Is the IoT market too fragmented to make money?

The Internet of Things (IoT) is poised for growth, but the fragmented nature of the market makes it difficult to achieve return on investment (ROI), according to a new report on low-power wide-area (LPWA) networks.

“ It’s not just one product like the smartphone, it’s hundreds of different products, and the trick is to create enough of them to satisfy the market, ” said Mareca Hatler, research director at market research firm ON World Inc.

Mareca Hatler predicts that revenue from LPWA systems and services will reach $56 billion by 2022. However, the market is very fragmented, with users at different stages of exploration or deployment, and there are more than 40 unique IoT applications for LPWA networks alone.

According to a new report from ON World, the narrowband-IoT (NB-IoT) version of LTE and 900MHz LoRa networks will play a major role in LPWA networks in the coming years. Sigfox, one of the main competitors in LPWA networks, will follow closely behind, partly due to the need for some unique designs.

“Sigfox has millions of subscriber devices, but the challenge is getting enough of them to meet demand – that’s the availability issue,” she said.

The need to customize designs for IoT deployments is a challenge faced by all vendors, but some feel it more acutely than others.

“One of the advantages of LoRa is that it has a larger ecosystem with more products,” Hatler said. “There are dozens of LoRa modules and gateways on the market, but Sigfox has only a handful of products.”

Currently, unlicensed LPWA networks dominate, but as cellular IoT becomes increasingly powerful, related applications are also expanding (Source: ON World)

About two-thirds of today's LPWA network operators are unlicensed, such as LoRa and Sigfox, but mobile operators are accelerating the expansion of their NB-IoT plans. As a result, OnWorld predicts that about 1.3 billion LPWA nodes will be deployed by 2025, of which NB-IoT will account for half of the market .

“In the next five to seven years, NB-IoT will be more advantageous. The only question is how fast it will happen. The network operators have such scale that they can offer disruptive pricing,” Hatler said, noting that Deutsche Telecom plans to charge just $12 per NB-IoT node.

Operators will drive broad availability and price, she said. In addition, they can offer high-quality services and five times more bandwidth than unlicensed LPWA networks.

Chinese telecom operators jumped into NB-IoT quickly. U.S. operators chose to launch the higher-bandwidth LTE-M first because it only required a software upgrade for their LTE networks. But in the past few months, they have announced aggressive plans for NB-IoT, which has begun requiring operators to install some new hardware.

“Operators haven’t mentioned anything about the cost of NB-IoT upgrades, but they are already being manufactured – some are even supporting LoRa as a complement, so users can have their own private network,” she said.

Other advantages of LoRa include the fact that it is an open specification with relatively many supporters, and it also supports asset tracking, locating devices within a range of about 100 meters without using GPS.

All LPWA networks will increasingly compete with existing Bluetooth, Wi-Fi and Zigbee networks, especially for use cases such as metering and smart buildings, she said. Although LPWA has lower bandwidth, it generally supports longer range and battery life.

"NB-IoT can take a bite out of existing wireless mesh networks," Hatler said. "We expect the market to be large enough to support a wide range of users and applications , but we will also see more and more head-to-head competition."

(Reference: IoT Diversity Challenges ROI, by Rick Merritt)

Source: eetaiwan

Compiled by: Susan Hong

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