2023 is going to be a tough year. War, inflation, political upheaval, energy shortages, and the ongoing fallout from a global pandemic are still creating a persistent sense of uncertainty at best and downright depression at worst. Labor shortages, supply chain issues, falling consumer sentiment, and rising input costs are squeezing many markets. Not all segments are equal, and some are growing, while others are contracting. However, the common aspect between all of these is that technology can either be the anchor dragging down operations or the mainsail powering companies forward. The devil is in the detail of the how, who, what, and when of technology investment and implementation. To help provide some clarity for the year ahead, ABI Research’s global team of analysts offered their insights into the 74 technology trends that will—and will not—shape 2023.
Altogether, this whitepaper includes 41 predictions of what will happen and 33 predictions of what will not happen in 2023. We hope that these trends serve as a helpful blueprint for building realistic expectations of key technology markets and verticals.
Table of Contents
- 5G Core & Edge Networks
- 5G Devices, Smartphones, & Wearables
- 5G Markets
- 5G & Mobile Network Infrastructure
- AI & Machine Learning
- Augmented & Virtual Reality
- Citizen Digital Identity
- Cybersecurity Applications
- Digital Payment Technologies
- Distributed & Edge Computing
- Industrial, Collaborative & Commercial Robotics
- Industrial Cybersecurity
- Industrial & Manufacturing Markets
- Industrial & Manufacturing Technologies
- IoT Cybersecurity
- IoT Hardware & Devices
- IoT Markets
- Location Technologies
- Metaverse Markets & Technologies
- Satellite Technologies
- Smart Homes & Buildings
- Smart Mobility & Automotive
- Smart Urban Infrastructure
- Supply Chain Technologies
- Sustainable Technologies
- Telco Cybersecurity
- Trusted Device Solutions
- Wi-Fi, Bluetooth & Wireless Connectivity
5G Core & Edge Networks Trends
1. XaaS Models in 5G Core Network Lead to New Value Creation
Our first technology trend is that Communication Service Providers (CSPs) will embrace Everything-as-a-Service (XaaS) models as they continue with 5G Core (5GC) rollouts. Possession is not as important as it once was. Accessing is more important than ever. With “tech access,” CSPs seek varied capacity models for their core networks that fluctuate based on consumption, i.e., “no consumption, no money” models. That is hardly new news, but a tough economy and all-around cost increases accelerate that trend markedly.
CSPs seek to transform their cost structure and shield margins by avoiding capital outlays, closely associated with Capital Expenditure (CAPEX), in favor of variable costs over time. 5GC suppliers are responding accordingly to meet that market demand. With a growing Software-as-a-Service (SaaS) portfolio, Nokia, for instance, seeks to free CSPs from the burden of costly and time-consuming product maintenance as they progress with their 5GC rollouts to pursue new value creation.
But the switch from “tech ownership” to “tech access” overturns many conventions. For CSPs, the move from ownership to access comes with a price. Part of what CSPs own with their core network ownership is the right—and ability—to control and integrate their assets. The right to integrate comes with network ownership, not network access. CSPs’ ability to modify and integrate will be a key discussion topic going forward. On a separate, but related strand, XaaS upends the existing competitive landscape and market economics for Network Equipment Vendors (NEVs). XaaS models may well mean that Ericsson, Huawei, Nokia, and ZTE face a strategic challenge of the first order: how do they need to transform their operating models and how do they modernize their product design to compete with entities whose existence is anchored on consumption models from the ground up?
2. 5GC Will Achieve Mainstream Market Adoption
Another key trend that will pick up pace in 2023 is the mainstream adoption of 5GC networks. By now, there is a growing realization that merely using existing Evolved Packet Core (EPC) for 5G (5G Non-Standalone (NSA)) may not be sufficient for new growth. 5G-NSA provides a good start for enhanced bandwidth and increased capacity requirements at a lower cost per Megabyte (MB). But eventually, there needs to be a transition to 5GC networks operating in 5G Standalone (SA) mode for CSPs.
Not only will this enhance the consumer experience, but importantly, it will tap into the enterprise and industrial revenue opportunity. According to Oracle, 64% of CSPs believe that 5GC stands to enable better experiences in the next 3 years. Further, with 5GC, it is the first time that CSPs rely on the core network to introduce something above and beyond Mobile Broadband (MBB). To date, there are 30+ 5GC live networks deployments. With a growing 5G subscriber uptake, and ongoing move of 4G traffic to 5G networks, the expectation is that 5GC networks will enter the mainstream market in 2023 and onward. Orange, for example, highlights that it aims to deploy 5GC networks in key European markets from 2023.
But work remains to be done for widespread commercialization. According to ABI Research’s syndicated research, with 3G and 4G, the likes of BT, Orange, and Telefónica drive value with a centrally governed operating model. A “build it and they will come” approach is the starting point, and “what technology CSPs can build” is the foundation of that model. Tech sets the (consumer) business agenda. That constitutes a top-down approach. For 5GC commercialization beyond MBB, the existing modus operandi will need to be supplemented with a decentralized approach.
What (enterprise) customers need becomes the starting point. Their business strategy sets the tech agenda. And a bottom-up approach is the name of the new growth game. That is because in a horizontally stratified 5G ecosystem, requirements constantly change, and one shoe does not fit all. This inevitable, perpetual change stands to be the pivotal axis for the industry. But learning how to operate in this fluid ecosystem is a multi-faceted journey.
3. Infrastructure Vendors’ Integrated Equipment Product Playbook in Core Networks Will Not Maintain Relevance
A significant shift is beginning. In the growing world of cloud and services, software stands to be a key differentiator for the industry. For example, 5G is the first “G” that paves the way for CSPs to operate solely in the software layer. Though very subtle, what is happening is the consumerization of network equipment. This is a major market trend that will soon knock on NEVs’ C-Level executives’ door. With ongoing cloudification and, by extension, consumerization of network equipment, the commercial imperative from an NEV’s perspective is stark: depart from the finite supply of integrated equipment that optimizes performance, to monetization models based on cloud software where the supply is essentially infinite. For example, a rapid proliferation of software-fueled advances means that today’s classic sales model for Cisco, Hewlett Packard Enterprises (HPE), and Juniper is very likely to wane in importance. That is because in a software-based setting, one characterized by no real selling cycles and no high price points, equipment prices and margins stand to be diluted.
Historically, suppliers have viewed product waves and tech adoption cyclically according to the product playbook. NEVs’ product playbook centers around selling standard, repeatable equipment. With each network generation, NEVs build an incremental product through a new cycle that links to the first one, and then repeat the cycle. It is a simple, highly-effective sequence in which volume equals profit and standardization drives volume. But, as articulated above, the disruptive promise of software, alongside increased scrutiny of tech ownership costs, provide the underpinnings of a sea change in how NEVs must operate to drive growth. In a world of low price points and no real selling cycles, if NEVs do not hedge their strategic bets, they will be walking a tight rope without a net. Swapping one high-price, high-margin product (cycle) with another is no longer that simple.
4. 5GC in Three-Layered Cloud Stacks Will Not Happen
Initial CSP preference, to date, has been to let 5GC Network Functions (NFs) [CJH1] suppliers implement their own stack platform in what leads to dedicated clusters. Most vendors’ 5GC offerings support several cloud infrastructure stacks, including the vendors’ own Network Functions Virtualization Infrastructure (NFVI), cloud-native infrastructure solution on bare metal, telco cloud stack, and Third-Party Provider (3PP) cloud infrastructure (e.g., Canonical, Red Hat, and VMware).
Ericsson is a case in point. ABI Research estimates that only 15% to 20% of 5G deployments, to date, are on three-layered, decoupled stacks where players like Canonical, Red Hat, and VMware provide the abstraction layer. There are three decision points for CSPs as far as cloud stack selection goes:
- Establishing demarcation points between 5GC’s cloudified network functions and network elements still in physical form.
- Establishing a cloud-native blueprint for suppliers to deploy their software against, not the other way around.
- Maintaining control and design of key 5GC components.
There are some 5GC deployments on Hyperscale Cloud Provider (HCP) stacks. They are on a Proof of Concept (PoC) basis and focus on vertical industries. DISH, for example, uses Amazon Web Services (AWS) for its 5G rollouts; anecdotal data points from the industry suggest that less than one-third of DISH’s workloads are currently hosted on AWS. AWS, Google Cloud, and Microsoft Azure have a place in the ecosystem as reflected in numerous ABI Research market intelligence reports. But, in the near term, CSPs are likely to host their core network workloads in on-premises cloud stacks.
The opportunity for HCPs to host voice and data workloads is a function of performance in terms of functionality and reliability, but also a function of security, data sovereignty, and cost. For voice, but also for some data workloads, according to some industry voices, and as covered in ABI Research’s deliverables in 2022, there remain core network functions for which CSPs need to optimize for performance. That, for the time being, may be easier achieved with owned and proprietary on- premises Data Centers (DCs).
5G Devices, Smartphones, & Wearables Trends
5. Foldable Devices Will Become More Mainstream
Foldable devices are growing steadily, and will surely become mainstream in the near future. The year 2023 is going to be the one for foldable devices, as Original Equipment Manufacturers (OEMs) are betting high on the emerging set of modern designs and form factors. The foldable device category was led by Samsung (Fold series and Flip series) for some years and can be seen growing with brands like Huawei, vivo, Motorola, and OPPO joining the bandwagon and launching foldable devices. The trend is expected to increase as more consumers are becoming attracted to this new form factor. ABI Research forecasts that almost 22.5 million foldable phones will have shipped in 2022, reaching around 68 million units in 2025 at a Compound Annual Growth Rate (CAGR) of 77.9%.
Foldable devices offer a new user experience to consumers looking for the convenience of a smaller phone without having to compromise on the screen size. Huawei, Motorola, Xiaomi, vivo, etc. are all launching the foldables phones, but are limited to geographical regions. ABI Research expects that the price of these devices will come down in the coming years, and the demand and geographical presence of these devices will increase in the years to come.
6. AI in Smartphones Will Become More Prominent
Artificial Intelligence (AI) is a technology that continues to grow rapidly every year with groundbreaking innovation and use cases taking place every year within the tech industry. From healthcare to self- driven cars and from manufacturing to entertainment and gaming, AI will be prevalent in 2023. It is also expected that, by 2023, AI will have reached a point of being the single most game-changing invention in the history of mankind.
Talking about the smartphone domain, AI has been one of the most important aspects in terms of innovation in smartphones. Voice assistants and smart photos already being part of AI in smartphones has changed the way consumers are capturing images and interacting with their smartphones. Chipset vendors like Qualcomm and MediaTek have also launched their latest flagship models Snapdragon 8 Gen 2 and Dimensity 9200, respectively, with a prime focus on AI. Both chipset manufacturers have already highlighted advanced AI use cases like sharpest and brightest cameras, immersive multimedia, gaming, security, and several other features. We note that smartphone vendors have already joined up with these chipset manufacturers to display the AI use cases and latest innovations in their devices in 2023.
