Connectivity is one of the areas where there is still a lot of movement, uncertainty and evolution in the broader Internet of Things strategy context, certainly in the wireless connectivity space.
This is both the case for short-range protocols and standards (e.g. home automation standards such as ZigBee or the Z-Wave Alliance, evolutions in WiFi and Bluetooth, etc.), as for long-range ecosystems, standards and protocols where we find various LPWAN actors and consortiums.
In this forecast we look at the latter. For businesses it’s important to build strategies with these evolutions in mind and look ahead at where they will be in a few years as IoT projects are rarely for the short run (you don’t replace street lamps every day, for example) and it’s important to chose solutions that can be quickly adapted when better connectivity solutions have become more mature.
IoT and LPWAN: where do we stand and what can we expect in 2017?
The Low Power Wide Ara Network or LPWAN market is evolving and growing fast. While cellular LPWAN solutions such as NB-IoT are the talk of the day and are expected to ultimately be the best choice, the unlicensed band LPWAN solutions are moving much faster in practice in 2016 as the various players keep rolling out rapidly, just as the cellular LTE-M and NB-IoT proponents are pushing their standards and solutions. Yet, cellular has quite some catching up to do.
As mentioned previously, today there certainly is room for most of them. The Internet of Things is a big space, as is the Industrial Internet of Things. The use case and context play a significant role and there are big geographical differences. In some countries, non-cellular LPWAN networks have a very strong footprint and are broadly deployed. With networks having been rolled out nation-wide in several countries in 2016, and more nation-wide deployments coming early 2017 and later in 2017, it’s not likely that even the telecom operators will make a shift just like that but they often rather see LPWA as complimentary.
What do the analysts and researchers say? An overview of some recent (and some less recent) forecasts. Let us know if you agree with them and what your take on the market evolutions is.
LPWAN: the market, services and connectivity
With mainly LoRaWAN and Sigfox leading the way in fast expansion, the others (Ingenu, Weightless SIG, etc.) also keep growing the non-cellular LPWAN market but 3GPP LPWAN players aren’t exactly sitting still either.
LPWAN forecasts on connections
Keeping in mind that the company also takes the Consumer Internet of Things into account, the ‘IoT Global Forecast & Analysis 2015-2025’ from Machine Research (August 2016) expects 11 percent of IoT connections in 2025 to use LPWA connectivity technologies such as Sigfox, LoRa and cellular LTE-NB1.
The majority of connections in 2025 (72 percent) will be using short range technologies such as WiFi, Zigbee or in-building PLC. That’s only 1 percent more than today and of course is mainly driven by consumer electronics, along with building security and building automation. Consumer electronics isn’t where you’ll typically find LPWAN and short range is exactly what LPWAN is NOT about so it’s hard to put in perspective.
Business Insider Intelligence also looked at the future of LPWAN market. According to their findings, the total number of IoT devices connected over LPWANs will reach 700 million by 2021.
LPWAN IoT market predictions
MarketsandMarkets (research July, 2016) expects that the global LPWAN market will grow at a whopping Compound Annual Growth Rate (CAGR) of 89.3 percent from 2016 to 2021.
From a market value of $1.01 Billion in 2016, the total LPWAN market value would thus reach $24.46 Billion by 2021, MarketsandMarkets forecasts. This concerns the overall LPWAN market, so services, connectivity, etc. included.
End 2015, Dale Ford, Vice President and Chief Analyst at IHS, wrote on LinkedIn how LPWAN technologies are a key focus area for operators who are building their overal M2M and Internet of Things strategies and that he expects the total installed base of LPWAN connections would rise from nearly 23 million connections in 2014 to 191 million in 2019, all LPWAN technologies included. In 2016 we certainly saw that the number of LPWAN connections grew very fast so we’re eager to see an update of the IHS forecasts.
LPWAN services outlook
Then there are also forecasts regarding the growth of the LPWAN services market (as mentioned previously the Internet of Things services market in general is – obviously – poised to grow but also to disrupt the market).
If we look at the LPWAN services market alone, according to ON World report (October 2016), the LPWAN services market will reach $75 Billion by 2025.
IDC: no bright future for LPWAN IoT players in the unlicensed spectrum
IDC doesn’t think that the LPWAN market is going to be big and doesn’t have too much potential, specifically the unlicensed band solutions.
