Connected Devices Market a $1.2 Trillion Revenue Opportunity by 2020
The wireless industry could see a $1.2 trillion revenue opportunity out of the connected devices market by 2020, claims Global Information Inc (GII). Early growth in this sector will be driven by security applications, but the nascent building automation market will contribute significantly towards the end of the forecast period. M2M connectivity also underpins the Smart City concept, enabling city infrastructure and assets to be monitored and controlled remotely and is instrumental in driving cost efficiencies and creating new value
The market for M2M communication in intelligent buildings will grow at a CAGR of 17% between 2011 and 202 from US$52 billion in 2011 to $214 billion in 2020.
Security is the largest application group generating 60% of total revenue by 2020. The fastest growing application group in terms of revenue is the building automation group, which will grow at a CAGR of 50% to reach $63 billion in 2020.
According to the new report, the security market is an already well-established market which significantly benefit from M2M connectivity as alarms, CCTVs and access control systems become increasingly connected.
Once the market has taken off, significant opportunities for the management, mining and presentation of the information associated with an individual's constellation of connected devices will emerge. Mobile operators will be particularly well placed for this kind of opportunity.
Smart Cities & Public Transport
The market for M2M connectivity in the smart cities sector is forecast to reach $19 billion in 2020. This is a diverse sector with a wide range of different public services, all of which can substantially benefit from M2M, in particular through driving efficiency savings. In most cases, each service has been conceived and developed over a number of years an independent silo, with little integration, interdependence or communication built in between services. The challenge with retrofitting existing cities will be to link up some of those independent silos where appropriate.
Smart City projects are by nature large and complex and there are no "one size fits all" solutions. They require the expertise of a number of industry players; hence there are substantial opportunities for vendors, systems integrators and fixed and mobile network operators in this market and more importantly partnerships between players.
The utilities M2M sector will see massive growth in the next few years, increasing from 140 million connections at the end of 2011 to 1.5 billion in 2020. Smart metering is the dominant applications, accounting for 98% of connections in 2011, rising to 99% in 2020. It will also account for the lion's share of traffic over the period, going from 80% in 2011 to 95% in 2020 and it generates between 98% and 99% of revenue over the forecast period.
The main driver for M2M connectivity in the utilities sector comes from government. Many are setting aggressive targets for the deployment of smart metering, most notably the EU requiring that 80% of electricity meters are smart meters by 2020. Many other countries, including China and the US, are also pushing smart meter adoption through stimulus packages and the mandating of rollouts. This governmental pressure is largely stimulated by a desire to reduce consumption and CO2 emissions, factors that might have led utilities to adopt smart metering, but certainly not in the timescales envisaged by, for instance, the EU.
The revenue opportunity for MNOs in the utilities sector, such as it is, does not lie in carrying traffic. Traffic-related revenue is negligible. MNOs must get involved in device and service management if they are to secure a significant portion of the USD300 billion (EUR215 billion) that will be generated between 2011 and 2020 in the sector. If the MNO's role is relegated to that of bit pipe, the revenue opportunity is modest in the extreme.