7. Growth in Wearables Will Continue Post-Pandemic
The wearables market is poised to grow as the latest technologies and use cases are introduced every now and then. ABI Research forecasts that the total wearables market will reach around ~700 million by 2027 with a CAGR of 12.8% calculated from 2022 to 2027. Wearables that were once treated as “nice to have” devices have now become a necessity for consumers due to the increased adoption of the IoT and the increased use of technology by the population. ABI Research expects growing demand for connected devices in the wearables industry (especially healthcare), which will take the wearables market to a new level in the coming years.
The OEMs will play an instrumental role in providing portable and simple form factors that will help the wearables industry grow in the years to come. We can already see traction of technology like bone conduction headphones, which are becoming an eye catcher for many consumers. The introduction of the Aura Ring and Whoop band to track the fitness regime of sports persons is also becoming quite common now. Increased cases of chronic diseases like cardiovascular diseases and obesity will lead to a larger demand for wearable devices.
The next few years will be very exciting for the wearables industry as the use of sensors and digitally-equipped wearables increases, making healthcare a core center of innovation for wearable devices. ABI Research also expects growth in the smart clothing category, driven by a huge demand for monitoring body activities used in various end-user industries like sports, healthcare etc.
8. Healthcare Wearables Will Become More Prevalent
The wearable technology market is flourishing with the latest innovations. Healthcare wearables like fitness trackers, smartwatches, biosensors, and blood pressure monitors have witnessed a booming demand lately and will become more prevalent in 2023 with more consumers focused on health and overall wellbeing. All of these wearable devices have largely been driven by fitness trackers in the past as people wanted to keep fit during the COVID-19 pandemic, but going forward these devices are expected to play a bigger role in the medical sector. We can already see the use of the Internet of Things (IoT) and real-time analysis of data in the medical and healthcare field, and this trend is going to be prominent as medical wearables will play a pivotal role in shaping the future of wearable devices in the healthcare industry.
What’s really driving this trend is the availability of sensors that measure health-related data by becoming more sophisticated with better algorithms that interpret huge and fast amounts of data. This is done with the help of the computing power that can be packed into tiny devices called wearables. Smart home healthcare wearables can capture multiple parameters, including counting steps, measuring heart rate and temperature, tracking your sleep, etc.
Medical wearables, such as Continuous Glucose Monitor (CGM) systems, can also help treat and monitor patients with precision. Long-term monitoring will drive preventative care and actions, resulting in more reliability on these healthcare and medical devices. The use of these advanced devices can send the patient’s health information to doctors in real time, saving time and enabling the patient to take precautionary measures as instructed by the doctor.
9. Smartphone Sales Will Not Bounce Back to Pre-Pandemic Levels
Changes in consumer behavior caused by the pandemic have had a direct impact on some device sectors, creating spikes in demand for items like tablets, notebooks, wearables, and accessories, which is due mostly to the increase in home working, remote learning, and online entertainment consumption. However, demand for such devices contracted in 2022, which was not only as a result of the hangover from pandemic lockdowns when consumers loaded up on such products, but also because these devices tend to be more discretionary, inflationary-sensitive purchases.
Despite countries finally starting to emerge from the pandemic, and as the industry gradually witnesses supply chains, consumer confidence, and demand slowly return to some level of normalcy, the highly challenging economic climate, geopolitical volatility, and inflationary pressures have conspired to outweigh any growth potential, tempering device demand, which is set to move well into 2023. Indeed, current market uncertainties are becoming a major impediment to the development of the device ecosystem and vendor landscape in some countries and sectors, potentially facing a much longer road back to economic recovery so that conventions and behaviors in the mobile devices’ ecosystem will inevitably be severely challenged in the longer term.
10. Industry’s Move to 5G Will Not Boost Penetration of the Connected Laptop Market … Yet
For a long time, the devices industry has been eager to develop always-on mobile connected notebooks to enable users to enjoy broadband experiences on the move. However, the market has witnessed a series of false dawns as OEMs’ efforts to achieve this objective have had little success, even now with the prospect of adding 5G, which is due to a number of technical and business challenges. Chief among these is making cellular modems central to the device reference design, which has, so far, been considered as just an add-on feature by notebook OEMs, meaning that performance and battery life are not necessarily optimized.
For the convergence of mobile and notebooks industries to happen, they will both have to position 5G connectivity as a central feature in the design of 5G notebooks and Personal Computers (PCs), with a focus on long battery life, thin and light designs, and always-on, always connected experiences. Partnerships, such as the one between Intel and MediaTek, could be crucial to finding success and delivering enhanced, next-generation mobile compute experiences.
Moreover, with Apple moving to Arm-based chips for its notebooks, it could signal a significant step toward 5G integration and “always-on” connectivity in the company’s notebooks, providing the impetus that the industry has craved to bolster demand in the sector. However, with Apple now not expected to announce the launch of its own 5G modem until 2025, the cellular connected laptop market may have to wait a little longer to see if its promise can be realized.
11. 5G Will Not Appear in Consumer Wearables, but Wait for 5GG RedCap
While wearables can benefit from cellular connectivity, giving them greater freedom from being tethered to smartphones and allowing wearers to use them on the go, 5G wearables are still not expected to be seen in 2023. Component manufacturers have yet to announce any 5G chipsets for wearables and are not expected to do so any time soon, as the market potential is small with few device shipments compared to other mobile devices.
For the time being, market demand for cellular connectivity in wearables can be served adequately by 4G, while there is added complexity of fitting the required 5G components in a small form factor. However, all is not yet lost in the sector because with the gradual evolution of 5G, The 3rd Generation Partnership Project (3GPP) will be introducing Reduced Capability (RedCap) New Radio (NR) under Release 17, Release 18, and beyond, which is termed a “light” version of the 5G standard. RedCap addresses devices with cost and energy- constrained use cases, aiming at products that are far less complex, cheaper, have good battery life, and require less bandwidth than current 5G NR products. Specifically, RedCap is aimed at specialized devices and consumer wearables, falling right within the sweet spot. However, with RedCap consumer products not likely to arrive until 2025, the cellular connected wearables market is unlikely to see any fundamental changes in the short term.
5G Markets Trends
12. Increased 5G Standalone Deployments in Asia-Pacific Expected to Enable More 5G-to-Business (5G2B) Applications in 2023
Our next technology trend for 2023 is the push for 5G SA deployments in the Asia-Pacific region. 5G Network Slicing (NS) is considered a key technology for 5G cellular connectivity for enterprise vertical applications. NS enables enterprises to run multiple logical networks on a commonly shared infrastructure spanning multiple domains (radio, transport, core, and edge), promoting flexibility and dedicated network slices customized for different enterprise use cases. For example, in the context of a smart port, a low latency network slice can be provisioned for remote-control or autonomous operations, while a high bandwidth slice can be provisioned for High-Definition (HD) video surveillance applications. In the real world, NS has been successfully deployed to enable various use cases, such as the remote control of Rubber Tire Gantries (RTGs) at the Ningbo-Zhoushan Smart Port in China and enabling smart healthcare applications at the West China Second University Hospital.
5G NS is expected to ramp up over the next few years as more Communication Service Providers (CSPs) in Asia-Pacific begin to roll out their 5G SA networks, which is required to support commercial 5G NS services. For example, in October 2022, CSP Reliance Jio Infocomm Ltd. announced a partnership with Ericsson to roll out its 5G SA network in India. Australian CSP Optus also announced that it had launched its 5G SA network that will support 5G NS among other capabilities in August 2022, while Singaporean CSP Singtel announced that it had reached more than 95% of nationwide coverage for its 5G SA network in July 2022. ABI Research expects there to be a large opportunity for 5G2B growth in the Asia-Pacific region, with 5G NS revenue forecast to grow from US$151 million in 2022 to US$12.6 billion in 2028 (a CAGR of 109%).
13. 5G Chipsets Will Start to Deliver on Promised Features for Industrial Use Cases
The industry has been waiting for vital 5G enterprise features like deterministic networking or Ultra- Reliable Low Latency Communication (URLLC) since the first talks about 5G began back in 2019. The implementation of these features into chipsets and devices has taken its time. Despite all relevant standardization work having been completed in the Summer of 2020, these chipsets and devices have not yet appeared within the market. As even the last technology difficulties have been ironed out, ABI Research is convinced that the first industrial-grade devices compatible with 3GPP’s Release 16 will emerge in the market in 3Q 2023.
While ABI Research believes this will certainly change gears when it comes to enterprise 5G, a much larger-scale rollout of devices and chipsets would be needed— currently scheduled for 1Q 2024, which will further propel the adoption rate of 5G connectivity within enterprise verticals.
14. Outdoor Use Cases Will Drive Private Cellular
What has started throughout 2022 already will continue and become even more prominent in 2023. Old battle lines between Wi-Fi and, specifically, 5G are reappearing, as the most tangible value proposition for enterprises seems to be the fact that, in comparison to Wi-Fi, private cellular (and 5G specifically) will be able to bring connectivity to particularly large and remote coverage areas. A private cellular network will be able to connect these outdoor sites (e.g., oil or gas fields, airfields of airports, or shipping ports) much more efficiently than other wireless connectivity technologies (e.g., legacy Wi- Fi), which creates a tangible value proposition for enterprise owners and managers.
For indoor deployments, on the other hand, the value proposition will remain weaker, as other wireless connectivity or even fixed access technologies could be a cost-efficient alternative to cellular connectivity—let alone 5G.
15. Private 5G Will Not Take Off in 2023
In line with critical enterprise 5G features (URLLC and Time-Sensitive Networking (TSN)) only starting to appear in commercially available chipsets by the end of 2023, Release 16-capable industrial-grade devices will be available at scale by 1Q 2024. As only the large-scale availability of Release 16-capable chipsets will drive down device costs (and ease the Private 5G value proposition), it is expected that 5G will begin to pick up only after the beginning of the next year.
As a consequence of this delay, 4G Long Term Evolution (LTE) will remain the dominant cellular connectivity technology until at least 2027, when ABI Research forecasts the inflection point, i.e., when 5G connectivity will contribute more to enterprise revenue.
16. Legacy Telco Industry Actors Will Fail to Grasp Long Tail of Enterprise Cellular
While certain traditional telco infrastructure vendors celebrate a noteworthy performance for enterprise cellular, ABI Research believes they will fail to grasp the long-term enterprise opportunity as they remain trapped in their consumer market legacy. The consumer market is governed by a completely different sales process than the enterprise domain. While in the consumer domain, the relationship between infrastructure vendor and network operator is very one-directional at a single point in time (infrastructure vendor sells equipment to network operator). Further, enterprises require a much more bi-directional, almost consultative approach, in which network infrastructure might also be consumed in an as-a-Service model (depending on the investment capabilities).
New kids on the block, i.e., Open Radio Access Network (Open RAN) vendors, hyperscalers, private network operators, or System Integrators (SIs), on the other hand, do not have this consumer market legacy. Therefore, newcomers can engage in a much more consultative approach to meet enterprise requirements and realize their desired use cases. This agility, flexibility, and responsiveness will resonate well with enterprise verticals, especially if the private cellular market remains in its nascent stages.