The research firm said that LPWAN technologies are probably only good for the shorter term and states that they lack the possibility to scale, the Quality of Service and the requirements that are needed for important IoT projects, which are built for the longer term and are more ‘critical’.
IDC states that “despite hype on the benefits of lower power WAN, such as LoRa and Sigfox, its unlicensed spectrum and lack of QoS will cause companies to focus it on non-critical applications – with 3 percent of companies deploying by 2018”.
Focus on cellular LPWAN IoT connectivity forecasts
Most researchers expect non-cellular LPWAN and cellular LPWAN to co-exist for quite some time.
Machine Research expects that cellular connections will grow from 332 million at the end of 2015 to 2.2 billion by 2025, the majority being LTE. Interesting is that 45 percent of cellular connections are expected in the connected car sector, as Machine Research states in the press release. And that’s precisely where LPWAN, as we know, is not the best fit.
As Machina Research expects the total number of IoT connections to grow from 6 billion in 2015 to 27 billion in 2025 and 72 percent of these connections are short range, this means that nearly 7.6 billion connections will be divided over other forms of connectivity. Approximately 40 percent of these 7.6 billion connections will be for LPWA connections (non-cellular and cellular).
Although IHS sees solid growth for LPWAN, the company also said that the 191 million expected LPWAN connections in 2019 are small in comparison with an 541 million cellular forecasted M2M/IoT connections in the same year. IHS anticipated continued fast growth for LPWAN beyond 2019.
The safest LPWAN market evolution prediction
Forrester published its report “Predictions 2017: Security And Skills Will Temper Growth Of IoT” on November 2nd, 2016. Apparently it also mentions LPWAN.
We didn’t see it but here is what Forrester says according to Ann Bednarz on Network World: “Small bursty traffic, dense sets of connections, or long distances require new forms of wireless connections, such as LoRaWAN, Sigfox, or 3GPP’s narrowband (NB)-IoT” and “In 2017, teams will search through more than 20 wireless connectivity choices and protocols to support a company’s diverse set of IoT devices.”
That’s not exactly new of course (maybe there is more in the report) but what’s clear to us is that if it’s hard to predict the future of the Internet of Things and in these times when IoT is still hyped, certainly when predicting ‘how big it will be’, it is even harder to predict the LPWAN market evolutions as in 2017 we’ll see many changes with the finalized 3GPP standards.
While some say one of these standards will wipe non-cellular LPWAN providers of the face of the earth in the next few years and others claim there are too many questions with regards to Cat-NB1/NB-IoT and LTE-M/Cat-M1, others simply say there will continue to be room for both.
Looking at the earlier mentioned predictions from IDC, it looks as if the unlicensed spectrum LPWA network players will not have the best possible future. But then why did Sigfox just raise another 150 million Euros? Is Salesforce investing in a marginal technology? And what about the expansions of both Sigfox and the LoRa ecosystem? Is the view of IDC too US-centric or will the LPWAN space indeed remain small and ultimately maybe dissapear after all?
Again, the use cases matter a lot, you can predict with certainty that there will be changes in the ecosystem and one or more smaller players might disappear.
However, as far as we’re concerned, any prediction regarding the growth and evolution in the LPWAN market will prove to be wrong in this very dynamic market. That’s, in the end, probably the safest prediction of all.
First, because the market is still maturing, there are too many almost religious debates and the focus is still too much on the technologies instead of the really good cases, deployments and outcomes. Let’s hope that changes in the next years and we can talk more about LPWAN from a business success perspective, rather than from a technology and standards perspective.
Secondly, because it would be foolish to assume that the different LPWAN ecosystems and technologies are not going to continue to evolve in real life and beyond any prediction.
And, last but not least, because we see huge regional differences and the predictions and opinions we see differ quite a bit, depending on where they come from.
If you know that Sigfox and LoRa, both non-cellular LPWAN, come from France and are less present in the US, it probably won’t come as a surprise that we see major differences in perceptions between both continents, by way of just one example. And it’s exactly in the US that both are investing and deploying fast. And so do several other firms from outside the US.
Top image: Shutterstock – Copyright: Rob d – All other images are the property of their respective mentioned owners.