The State of IoT Connectivity

IoT: LPWA vs. NB-IoT LTEMWC16 was a great venue to check the pulse of developments in IoT connectivity. We summarized part of our observations which we shared and published (link). It caused many follow ups by colleagues and friends who voiced a wide range of opinions that I thought some further color would be useful.

To start, the main challenge in IoT is applications. The challenge is not technology which exists. Rather, the issue is in making the business case for IoT to arrive at a functional solution. That cycle is long and expensive. When we drill deeper into many IoT activities, the question becomes “who will pay for this service.” Technology can lower the cost, but there are many elements that are not technology related which gate the process.

At MWC, specific attention was on Narrowband-IoT (NB-IoT) over all other 3GPP standards, including LTE Cat-m1 (Release 13). NB-IoT is at the top of the hype cycle and certainly stole attention from Cat-m1, even as Cat-m1 is closer to being reality and will provide many of the features of NB-IoT, including long battery life. It will be interesting to watch the dynamics evolve as competition among 3GPP standards heat up with many technologies slated for release within a short period of time. LTE Cat-0 is the first casualty but may not be the only one. Semiconductor companies will have the unenviable task of making bets on these technologies who are likely to pursue a good part of software configurable functions to avoid losing a bet on one of the standards. Therefore, we can expect lower efficiency than otherwise – but it may not matter in the big scheme.

IoT Technologies Map. [Source: Xona Partners]

IoT Technologies Map. [Source: Xona Partners]

On timing, we have taken the position that NB-IoT will be commercial in (early) 2018 which is longer than what some proponents proclaimed at MWC. We don’t think a standard that is slated for completion in June at the earliest (and quiet likely will need more time to fully firm up) would be commercially ready by end of this year or early next year as some claim.

The LPWAN market will not die out, but the challenge is on execution. There is room in the market for LPWANs but perhaps not all the different technologies. IoT applications are a great many and they cannot be served by one technology or network. Execution is the main issue in IoT: MNOs will have their challenges as well. Selling broadband services to subscribers is completely different from selling connectivity for devices. Some MNOs have fared better than others, but in general, the challenge remains. This provides an opportunity for LPWAN operators; those who execute better will win.

Wide-area IoT connectivity technology categories.

Wide-area IoT connectivity technology categories. [Source: Xona Partners]

Finally, there are what I call “short-range wide-area” technologies that include peer-to-peer protocols which are the entrenched incumbents that both LPWANs and 3GPP IoT standards are seeking to displace. No one is even talking about this angle which is a major piece of the puzzle. But this is best saved for another article!






About Frank Rayal
Technology strategy, markets and M&As

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