5G & Mobile Network Infrastructure Trends
17. Investment in Asia-Pacific RAN 5G Network Infrastructure Expected to Grow to US$130 Billion in 2023
Investment in 5G Radio Access Network (RAN) infrastructure is by no means over. Countries across the Asia-Pacific region are at different stages of development. China, South Korea, Japan, and Singapore are the most advanced in terms of RAN coverage and capacity rollout, while other markets are catching up. ABI Research forecasts outdoor infrastructure equipment sales to exceed US$86 billion in 2023, including radios, small cells, and macro basebands. Furthermore, 5G Massive Multiple Input, Multiple Output (mMIMO) shipment sales are set to increase to US$30 billion (see ABI Research’s Network Technology and Market Tracker market data (MD-NWMT-106)).
The determination to accelerate 5G deployment is also being felt in other areas. Network sharing and joint ventures between telcos are an established part of the European, North Asian, and North American cellular landscape, but cell site tower sales and greater collaboration are expected to take place in South and Southeast Asia in the coming years. However, stakeholders need to get the economics right. Average Revenue per User (ARPU) in India is just US$33.59 per month. This has an impact on the economics of leasing space at cell sites. Operators in India, for example, have been reluctant to adopt network sharing practices, despite policies being in place from the government and Telecom Regulatory Authority of India (TRAI).
There is interest in Open RAN in Asia, but operators are still very much in a wait and see mode. Open RAN developments in Japan are leading in the region. In 2023, it is expected that Open RAN developments will pick up pace in Thailand, Singapore, and South Korea, given that Japanese CSPs NTT DOCOMO and Rakuten Mobile have established presences in these areas. ABI Research forecasts the revenue in Open RAN small cell radio shipments to reach US$4 billion in Asia-Pacific.
18. Commercial Rollout of 5G-Advanced Unlikely to Take Place in Asia-Pacific in 2023, Despite the Progress Made in 2022
5G-Advanced, underpinned by the 3GPP’s Release 18, was ratified as of December 2021. 5G-Advanced has several innovative features, such as mMIMO upgrades, enhanced mobility, and integrated access backhaul with AI- and ML-driven frameworks. Operators in Asia are expected to step up and adopt 5G-Advanced, but adoption in 2023 is likely to be limited to trials and selective rollouts in Northeast Asian markets. 5G rollout in Asia is still largely focused on the RAN dimension.
5G-Advanced is likely to gain more substantial traction in 2024, with countries in Asia taking until 2025 to appropriately complete upgrades pertaining to RAN, Core, and cloud-based network functions of 5G that will allow for 5G-Advanced. Despite this, equipment spending for RAN and Core upgrades remain high for 2023. For instance, RAN Capital Expenditure (CAPEX) for eight countries in Asia-Pacific, including Australia, China, India, South Korea, Japan, Singapore, Thailand, and Vietnam, essentially remains steady at US$52 billion between 2022 and 2023. Conversely, Core CAPEX for the same eight countries will increase to US$22 billion in 2023, up from US$20 billion in 2022. If executed seamlessly, the Asian market for 5G Advanced will accelerate the evolution to 6G by 2030.
AI & Machine Learning Trends
19. TinyML Will Reach Wherever There Is Relevant Environmental Data to Analyze
TinyML is most useful in environmental sensors, given the size requirements and compute capabilities. And there are many possible use cases to be had; consider any kind of sensorial data from the environment that can be attended to and there is probably an ML model that can be applied to that data, with sound sensors as the most prominent in the market right now, with close to 50% share.
Considering the very large number of potential use cases, however, it is very important that vendors concentrate on those applications that TinyML can, in fact, be useful for. Vendors will have to work out a clear value proposition prior to production, and given the physical constraints of the hardware in which TinyML models are embedded, software and hardware specifications of these models are closely intertwined, so they must be aligned carefully.
In particular, the software tools to optimize TinyML models must be optimized for the particular hardware systems in which they operate. But whatever is out there to measure–people detection and counting, speech detection, object recognition, word spotting, what have you–there will be a TinyML model to turn valuable data into action.
20. Generative and Multimodal AI to Drive Next Phase of Cloud AI Growth
Generative AI has taken a significant step in 2022. This is largely due to continual advancements on large language models (transformer) and text-to-image models (stable diffusion). Trained on large amounts of text and image data, generative AI models are multimodal in nature, capable of linking information from various sources, including image, text, and audio, and producing relevant content that closely resembles what a human creator can do.
When deployed as cloud-based tools, these models will help augment creators in enhancing product quality and accelerating time to market. No doubt, the industry will need to address several concerns around generative AI, including data and infrastructure security, copyright and distribution rights, ethics and accountability, user safety and privacy, and governance and supervision, but do expect lots of interest from enterprise software vendors and content creators. The content generated in online video, social networking, and gaming is expected to be a US$2 trillion dollar market by 2030. Clearly, the technology requires large amounts of AI computing power, which will fuel the deployment of more AI data centers and servers. Public cloud companies will also continue to invest in creating generative AI models that have more explainability to meet regulatory requirements, and data governance and infrastructure security will continue to be upgraded as AI becomes more common and widely deployed.
21. ChatGPT Has a Long Way to Go Before It Can Revive Voice Assistants
And why not? Voice assistants like Amazon Alexa are being phased down and conversational chatbots like ChatGPT are proving quite dexterous at certain tasks and interactions. Indeed, Alexa is meant to offer some voice interaction, follow orders, and connect to other smart appliances in the house, and it does so by employing only so-called weak versions of AI, so why not upgrade these assistants to be smart voice services?
Unfortunately, large language models, such as ChatGPT, are effectively auto- complete text machines that have been trained on large datasets of real human texts (and speech), so they do not actually “do stuff” in the world—they spit out words, not actions, nor can they call up any other apps. Such language models are also rather unreliable and wild; they cannot only make mistakes and imagine facts and events, but they can also provide terrible advice and insult others, and no vendor will be willing to deploy such systems if there is any possibility of a lawsuit coming their way. Moreover, chatbots like ChatGPT may never be able to infer user intent exclusively from what users say; thus, turning it into a product that can control one’s home in a way that can be scaled to millions of homes is a long way off.
22. No-Code AI Will Not Fully Democratize AI
The need for AI in enterprise augmented reality applications has grown, but companies with internal AI skill sets remain limited. AI technology suppliers have been hard at work in 2022 introducing various no-code AI solutions with the goal of making AI development more accessible to broader groups of companies. Unfortunately, this will remain very challenging in 2023. First, small and medium-sized companies are still finding it difficult to compete with public cloud companies and large AI technology suppliers for AI talents.
Second, AI adoption in many industries is subject to heavy scrutiny, especially in regulated industries, such as banking and finance, automotive, international logistics, and public safety. These industries require AI to have a high level of transparency and explainability, so companies need to have the ability to develop AI solutions that can fulfill these requirements, while abiding to the specific rules and regulations.
Finally, new AI use cases are emerging at a rapid pace, especially at the edge in end devices. Currently, no-code AI platforms excel in mature and standardized processes, such as invoicing, contract validation, visual inspection, and Optical Character Recognition (OCR), but still have difficulties supporting new and innovative AI use cases, such as Natural Language Processing (NLP) at the edge and industrial arm manipulation. AI engineers and scientists will need to create, train, and optimize custom AI models. In conclusion, companies that are interested in AI must consider either investing in hiring AI talent or working with a third-party AI solution provider, instead of relying solely on no-code AI platforms for their AI applications.
Augmented & Virtual Reality Trends
23. An Enterprise VR Renaissance
The year 2022 saw companies looking toward Virtual Reality (VR) increasingly often. Training, far and away, was the leading use case both discussed and implemented. The year 2022 also saw the confirmation and/or release of a handful of notable enterprise VR devices to spice up the competitive environment, including the Meta Quest Pro, Lenovo VRX, and Pico 4 Enterprise. These devices all improve the visual experience with pancake optics, as well as enhance the camera passthrough experience. VR training offers infinite adjustment and repetition, which cannot be met with other training methods. Academic studies universally show positive knowledge retention and recall impact with VR training—always moderate, sometimes substantial. There is also the remote/off-site element for VR training that shows similar value to remote assistance: cost and downtime reduction.
Return on Investment (ROI) remains the leading reason for adoption, perhaps as expected, but positive secondary benefits are seeing more attention as well. VR training and sustainability are intrinsically tied to ROI when it comes to Extended Reality (XR) devices, such as remote assistance saving travel costs and travel emissions. Sustainability messaging varies in importance by region— Europe has been leading the sustainability charge, with XR a key element for many companies. Other regions still lead with ROI over sustainability, but the two are increasingly becoming level.
24. Blurring the Lines between AR and VR
ABI Research takes a relatively straightforward approach to XR device classification to make quantitative data and forecasting succinct: devices with see-through displays (or glanceable displays) are Augmented Reality (AR), while devices that fully obscure user vision are VR. Passthrough VR devices are challenging that definition, though. This is most notable with the latest enterprise VR devices in the Meta Quest Pro, Lenovo VRX, and Pico 4 Enterprise: using high quality real time camera passthrough is increasingly common. These devices all improve the camera passthrough capabilities, and in some cases (Meta), the go to market seems to favor augmented/mixed reality messaging and usage over traditional VR.
It is too early to say whether these devices will truly supplant AR devices, as there are both benefits and drawbacks. On one hand, high-quality camera passthrough allows a single VR device to serve in both AR and VR capacities, while adding value to a pure VR use case. On the other hand, there are valid safety and usability concerns relying on cameras for environmental vision. It is likely that passthrough will remain mostly a VR value add, rather than an outright AR replacement for these reasons, but it is not a clear differentiation any longer.
25. A Competitive Consumer Smart Glasses Market Will Not Happen
While VR will see a handful of notable releases and enterprise adoption, the consumer AR ecosystem still needs more time to develop. Apple and Google alone dictate when consumer AR glasses will become desirable, with both companies targeting 2024 (tentatively) for smart glasses. Competitors, of course, will both beat these companies to market and follow afterward, but none can offer the same sway and impact. Apple will hit the broader XR market first with its high-end VR device in 2023, but that is a different device class than consumer smart glasses both in capability and price.
That being said, the content ecosystem has been maturing and growing even without consumer Head- Mounted Displays (HMDs), which will allow these devices to support adoption quickly. The mobile device segment has significant support from both Apple with iOS and Google with Android, and will certainly play a prominent role as host devices for any eventual consumer glasses. Efforts in creating development tools and ecosystems have been ongoing for years, and many features of mobile device AR can carry over to smart glasses easily when that development environment is shared.
Citizen Digital Identity Technology Trends
26. Digital ID Wallet Adoption Will Quicken as the Mobile Identity Market Continues to Develop
ABI Research forecasts the Mobile Identity (mID) market to grow from 425 million credentials in circulation globally in 2022 to more than 1 billion by 2027, as the significant transformation toward increasingly digitized identity systems continues.
Recent developments surrounding the digital identity wallet form factor of mID, as a successor to existing mobile identity technologies, largely play into this growing uptake. Merging the physical with the digital is becoming increasingly prevalent to provide solutions that can be used both online and for physical interactions. This is catered by the next generation of wallet-form mIDs, which are seeing increasing implementation.
These technologies enable a greater user experience versus their more fragmented predecessors in streamlining and augmenting the security of verification processes. As a result, this eases administration and aligns with digitalization and remote online access across industries and in eGovernment. A call to encourage adoption, and wide usability through a range of public-private partnerships has been made by governments and the private sector, spurring mID uptake to the mutual benefit of all parties.
