revenue from the IoT value chain will be USD201 billion in 2025.
This total addressable market includes revenue from connectivity, devices, applications and other parts of the value chain. Mobile operators will not generate all this revenue, but they will capture some value from applications and hardware.
Revenue from connectivity will be USD28 billion in 2025, just 14% of this total addressable market. Mobile operators are therefore seeking additional incremental value by offering other components of the value chain, above and beyond their connectivity offering. This will include providing capabilities in the application or hardware components: application revenue will constitute 61% of total value chain revenue and hardware will constitute 25%. Participation in parts of the value chain beyond connectivity carries more risk, but also generates higher revenue. However, mobile operators will face strong competition and will need to acquire (or partner for) new capabilities outside their core area of expertise.
LPWA networks will generate very low connectivity revenue
LPWA networks (such as LoRa, NB-IoT and Sigfox) compound the problem of low connectivity revenue. Connectivity revenue from mobile IoT networks will grow to USD22 billion by 2025 or 17% of the total revenue from the mobile IoT (cellular 2G, 3G, 4G and 5G) value chain. Conversely, connectivity revenue will only comprise 8% of the total revenue from the LPWA value chain. LPWA devices are low power, low bandwidth and typically transmit data infrequently. This makes it difficult for IoT network providers to justify the business case for an LPWA network on connectivity alone. Key players in LPWA connectivity will not only seek to build volumes of connections, but also to target the application and hardware components of the value chain.