Regulations and standards are being developed to enable secure and expanded applications of mIDs, notably the September 2023 Electronic Identification, Authentication and Trust Services (eIDAS) revision, where a European interoperable ID is soon to come and employ wallet technologies. The International Organization for Standardization (ISO) 23220’s expansion on ISO 18013 to extend mID regulation beyond driver’s licenses to all credential types is indicative of progression toward such mobile forms of identity becoming a mainstay across a wide range of credential types to be ubiquitously used by citizens.
Concerning digital wallets, other OEMs, including Samsung and Google, will soon join the fray alongside Apple in mobile driver’s license enablement (most notably in the United States), with other identity documents’ support and integration in development. OEMs’ wallets sit alongside traditional identity system integrators’ offerings, forming a competitive multi-wallet ecosystem with huge growth potential as more and more governments and administrative regions embrace a mID solution.
Cybersecurity Applications Trends
27. Post-Quantum Cryptography Market Kicks Off
In July 2022, the U.S. National Institute of Standards and Technology (NIST) announced four post- quantum algorithms for standardization: CRYSTALS-Kyber, CRYSTALS-Dilithium, Flacon, and SPHINCS+. The official standards are expected to be released in 2023 to 2024. The cryptographic algorithm development process, and their enshrinement into standards, is a multi-year endeavor; and only the first step in their eventual integration into the digital world. They then need to be adapted to existing technology protocols, and tested in various settings and configurations. The NIST process has been ongoing since 2017, but is now reaching the final stages. Post-Quantum Cryptography (PQC) development and integration into industry solutions will largely leverage NIST, and eventually Internet Engineering Task Force (IETF) standards, so NIST’s announcement is a big deal. The progress of work in these fora will be a sign of technology maturity and the goal will be to present “plug and play” types of technologies for industry, which will make commercial integration and adoption easier.
The NIST announcement provides the impetus for developing frameworks and timelines around which industry can start strategizing technology integration/migration, creating transition road maps, appointing responsible parties, and allocating dedicated budgets. Consequently, Research and Development (R&D) will intensify from PQC solution providers, and productization has been kick-started with this announcement. In 2023, first movers and invested stakeholders (notably those companies helping to develop the standards) will intensify their activities and start educating industry on the need to start paying attention to PQC, and planning for the transition. This will be a long and involved effort no doubt, but one that will see some significant traction in 2023
Digital Payment Technology Trends
28. Tap on Phone Payment Acceptance Will Benefit Both Users and Businesses
ABI Research perceives the drive toward tap on phone payment as the next step in the wider trend championed by neo and challenger banks of eliminating barriers to entry in payment acceptance for businesses. This is simply achieved through easier and less expensive smart devices, and seamless onboarding processes and enrollment for the majority of businesses. The development and expansion toward tap on phone payment will bring benefits across the market, but particularly to a number of key areas described below.
- Emerging Economies: Smaller merchants occupy around 40% of the income for emerging economies, with only 10% of these merchants ready to accept digital payments as of 2022. The growth of tap on phone and proliferation in local shops and merchants would prove to be the simplest way for such businesses to accept digital payments and tap into a significantly underrepresented market segment.
- A Backup Option: In the event that the primary Point of Sale (POS) system does not work, or it cannot be brought to a remote market location, the tap on phone capability will provide a consistent backup and ensure there is no shortfall in the availability of taking such a payment.
- The Move to a Cashless Society: Tap on phone will provide a launchpad for economies that are seeking to move to a cashless society; a trend seen in Europe and other developed economies like the Nordics. This will also prove useful in the event of regulatory enforcement for digital transactions, as happened in Denmark, where regulators announced they will require certain types of businesses to use a digital cash register, such as a POS terminal, for transacting by 2024.
- Card-Not-Present Transactions: Tap on phone should see high uptake in businesses that operate primarily remotely, such as Internet-first retailers, but need to accept in-person payments on occasion.
29.The Cold-Storage Wallet Market Will Not Grow Quickly in the European Space
As Europe is exploring stringent crypto regulation for self-custody devices, this has the potential to pose a risk to the cold wallet market. The European Union (EU) has, in 2022, proposed legislation that, if fully ratified by the European Parliament, would restrict Virtual Asset Service Providers (VASPs) from transacting with unhosted wallets without first confirming ownership via Know Your Customer (KYC), as well as requiring them to report all crypto transactions worth more than €1,000 to relevant anti-money laundering authorities.
In this definition, the EU considers an unhosted wallet to be a non-custodial wallet managed entirely by an individual, including both cold wallets, such as Ledger, Trezor, and Arculus, as well as hot wallets, such as MetaMask. If this legislation is passed, then such devices and solutions would be prohibited within the EU space, and the only crypto wallets ratified to operate in the European space will be those that uphold KYC to regulatory-approved standards.
ABI Research envisions this very much restricting the ability of solution providers and Decentralized Autonomous Organizations (DAOs) to operate within the EU over the next few years. Transactions between non-custodial wallets and centralized exchanges would become far more expensive and obfuscated due to data collection requirements.
Furthermore, innovation and new business in the wallet market will be stifled, with crypto companies with less capital having no option but to restrict transactions to self-hosted wallets or risking not being able to verify unhosted counterparts, which may compromise the legality of their operations, severely impacting their market competitiveness. On the other hand, smaller market entrants may see compliance operational costs become too high, withdrawing from the market altogether and resulting in market consolidation and stagnation.
Also, pay close attention to the emergence of Central Bank Digital Currency (CBDC) wallets as governments embrace cashless societies.
Distributed & Edge Computing Trends
30. Widely Talked about Telco-Hyperscaler Edge Partnerships Will Finally Show Progress with Widespread Network Edge Deployments
Hyperscaler-telco partnership agreements have emerged over the last couple of years as both of these parties look to climb higher up the digital value chain. So far, AWS Wavelength (in partnership with various telcos) has led the way with deployments in Europe, Asia-Pacific, and North America, but 2023 will be the year that the rest of the market catches up. Google Cloud Platform’s (GCP) acquisition of MobiledgeX (in early 2022) will have matured and be used as the foundation upon which to accelerate global deployment. Customer-led trends away from the public cloud toward localized deployments in line with data sovereignty will force hyperscalers to quickly diversify their service capabilities through smaller, localized, edge deployments.
31. Further M&A Activities in a Fragmented SmartNIC and DPU Market as the Modern Data Center Evolves and Intelligent Architecture Takes Center Stage
The SmartNIC and Data Processing Unit (DPU) ecosystem will further consolidate, as the buzz around intelligent architecture continues to grow. Larger vendors will start to look at how they can provide an end-to-end full-cycle solution offering, acquiring smaller niche vendors that solve a workload-specific challenge in a specialized industry. Data center infrastructure providers, such as server, networking, or security vendors, might explore integrating intelligent accelerators into their data center solutions, offering a compelling value proposition to customers, encompassing core infrastructure, as well as hardware acceleration capabilities.
32. Widespread Enterprise NaaS Deployment Will Not Come to Fruition as Financial Worries Make Executives Increasingly Risk Averse
Widespread enterprise Network-as-a-Service (NaaS) deployment will still not happen, as its value proposition is unlikely to resonate with enterprises in a fiscally-constrained market. Enterprises remain skeptical about a consumption-based pricing model, as monthly bills compound financial and operational risk. Additionally, the perceived higher Total Cost of Ownership (TCO) coupled with financial pressures to cut costs means that executives are unlikely to see through to NaaS’ potential operational value (technological refresh and accelerated “time-to-value”). Overcoming enterprise financial skepticism requires CSPs to introduce innovative pricing strategies with effective cloud FinOps tools, as well as pursuing partnerships with SIs to ease vertical deployment uncertainty.
33. Mass Commoditization of Intelligent Accelerators Will Not Happen Due to the High Entry Barrier of Adoption for Enterprise Organizations
The current use of intelligent accelerators, such as Smart Network Interface Cards (SmartNICs), DPUs, and Infrastructure Processing Units (IPUs) revolves around large data centers, with cloud hyperscalers and CSPs having the most compelling benefits in deploying these accelerators, designed to address new-generation workloads that create and consume large amounts of data. However, the high cost and specialized programming resource capabilities needed to deploy these accelerators are prohibiting enterprise-wide adoption. Although intelligent accelerator vendors are starting to focus on enterprises, efforts are still fragmented, with no clear go-to-market strategy for addressing this area of the market. This situation will persist and mass commoditization of SmartNICs, DPUs, and IPUs for the enterprise market is not expected to happen in 2023.
Industrial, Collaborative & Commercial Robotics Trends
34. The Mobile Robot Market Will Remain the Fastest Growing Segment in Robotics
Mobile robots will keep expanding use cases to markets that are a bit underserved by robotics right now, such as agriculture, construction, and mining, and the ever increasing level of autonomy of robots will be a testament to that. New technologies, such as teleoperation and 3D Light Detection and Ranging (LiDAR)-based Simultaneous Location and Mapping (SLAM), will contribute to supervised and unsupervised autonomy in robots. This makes robots ever safer and more efficient—key to adhering to industrial robot safety standards.
The largest application for mobile robots, in general, remains material handling within contained and structured environments. Mobile robots are increasingly being deployed outdoors, too, especially when equipped with 5G connectivity, and by the end of 2024, ABI Research forecasts that mobile robot shipments will reach 1 million by then.
35. Proprietary Robotics Software to Be Replaced by Hardware-Agnostic Software Platforms
As end users are constantly looking for more sophisticated robotics hardware to automate more workflows, they need to deploy different types of robots. Unfortunately, most, if not all, of these robots come from different vendors. At the moment, most robots are designed to operate as independent devices. The fragmented landscape of robots used in workflow automation makes managing them through a single software, such as a Warehouse Management System (WMS) or a common cloud platform a very complicated challenge. End users seek software platforms to facilitate large-scale rollouts through common development, rapid onboarding, orchestration, and maintenance.
Hardware-agnostic robotics platforms aim to resolve this challenge by providing a single platform that can accommodate all robots. They also offer motion planning templates, real-time simulation environments, integration of edge ML, and digital twin synchronization to all types of robots and components. With these developments, the maturing robotics software market will experience 17- fold growth in the next 10 years.
Another important feature of these platforms is their compatibility and support for Robot Operating System (ROS) and ROS 2. ROS software packages have been widely adopted in the industry. Compatibility with ROS is critical for roboticists and application developers, as it minimizes time spent on redesign and reconfiguration, and ensures quicker time to market
36. Global Uncertainties Will Not Slow Down Robotics Adoption
The adoption of robotics solutions is not slowing down, despite massive geopolitical and economic headwinds. Industrial robot deployment in manufacturing has barely slowed down due to COVID-19 and is expected to continue to grow in 2023. The recent International Federation of Robotics (IFR) World Robotics report showed industrial robot installation reached an all-time high in 2021, increasing by 31% over the previous year. The logistics industry is actively deploying fixed and mobile robotics automation to resolve supply chain constraints.
Businesses continue to face labor shortages due to short-term (global pandemic) and long-term (silver tsunami) reasons. As enterprises are expected to be more nimble and responsive to consumer demands, while being sustainable and environmentally- friendly at the same time, robotics automation is the only way to resolve this conundrum.
You can learn more about robotic technologies in manufacturing by reading our blog post, 11 Examples of Manufacturing Technologies.
37. There Will Not Be a Single Solution for Autonomous Robotics Navigation
Currently, most indoor Autonomous Mobile Robots (AMRs) are deployed using two approaches: infrastructure heavy and infrastructure free. The first approach (infrastructure heavy), predominantly adopted by Automated Guided Vehicles (AGVs), is QR code navigation. End users need to deploy QR codes or other fiducial markers across the operational site floor. AGVs will scan the markers to help them localize and identify the direction to their destination. Despite being relatively cost-efficient compared with other approaches, this navigation method requires greenfield deployment in a highly structured site.
In comparison, the infrastructure-free approach relies on vision-/camera-based SLAM or LiDAR-based SLAM in AMRs. Robots are equipped with Red, Green, Blue (RGB) and stereo cameras, proximity sensors, and Two-Dimensional (2D) and 3D LiDAR onboard to identify and analyze their surroundings, leading to high computational requirements for mapping, localization, and path planning. At the moment, the robotics industry is introducing new approaches that are considered infrastructure lite.
For example, 634AI deploys a camera system on the ceiling of the factory. The cameras capture and stream video to a central system that then acts as a control system by stitching all the videos together, guiding the robots. Opteran opts for mesh network-based swarm intelligence. Robots will exchange small packets of telemetry data and video streams with other robots within the same fleet constantly, allowing the entire swarm of robots to navigate based on a shared map that is localized, real-time, and dynamic.
Industrial Cybersecurity Trends
38. Increasing Government Regulation: Moderate Cybersecurity Demand Growth
Governments around the world, especially in the United States, Europe, and Southeast Asia, will continue to push for more cybersecurity regulation. Instead of general policy proposals, the trend is for them to demand specific action to prevent harmful breaches to critical infrastructure. A good example is a recent U.S. Transportation Security Administration (TSA) security directive asking train operators to designate a 24/7 cybersecurity coordinator.
While ABI Research expects that cybersecurity spending for Operational Technology (OT) and the IoT in critical infrastructure is expected to grow from US$10.7 billion in 2023 to US$21 billion by 2027 at a CAGR of 15%, 2023 might display slower rates due to looming economic recession and tighter fiscal controls. Moderate levels of cybersecurity spending in 2023 are not due to the lack of understanding of threats, or the absence of determination to mitigate risks.
The industrial sector increasingly acknowledges the importance of protecting OT from threats rising in Information Technology (IT) systems and is willing to address potential liabilities through increased investments in cybersecurity. The grim macro trends of the global economy though will dampen these efforts as a cautious 2023 outlook points to uncertainty, inflation, and a slower economy. Given a powerful greenback and the comparative resilience of the U.S. economy compared with energy-depraved Europe and uncertain COVID-19 policies in China, American companies are in a better position to maintain or increase cybersecurity spending.
39. Wide-Scale Remote Control of ICSs Will Not Occur
Wide-scale remote control of Industrial Control Systems (ICSs), though possible, are still a far-fetched scenario. Most incidents in the sector will still be malware attacks, phishing attacks to collect data, and ransomware attacks for financial gain. Although an attack leading to the control of physical assets is a nightmare scenario for the industrial sector, the probability is still comparatively low.
Attempts targeting ICSs are usually led by state-supported actors or highly motivated hacktivist groups. This means the majority of criminal cybergangs will still prefer to devise attacks that lead to immediate financial gain instead of long-term damage to industrial processes. Even in the case of state-supported attacks, Russia’s war against Ukraine reveals that Moscow still uses traditional missile strikes against energy ICSs, rather than cyberattacks.
Contrary to analyst estimates, it seems the Russians are not as cyber advanced to be able to replace physical attacks with cyberattacks against critical infrastructure. If a determined malicious actor, such as Russia, has difficulty controlling ICSs, other actors are likely facing even greater barriers.
Industrial & Manufacturing Market Trends
40. Digital Transformation Will Remain Imperative for Industrial & Manufacturing
Much has been said and written about the extreme pressures that Industrial & Manufacturing (I&M) firms continue to experience from rising costs of raw materials, energy, and labor; assuming they can secure supplies and recruit staff in sufficient numbers. Operationally, firms need to ensure their factories are run as sustainably as possible. In 2022, the financial community started using the acronym TINA for “There is No Alternative” in the context of investment decisions, and for I&M firms in 2023, there is no alternative to continuing their digital transformation programs.
Traditional automakers and their suppliers face the existential threat from the transfer to Electric Vehicles (EVs) and the need for digital technologies to design new products and components, as well as adjust their production lines. Oil & gas firms will lean heavily on data analytics to maximize production yield and manufacturers of electronics will continue to look to AI-based quality assurance for consistent results. Producers of food & beverages need digital tools to secure ingredients, optimize production lines, and demonstrate their Environmental, Social, and Governance (ESG) credentials.
While the acute pressure will continue in 2023, technology suppliers will need to focus on reducing the time required to deliver value to clients. Suppliers will need to corral stakeholders and clearly demonstrate how their solutions alleviate pressures and not get embroiled in endless Proofs of Concept (PoCs).
41. The Industrial Metaverse Will Not Take Shape …Yet
The year 2023 will not be the one when I&M firms invest vast sums in the metaverse. Staff will not be creating avatars and solving challenges in virtual worlds. The economic climate is not well-suited for large investments and there is no obvious way to generate value, such as virtual worlds.
I&M firms will invest in tools that create a digital thread, providing feedback loops between designers, engineers, and manufacturing teams. Moreover, strong financial investment into digital twins is expected. The digital twin software is designed to mimic machines, production lines, and facilities, as firms aim to use their resources more efficiently and sustainably. However, spending time working in the metaverse will be for another year. Indeed, paper record keeping remains a common practice in the pharmaceutical industry.
Industrial & Manufacturing Technology Trends
42. New Value Metrics Will Come to the Fore
Big ROI projects with undefined or lengthy periods of return simply do not cut it for industrial operators and manufacturers in the current macroeconomic environment. Manufacturers need to improve or maintain the current order of business through quick wins that solve immediate challenges and pain points, and suppliers want to ensure they are delivering that same kind of value to the customer. Software and as-a-Service-centric business models naturally reflect this orientation due to their ability to grow or contract with customer and market demand.
However, sales teams and implementation partners accustomed to selling products versus solutions, must come around to this new reality. Ultimately, the customer needs to be protected against risk and ensure the actions taken on any given day are the right ones. Projects that deliver fast Time-to-Value (TTV), such as lowering barriers to learning or onboarding a new task, or alleviating in-person travel via cloud-based collaboration tools are favorable compared to projects with a big ROI and long payback period. Instead, prioritize projects that deliver quick wins with incremental value that scales over time.
43. Lights Out Manufacturing Will Not Happen at Any Meaningful Scale
On a scale of 1 to 5, most manufacturers are at level 2 to 3 in their digital transformation endeavors. These industrial firms have begun the process of connecting wireless assets, integrating diverse data sources, and seeing the value of digitally-enabled solutions. But, these digitalization deployments have not fully scaled. Some exceptions, such as Mercedes’ Factory 56 facility in Sindelfingen, Germany, and the Tesla Gigafactory in Berlin are differentiated in terms of next-level integration and autonomy. That being said, most facilities are brownfield environments that need to retrofit sensors and manage the machines they have relied on for years.
Simultaneously, there is a new crop of solutions fueled by the cloud driving net-new capability including Everything-as-a-Service business models. Manufacturers of all sizes and industries are contemplating these solutions, but to varying degrees, and with different rates of adoption. Level 5 lights out manufacturing at scale is still a long journey ahead.
IoT Cybersecurity Trends
44. Unified IAM for the IoT Will Not Materialize
In their rush to digitally transform, organizations are expanding into IoT and migrating to the cloud, but their Identity and Access Management (IAM) strategies are falling to the wayside. Most are facing a significant crisis in managing machine identities, much of it due to the fact that they are jumping the gun on deployment without a solid IAM strategy in place.
The cybersecurity issue is that many are trying to extend their existing IAM and Public Key Infrastructure (PKI) to the IoT, without understanding the constraints and dynamics of managing such solutions for machines (and especially fleets of machines). Visibility, scalability, and configurability are critical issues, and will unfortunately not be resolved in 2023. Despite the emergence of pertinent and highly capable machine identity and adapted PKI solutions, the IoT landscape is still very much fragmented and users are not well aware of these new market solutions.
Key to solving these issues is security standardization on one end (and efforts like Matter in the smart home are strides forward in that sense), but also security education on the other from IAM vendors. PKI technologies are great enablers of IoT IAM, but getting that message across in a highly-fragmented and divergent ecosystem is no easy feat and will take some time.
IoT Hardware & Devices Trends
45. Cellular Smart Labels Will Not Reach Massive Volumes
Since the announcement of Bayer’s smart cellular, IoT-based label initiative in 2020, there has been intense excitement about how smart labels will grow the market. In the intervening 2 years, however, little in the way of commercial milestones has happened. Smart labels are certainly expanding at a rapid rate in the Bluetooth world, and a large number of products are coming to market and starting to explore use cases in the proprietary Low-Power Wide Area Network (LPWAN) world, but this has not been the case with cellular LPWAN smart labels.
A number of technical issues and commercialization issues have held the market back so far, and will continue to do so in 2023. In the coming year, new products and initiatives in the cellular LPWAN smart label market will be announced, and companies currently leading the market will launch their products commercially, but this will be more in the form of PoCs in the coming year, rather than full-blown commercial deployment. ABI Research expects cellular LPWAN smart labels in the medium term to hugely expand use case opportunities and contribute to Massive IoT, but this will not happen in the coming year.
IoT Markets Trends
46. Supply Chain Data Aggregator Companies Will Be Acquired
Within the IoT market, 2022 was the year of software. Data aggregators like project44, FourKites, Shippeo, and Overhaul have helped make supply chain visibility a reality in the past 2 to 3 years, leveraging both IoT and non-IoT data sources to help enterprises see, understand, and act within their supply chains. While the ability to aggregate data and generate signals is valuable, the greatest value from supply chain data aggregators comes when these capabilities are paired with the execution capabilities of enterprise systems, such as Enterprise Resource Planning (ERP), Transportation Management System (TMS), Warehouse Management System (WMS), and supply chain control tower solutions.
Companies already strong in software, such as TMSs, fleet management providers, or control towers, are increasingly looking to diversify the pool of data from which they can draw in order to optimize every facet of their customers’ supply chains and build out a comprehensive supply chain digital twin. Large companies strong on the supply chain hardware front are equally interested in moving up the stack and offering more actionable intelligence to their customers.
As a result, many of these software and hardware vendors are thinking very hard about making the leap with large acquisitions. The year 2023 will be the one when software becomes not a value-added differentiator, but a critical component of any vendor currently active in the IoT hardware market: this will be achieved partly with in-house building, and partly with acquisitions of large and small software specialists.
47. 2023 Will Be a Bumper Year for Energy Harvesting Startups
Energy and batteries for the IoT will continue to be a major topic for 2023, and will grow to be a more central consideration for IoT designers. From an Original Device Manufacturer (ODM) and technology solution provider perspective, energy harvesting allows the possibility of lower-cost devices and longer-life solutions, creating a more favorable ROI for assets requiring long-term connectivity. For adopters, sustainability pressures and overcoming IoT device maintenance problems make this technology an attractive proposition. In the past 3 years, energy harvesting companies for the IoT have started to proliferate.
During this time, these companies have all tended to be engineering experiments; however, many are reaching a stage when products are being commercialized at scale. In 2022, around US$110 million was invested in energy harvesting startups. In 2023, this number will continue to grow with ever larger funding rounds, helping to scale the technologies and popularize the concepts of Massive IoT and Ambient IoT. In addition, as the technology approaches and production processes mature, acquisitions of energy harvesting companies by semiconductor manufacturers are to be expected in the 2023 to 2024 time period.
48. Printed Electronics Will Not Reach Mass Market...Yet
One of the most interesting areas of growth for the IoT will come from printed electronic designs. There are multiple components of this: using conductive inks, metal etching, or Laser-Direct Structuring (LDS) for electronic circuit designs, or developments in the printed batteries world. Each of these will revolutionize what is possible from the IoT, enabling no-touch IoT embedded on various types of assets, such as envelopes or packages, at the production line and at massive volumes.
Many companies are currently working on developing technology and prototypes, and some initial partnerships between OEMs/ODMs and printing companies have started to be announced. Printed IoT will require traditional printing companies (e.g., vendors selling Near Field Communication (NFC) or Radio Frequency Identification (RFID) label/tag printers or tags) to expand their vision beyond their existing portfolios, and to modify how they go to market with customers at the production line and facility level.
These vendors are a crucial lynchpin to enabling printed electronics on a massive level, and to helping shippers, logistics providers, and packaging providers realize new opportunities enabled by more highly connected products. The market is still in its infancy, and 2023 will not be the year when the industry is transformed; however, 2022 has given us some of the first glimpses into what new printing technologies could bring to the IoT, and as the market matures in the coming years, technology vendors and adopters should start assessing considering what position they want to occupy.
Location Technology Trends
49. Bluetooth Positioning Will Solidify Its Place as a High Accuracy Solution
As the Real-Time Location System (RTLS) market has worked itself out, widely applicable positioning solutions have been leveraging Wi-Fi and Bluetooth for cheap hardware, widely compatible infrastructure, and a wide vendor ecosystem. In the high accuracy space, however, high accuracy solutions will leverage Ultra-Wideband (UWB) more often to provide sub-meter-level accuracy in more difficult multipath conditions.
While high accuracy Bluetooth Low Energy (BLE) Angle of Arrival (AoA) location systems have been available from vendors like Quuppa, the addition of AoA positioning to the Bluetooth 5.1 specification in 2019 led to a wave of commoditized solutions at a much lower price point than what was previously available (e.g., from u-blox, Silabs, Minew, and MOKOSmart). ABI Research expects that, in 2023, the Bluetooth RTLS market will be worth US$1.7 billion.
50. Hybrid Positioning Systems Will Bring Improved Visibility and Location Services
Robust location services need to provide reliable and accurate positioning across a range of environments. Effective location coverage will often include scenarios where people or assets will want to position themselves both indoors and outdoors or within noisy multipath environments, such as urban canyons. To address this location, solutions are increasingly leveraging multiple technologies, such as combining a Global Navigation Satellite System (GNSS) and BLE for indoor and outdoor coverage, using multiple RTLS technologies, such as BLE and UWB, for their individual performance benefits, or multiple implementations of the same technology, i.e., Bluetooth proximity beacons and precise Bluetooth AoA. These solutions can have the best of both worlds, compounding the individual advantages of technologies for coverage and efficiencies not achievable by single-technology solutions.
Hybrid systems will lead the way for new verticalized location use cases, such as navigating over campuses, hospitals, or end-to-end supply chain visibility. For example, hybrid tracking for the IoT and logistics allows for visibility both when in-transit and when at a distribution center. Consumers can navigate seamlessly during journeys, while ignoring the traditional limitations of GNSS in building and urban environments, and enterprises are able to introduce localized, high-precision infrastructure where necessary on top of building-wide RTLS. Efforts by wireless infrastructure providers, such as Cisco, Aruba, Juniper, and Extreme Networks, alongside device and technology vendors have led to a more open ecosystem able to support these hybrid solutions.
51. The Geolocation Markets Will Not Shift away from GNSS Just Yet
The efforts of a wide ecosystem of solution providers have meant that GNSS is no longer the only viable wide-area and outdoor location solution on the market. However, as the market evolves and despite its shortcomings, GNSS will retain a tight grip on market share. With IoT use cases, such as asset tracking and consumer tracking for wearables and smart tags, expected to be the largest drivers for increased device shipment volumes, LPWAN positioning, software and cloud-based solutions,
5G positioning, and Low Earth Orbit (LEO) satellite positioning, among others, all provide potential benefits in comparison to GNSS. This can include improved power efficiency, consolidation on communications and location for reduced complexity, or improved signal security through validation.
While these additional technologies bring promise, ABI Research expects that the majority of the market will stick to GNSS for the time being. Once matured, many of the alternative solutions will bring the same level of reliability and coverage as GNSS, but currently, LPWAN positioning is struggling with accuracy and reliability, acquisitions of key cloud-based location companies, such as Polte and Nestwave, have disrupted the industry, and 5G positioning is not ready for mass market without improvements included in the 5G pipeline in 5G-Advanced.
Meanwhile, GNSS chipset vendors and the global GNSS community continue to provide incremental improvements to their solutions through faster acquisition of location data and reduced chipset footprint. The satellite space for GNSS is also expanding, with increasing availability of additional positioning signals, such as L5, and the expansion of regional augmentations, such as India’s NavIC and Japan’s QZSS. Products from Broadcom and Sony both support dual-frequency GNSS at under 10 Milliwatts (mW) of continuous power, but also increased accuracy may be the difference maker for future high-volume device shipments. In a global climate of financial instability and where reliable location has proven to be more crucial than ever, many vendors will continue to lean on GNSS. ABI Research expects that, in 2023, more than 2 billion GNSS chipsets will ship.
Metaverse Markets & Technologies Trends
52. Focus Will Shift From Long-Term Visions to the Building Blocks and Details
For all the hype the metaverse generated in early 2022, 2023 will be a year focused on the details as opposed to speculation. This change will, at least partially, result from the crypto crash, which deflated some grandiose near-term expectations for the metaverse. Thankfully, focusing attention on the here and now will help legitimize the metaverse and lay the groundwork to build toward this future.
Many companies that explored new metaverse opportunities, such as enlisting immersive collaboration and communications or beginning digital twin initiatives, will build upon these early deployments and trials. 3D content generation will also see increasing attention in 2023 with new and expanding toolsets designed to bring 3D into more workflows to reduce costs (e.g., virtual productions), improve efficiencies (e.g., reduce prototyping and prep work), and break into new opportunities. While the number of companies taking the plunge into the next phases of their metaverse ambitions may be limited, the metaverse will see continued organic growth.
53. 2023 Will See Metaverse Monetization Efforts on the Consumer Side Ramp Up
Companies will begin monetizing platforms and services or try new business models to extract additional revenue from their users. However, users still require a period of acclimation and a change to expectations. Thus, we don’t expect these monetization efforts to reach key milestones or serve as inflection points for areas like platform-independent ownership of digital goods and assets. Instead, 2023 monetization efforts will focus on expanding sales of virtual items within platforms and advertising, a key business model that remains contentious among some early adopters. 2023 will be the year that these barriers start to break down.
54. Most Pressing Issues About the Future Metaverse Will Not be Resolved in 2023
The focus on foundational elements of the metaverse means that these key issues will not get resolved in 2023.
What is the role of Web3 in the metaverse? The metaverse’s Web3 conundrum, fueled by the ongoing crypto winter and controversies, will remain an area of debate beyond 2023, barring significant and unforeseen changes to policies and market directions. Questions around Web3 hinder virtual item ownership due to NFTs continued strong associations with cryptocurrencies. Without content ownership (platform interoperable assets that can be sold) the creator economies and 3D content generation will not reach their full potential.
Fragmentation, especially within the consumer segment. Despite claims to the contrary, companies have yet to commit nearly as many resources or efforts to bring interoperability and open platforms to consumer markets, especially compared to early enterprise and industrial metaverses where efforts around standards like Universal Scene Description (USD) project a better pathway forward.
3D versus deeper levels of immersion. Most metaverse use cases have favored PCs and smartphones over XR, and this will remain the case as the industry awaits the arrival of mainstream- level smart glasses, which will not happen in 2023. VR will receive a lift in 2023 with new devices and upgrades. However, cost, form factor, and preferences will continue to push the larger base of metaverse users to traditional devices. Separations between more deeply immersive experiences (XR) and traditional 3D interfaces (2D displays) will continue to foster disparate opinions and views of the metaverse and its potential.
Satellite Technology Trends
55. LEO Satellite Subscriptions and Capacity Will Continue to Increase
Low Earth Orbit (LEO) will continue to see significant growth and deployment of constellations from the communications sector. The largest existing constellation with more than 3,500 satellites in orbit, Starlink, has received approval to launch another 7,500 Gen2 satellites before the decade is out. With around 3 to 4 launches made every month in 2022, and deployments of about 50 satellites per launch, we can expect at least 1,800 to 2,400 new LEO satellites coming online next year.
Alongside this, while the United States is the global leader in satellite launches, we can expect to see more deployments from China as they aim to deploy the LEO global broadband mega constellations, Guowang (GW-A59 and GW-2) and Yinhe, that would bring online around 14,000 satellites. To reflect these developments, ABI Research forecasts that subscribers using LEO satellite services will reach 2.4 million in 2023 and the global number of LEO satellites approved for deployment will reach more than 30,000 by the end of the decade (as per currently planned constellation deployments).
56. Satellite-to-Cell Services Will Not See Wide-Scale Adoption…Yet
The emerging satellite-to-cell service segment is picking up momentum as players like Apple, Huawei, SpaceX, Globalstar, AST Space Mobile, and Lynk are accelerating the launch of services. Starlink’s recent approval to launch 7,500 Gen2 satellites in LEO (525, 530, and 535 Kilometers (km) from Earth’s surface), which is in addition to its currently approved 4,425 Gen1 LEO satellites (which operate at 1200 km), will unlock satellite-to-cell service capabilities via 1,910-1,915 Megahertz (MHz) and 1,990-1,995 MHz bands per SpaceX’s most recent Federal Communication Commission (FCC) filing.
Critically, Gen2 direct-to-cell functionality is still pending FCC approval and full deployment of the hosted payload, with continuous coverage of the Earth within +58 to -58 degrees, will not occur until mid-2024. This comes hot on the heels of Apple’s recent communication terminal patent acquisition that aims to connect Apple devices with satellites via IEEE bands Ka, Ku, K, V, W, X, C, ISO Q, and other desired bands to unlock media, voice, and Internet data services. In its current form, Apple has only recently launched satellite emergency SOS and location tracking services with Globalstar to hold over consumers for the next 2 years.
Alongside this, satellite operators Lynk and AST Space Mobile are looking to launch or begin the process of launching services at the beginning of 2023. In its current stage, satellite-to-cell services are available for specialized applications, but show upside potential in the years to come, with 2023 and likely 2024 being used to prime consumers’ interest.
In this respect, ABI Research anticipates that the wider Non-Terrestrial Network-Mobile (NTN-Mobile) service segment, which includes the satellite-to-cell segment, will reach 6.8 million connections by 2027.
Smart Homes & Buildings Technology Trends
57. Smart Home Will Have to Pay Its Way
There will be a growing drive from vendors and consumers alike for the smart home (can extend to apartments and hotels) to pay its way. Scaling back smart home voice control teams at both Amazon and Google toward the end of 2022, in part, reflects a new emphasis on revenue streams, over underwriting development and devices for potential exploitation further out. Samsung recently expanded its summer of 2022 launch of its SmartThings Energy service, an application supporting whole home and individual device energy monitoring. This move will support partnerships with real-time energy monitoring management and energy switching players.
The end of 2022 also saw Vivint, a major U.S. smart home player based around subscription monitored security provision, set to be acquired by Texas-based utility NRG Energy, as the latter sees the ability to leverage smart homes among its customer bases and beyond. On the consumer side, energy management is an application that may support greater investment in smart home adoption. The ability to monitor and reduce energy spending is of increasing value, and smart home abilities to enable that will help consumers see an ROI in smart home capabilities over and above the convenience, with technical curiosity having led much of their engagement, so far.
58. Smart Home Will Not Stop Its Strong Growth
Pressure on consumer spending and shifting drivers for OEM and service provider smart home engagement will not stop strong smart home growth. Tighter reins on smart home investment may be coming, but that will arrive at a time when the smart home has already won broad awareness and acceptance. For those consumers, OEMs, and service providers still on the sidelines, the publication of the first Matter specification in October 2022 will remove key hurdles to engagement. The smart home had long required vendors to decide on and select from a range connectivity options, each with varying potential to connect to specific potential partners and target audiences.
In addition, with no interoperability between leading ecosystems, vendors had to develop products meeting the requirements of each—raising the cost of developing smart home products and limiting the addressable market potential. Matter certification means application interoperability across ecosystems and a clear delineation of Thread, rather than Zigbee or Z-Wave or even Bluetooth for low-power device connectivity. It also has wide industry backing. By the start of December, Matter had already certified more that 225 smart home devices from dozens of players with 300 more already in the certification process. With additional device and application support planned by Matter in 2023, the smart home will continue to include more in-home device types and services drawing in evermore players and consumers.
Smart Mobility & Automotive Technology Trends
59. 2023 Will See Widespread Adoption of Location-Enriched Mobility
Digital maps have long been adopted in automotive infotainment systems for delivery navigation and route guidance functions, but are set to enrich a wider range of automotive domains from 2023 and beyond. In particular, the active safety and Electric Vehicle (EV) powertrain domains will increasingly rely on accurate and up-to-date map layers to deliver on future applications, such as Intelligent Speed Assistance (ISA) and range optimization.
In the active safety domain, a combination of the European General Safety Regulation (GSR) 2 mandate and the updated European New Car Assessment Programme (EuroNCAP) 2023 protocols will see millions more vehicles relying on digital maps to augment perception, and deliver insights on road and traffic events taking place beyond the horizon and around corners (e.g., Non-Line-of-Sight (NLOS)). Other regional NCAP ratings protocols typically follow the pattern set by EuroNCAP, suggesting widespread adoption of location-enriched Advanced Driver-Assistance Systems (ADAS) over the coming years.
Similarly, location intelligence will also play a key role for OEMs in proliferating EV powertrains, powering two key applications. Maps capturing attributions, such as road elevation and curvature, can play a key role in optimizing battery discharge and extending range, while live map layers capturing traffic, road events, and weather can provide highly accurate Estimated Time of Arrival (ETA) determination. These two applications will both contribute toward increasing consumer confidence in EV powertrains, so that the vehicle will have the necessary range to satisfy mobility needs and that the indicated range can be relied upon.
This broadening of the role that digital maps play will drive new approaches for OEM supply chain leaders toward curation and dissemination. This trend comes as the more mission-critical applications dictate a leap forward in attribution richness, accuracy, and time to reflect reality.
60. 2023 Will Not Be the Year That Automakers Crack OTA Updates
Vehicles are becoming software defined at a faster rate than the automakers that ship them. This is because the software-defined car revolution is being driven by several factors. First, the enabling technologies that underpin the software-defined car revolution, including high headroom compute, secure and high-bandwidth networking, mature application frameworks, etc. are largely being supplied by myriad Tier Twos from outside the traditional automotive industry supply chain, and not the automakers themselves. Second, there is a competitive pressure from new EV OEMs (most notably, Tesla) to deliver lifecycle management and new features throughout the vehicle’s lifetime. While the novel OEMs pioneering this approach in automotive are digitally-native, i.e., software competence is at the core of their brand identity, legacy OEMs are instead trying to graft software divisions into mechanically- oriented organizations.
Other major factors are consumer tastes and vehicle safety regulations. Consumers desire a car that goes beyond merely being a car; they want it to include similar features they are accustomed to with other digital experiences, such as smartphone usage. Then there's the influence of vehicle safety regulation, notably in Europe. Autonomous driving applications, which relies on effective vehicle software, is a must-have when addressing European vehicle safety laws. Cars increasingly need software-supported features such as Intelligent Speed Assistance (ISA), Autonomous Emergency Braking (AEB), Lane Keeping Assistance (LKA), and Driver Monitoring Systems (DMS).
As a result, established OEMs have been driven to buy into an industry revolution in which they are the passengers, rather than the drivers. All major OEMs now have an Over-the-Air (OTA) partner, capable of managing connections and organizing update campaigns, and some have already begun to leverage this channel to maintain and patch software errors and minimize the need for physical recalls. However, OEM experimentation with feature updates (outside the EV newcomers) have, thus far, proved unsuccessful. Backlash against BMW’s heated seats and Mercedes-Benz’s acceleration subscription business models paint a picture of an industry unsure of how to leverage the powerful new tool at their disposal.
Using software-defined architectures to throttle the vehicle’s hardware capabilities, and paid subscriptions to restore these capabilities is not a sustainable path to monetizing the installed base. Shipping vehicles with excess hardware capacity, and developing new, innovative software-based features to be deployed after the vehicle has shipped is the only viable way to encourage consumer engagement with the OTA trend.
While this will require OEMs to expand their software competence and rapidly onboard additional software engineers, the most important barrier to overcome is a 180-degree shift in philosophy. The strategy of established OEMs for decades has been to reserve new features for new models, and leveraging these new features as differentiators to drive shipments of these new models. The industry must first pivot to a strategy of developing new features for existing models if it is serious about extracting subscription revenue.
Smart Urban Infrastructure Technology Trends
61. Sustainable Cities to Gain Momentum in 2023
After more than a decade of half-hearted approaches, sustainable urban infrastructure is picking up momentum fast, as could be observed at the Smart Cities Expo World Congress 2022. The smart cities focus is rapidly shifting from connectivity, safety and security, smart spaces, and smart mobility to all aspects of sustainability, as the single most important challenge cities will face in the next few years will be related to the impact of climate change, including flooding and heat islands. This translates into a wide range of initiatives, projects, and investment programs, centered around urban decarbonization, net- zero cities, urban circularity, green infrastructure and vertical farming, smart energy, and zero emissions mobility and transportation.
From a technology perspective, key sustainability solutions include commercial buildings management software for optimizing energy efficiencies, battery-electric and hydrogen fuel cell vehicles and associated charging and fueling infrastructure, renewable energy generation and smart micro-grids, the use of digital twins for modeling energy consumption, planning of gray and green urban infrastructure, simulation of the impact of climate change, blockchain-enabled carbon credit market places, ambient IoT, and cross-vertical smart cities platforms. This represents nothing less than the ultimate convergence of all smart cities technologies, paradigms, and approaches under one and the same unifying sustainability umbrella, harnessing all expertise and funding around a common and unique purpose and objective. In fact, sustainability approaches often have important secondary benefits related to increased resilience and cost savings, thereby helping to address the wider urban prerogatives.
Cities, countries, industry associations, and many other organizations around the world are setting increasingly ambitious targets ranging from phasing out all non-zero emission vehicles by 2035 to reaching full carbon neutrality by 2050. For technology vendors, this offers huge potential to develop and monetize clean technology, provided they squarely start embracing urban sustainability as the guiding commercial principle today.
62. Smart Cities Will Remain a Low Priority Segment for Technology Vendors in 2023
Vendors across the technology ecosystem are optimizing their commercial strategies around the most financially attractive and easily addressable markets and verticals. Over the past years, we have seen smart cities, as well as the government market, more generally, being replaced by smart manufacturing, supply chain and logistics, and, to a lesser extent, energy as top priority segments. Underlying reasons and motivations include lack of available (public) funding, fragmented purchasing ecosystems, long decision cycles, and a lack of awareness about the benefits of smart urban infrastructure, resulting in very challenging sales processes with cities and governments.
However, if vendors just focus on segments representing low-hanging fruit, that might endanger their long-term prospects. There are good reasons to keep smart cities on their radar, including:
- Cities are starting to explore new types of financing to fund technology deployments, ranging from city/municipal bonds to sensor data monetization (North Texas Innovation Alliance).
- It is critical for vendors to leverage their technology solutions across as many segments as possible to reach scale and profitability; for example, digital twins have now started to be deployed across almost all verticals, including smart cities, where they will become a critical tool for managing urban assets and infrastructure.
- The amount of technology-related regulation and legislation on both a local and national level will increasingly dictate the agendas of technology vendors.
- Smart cities represent aggregation points of technology solutions across all verticals.
In conclusion, while the smart cities segment will remain a challenging segment for technology vendors, it would be unwise to walk away from it.
Supply Chain Technology Trends
63. Growth in End-to-End Visibility and Reporting Solutions to Comply with Regulations
Track and trace regulations around the world are growing and becoming increasingly stringent, particularly within high-risk cold chain industries, such as food and pharmaceuticals. Visibility technologies are especially important in the face of various pharma supply chain challenges.
Authorities are not only seeking deeper visibility, tracing from the raw material suppliers all the way to the consumer, but reporting needs to be accurate and continuously available. Notable regulations coming into effect in 2023 include the Food Safety Modernization Act (FSMA) Rule 204 that focuses on additional traceability around foods, such as animal products, seafood, and fresh produce.
Food companies will need to be fully compliant by 2025, so it is expected that a high degree of digital transformation spending over the next 2 years will be focused on both traceability and food condition monitoring. And the second is the Drug Supply Chain Security Act (DSCSA) requiring interoperable, electronic tracing of certain prescription drugs down to the package level. While enacted in 2013, the regulation comes into full effect in November. Internet-of-Things (IoT)-enabled traceability and supply chain visibility platforms will see continued adoption at all levels, enabling companies to ensure both compliance and operational competitiveness.
64. More Fleet Electrification
The demand for EVs has been growing at an unprecedented rate over the last few years. We’re not only seeing this trend in consumer vehicles, but also in commercial fleets. Many large commercial fleets have started investing heavily and are raising considerations toward full fleet electrification in the near future. Although federal incentives have been a primary driver, factors such as lower operational costs, simplified maintenance, and enhanced performance are other prominent advantages EVs have over regular Internal Combustion Engine (ICE) vehicles. IKEA US has converted all of its last-mile fleet in the state of New York to EVs. Amazon, meanwhile, is planning to invest more than €1 billion in EVs for its Europe fleet and has partnered with EV manufacturer Rivian in the United States. Domino’s Pizza has said they’ll be rolling out a fleet of 2023 Chevy Bolt EVs across the United States in the coming months.
Government mandates and regulatory incentives have been the key driver behind the growth in EV adoption. In the United States, the Biden administration recently announced US$2.8 billion in grants to boost the EV battery supply chain. The administration also has set a goal to make EVs half of all new vehicles sold by 2030 and fully electrify all government fleets by then. Over in Europe, the EU’s Green Trucking Directive calls for 50% toll discounts for EVs from 2023 and air pollution charges for gas vehicles from 2026. Regulations have been a key driver behind the growth in electrification and automotive manufacturers have acknowledged this. General Motors (GM) said it expects EV profits to be comparable to gas vehicles by 2025, years ahead of schedule. Meanwhile, sales of Ford’s EVs continue gaining momentum, up 102.6% Year-over-Year (YoY). Ford’s EV sales for the month of November 2022 were higher than its gas vehicles.
65. No Relief from Labor Shortages
Supply chain labor shortages are continuing to be felt around the world and studies are forecasting a global worker shortage of around 85 million workers by 2030. Since the onset of the COVID-19 pandemic, labor numbers within warehousing and logistics have been hit particularly hard. In Europe, Heavy Goods Vehicles (HGV) driver shortages were up 41% in 2021 with up to 425,000 unfilled vacancies.
And while some reports found that these unfilled driver jobs did reduce slightly in 2022, the improvement is expected to be temporary. In the United States, job openings in the warehouse and transportation industry hit 520,000 in June 2022 with only 315,000 filled. These vacancies have begun to shrink alongside what many believe to be signs of economic cooling, but supply chain labor shortages are exhibiting a deeper shift. Aging populations, low wages, the lingering effects of the COVID-19 pandemic, political barriers to immigration, and wider changes to our way of working are presenting a bleak long-term forecast for labor availability to current supply chain operational processes.
Such structural changes to the labor supply are changing the way companies view technology from a nice-to-have to a necessity, but this is only one side of the coin. With growing omnichannel activities and fulfillment automation initiatives, supply chain operations are having to quickly diversify and implement new ways of working. To tackle both challenges simultaneously, companies will be focusing on scalable automation solutions, as well as optimizing the available labor they have through Collaborative Robots (cobots) and stronger management systems.
COVID-19 and recent instability have accelerated a longer-term change in labor pools across the global supply chain, and companies are increasingly aware that long-term competitiveness relies predominantly on consistent, effective digital transformations.
66. Accelerated Micro-Fulfillment Deployments to Optimize Last Mile Will Not Happen
The increased demand for last mile delivery could benefit from accelerated micro-fulfillment, but that isn’t expected to come to fruition in 2023. During the onset of the pandemic, micro-fulfillment was expected to revolutionize order fulfillment and supply chains, in general, for retailers. It’s safe to say this hasn’t been the case and won’t be until the near future. Micro-fulfillment is moving forward, but at a slower pace than previously forecast. Slowing e-commerce sales and difficulties for smaller retailers in achieving an ROI have been the two major factors behind this.
Meanwhile, brick-and-mortar sales have been picking up. March 2022 was the first month since November 2013 to record a YoY drop in e-commerce sales, when they dropped by 3.3% from March 2021. Meanwhile, brick-and-mortar sales rose by 11.2%. Dick’s Sporting Goods saw online sales fall 11% in its most recent quarter; Best Buy’s online sales dropped 12%; still, both retailers reported an overall increase in sales. Even Amazon posted a US$206 million operating loss for 4Q 2021, a 1% drop in revenue at its online stores, and announced the cancellation of its several micro-fulfillment deployment projects.
Despite this, there have been activities from a few other retailers in this space. Walmart acquired automation specialists Alert Innovation and is planning to build more than 100 micro-fulfillment centers across the country. Large retailers like Walmart and Kroger will continue to invest in automation wherever it makes sense, including in micro-fulfillment centers. But for smaller grocers and retailers lacking the scale and resources of the industry giants, in-store traffic versus e-commerce sales numbers over the coming months will be key and the future of micro-fulfillment center deployments may depend on them.
Sustainable Technologies Trends
67. Green Product and Building Solutions Will Surge with Support from Emerging Government Regulations
Regulations addressing climate change and environmental impact are increasing worldwide and influencing greener corporate and product business strategies. The German Supply Chain Act, which will come into force on January 1, 2023, and the EU’s proposal for Corporate Sustainability Due Diligence Directive are proposing or requiring that companies conduct due diligence on their value chains, while assessing human rights and environmental risks, such as pollution, carbon emissions, and biodiversity loss. In the United States, the Inflation Reduction Act of 2022 is investing US$369 billion in energy production, manufacturing, green building regulations, and other climate change programs to reduce carbon emissions by roughly 40% by 2030. Furthermore, the United Kingdom, Japan, the United States, the EU, Brazil, Hong Kong, New Zealand, Singapore, and Switzerland have all either approved or are in the process of requiring mandatory climate risk reporting.
Companies are following these regulations closely, and they are investing in software and other technologies not only to measure and automate carbon accounting, but also to actively manage platforms for directly reducing carbon emissions, water use, and waste. In manufacturing, switching to renewable energy for electricity, electrification, and equipment automation trends are reducing industrial carbon emissions, while AI-driven platforms conduct a multitude of sustainability-focused operations, such as selecting sustainable materials, assessing circularity strategies, aggregating supply chain data based on a product’s Bill of Materials (BoM), collecting real-time IoT data from manufacturing processes, and conducting cost versus carbon “what-if” scenarios and simulations for feeding energy and material use data back to designers and engineers in the design phase. On the building side, cities and municipalities globally are enacting or proposing requirements for enhanced building energy efficiency, materials passports and health product declaration standards, and other building environmental impact requirements, spurring innovation and many new climate tech startups addressing these areas.
See some real-world examples of sustainable cities in this blog post.
68. Companies Will Continue to Focus on ESG Initiatives, Despite Political Pushback
Companies will continue to listen to stakeholders, including customers, partners, employees, and investors, when it comes to addressing Environmental, Social, and Governance (ESG) initiatives, rather than engaging in political culture wars. In 2022, the United States witnessed a scuffle between conservative states and Wall Street, addressing the use of investor funds for potentially choosing sides in the debate over energy policy and climate change response. While companies in a limited number of states may experience modification of ESG communication strategies, or may tone down certain alliances, a politically led, global shunning of ESG-related investing is not expected.
Governments representing more than 90% of global Gross Domestic Product (GDP) have net-zero commitments in the coming decades, and an overwhelming number of companies in the S&P 500 publish sustainability reports. ESG is also a critical risk management framework for many companies that is already deeply integrated into numerous corporate programs for monitoring and managing supply chains, diversity initiatives, environmental regulations, fair labor practices, and transparency for board-level governance and communications. Companies that manage resources responsibly, seek to lower their carbon emissions and impact on the environment, govern transparently, and maintain good labor relations are likely to generate better long-term financial outcomes.
69. Circular Economy Strategies Will Generate Attention Worldwide, but Will Not Take Off Without the Proper Incentives
Our current global economy is designed for linear growth, and the incentives for this type of growth are strong. We take resources and materials from the Earth, make products with these materials, and then we throw them away as waste (i.e., take-make-waste). To contrast, a circular economy addresses the entire system that supports a product, a building, or a process, tackling major global challenges, such as climate change, waste, pollution, and biodiversity loss.
While all these topics are generating significant amounts of attention, circularity strategies have many challenges to overcome. Some of these are: company or product short-term profitability, consumer convenience, uncoordinated business models, lack of government regulation, improper waste infrastructure, inadequate recycling technologies, and more.
Governments and corporations will have to better align circular incentives to get more circular economy strategies to stick. For example, regulators could mandate that EV battery makers must coordinate and use similar combinations of chemicals to promote higher-quality recycling outcomes and standardization among EV battery recyclers. Supporting similar initiatives, the European Commission’s new Batteries Regulation proposes a “battery passport.” Beginning in January 2026, all industrial and EVs with a capacity higher than 2 Kilowatt Hours (kWh) will require a digital representation of the battery components with applicable ESG and lifecycle requirements. Tax considerations for participation in reuse and recycling coordination programs could incentivize a more circular, lower-carbon EV ecosystem.
70. Rapid Rollout of EVs Will Not Happen until Challenges to Widespread Adoption Are Met
The rollout of EVs is increasing, but the deployment schedule has not exactly been an EV revolution, as countries, regional governments, and cities aim to achieve climate targets and transition away from ICE vehicles. According to the Global EV Outlook from the International Energy Agency (IEA), Europe’s Nordic nations—Norway (86%), Iceland (72%), Sweden (43%), Denmark (35%), and Finland (31%)—led the world in global EV market penetration in 2021. China finished in 13th place despite leading all countries in total numbers of electric cars sold. Meanwhile, the United States barely made the top 20 with 5% EV sales as a percentage of overall car sales. In Latin American countries, such as Mexico and Chile, EV sales are less than 2% of all auto sales.
Why will mass adoption of EVs not happen in 2023? The capital cost of EVs has historically been the major barrier in purchasing decisions for electric cars and trucks, and inflation and high interest rates will further inhibit new vehicle sales. EVs are more costly to make for manufacturers, and those costs are passed on to the consumer. However, as the cost of batteries continues to fall, the debate will shift to other challenges in adoption, such as required infrastructure for charging, the customer experience of EV charging (i.e., customers will demand more charging locations and faster charging experiences), and the raw materials required to fully scale widespread adoptions of EVs. Today, traditional fueling stations for ICE vehicles are readily available, while EV charging stations are typically harder to find.
This smaller network of operational charging stations has prevented many customers from making the switch to electric. The operational question also highlights the need for high-quality charging station maintenance companies to keep charging stations reliably up and running. Moreover, companies will need to continue to invest in smart charging technologies to generate faster charging options, while also reducing potential grid overload in the coming years during peak charging times. Finally, improved battery monitoring and end-of-life battery reuse and recycling options will have to be addressed to reduce costs of battery replacement and to mitigate global supply issues with critical battery minerals.
Telco Cybersecurity Trends
71. The Beginning of the End for the Classical Removable SIM Card
The market dynamics in the United States arguably provide a perfect testing ground for Embedded Subscriber Identity Module (eSIM)-only devices, due to high levels of eSIM readiness, maturity, and the fact that the United States is a market of significant size, making the creation of a specific smartphone model for the U.S. market more economically viable. With that said, in the Fall of 2022, Apple announced its first range of eSIM-only smartphone devices, for launch within the U.S. market. Although Apple will first limit deployment of its Apple 14 eSIM-only devices to the United States, it clearly outlines Apple’s intentions for an eSIM-only handset portfolio. Although becoming available in 4Q 2022, the impact on the U.S. market will be clear and more evident in 2023 with the first full year of Apple’s eSIM-only device shipments into the region.
Apple has now made its intent clear and it is inevitable that Apple will eventually migrate all its smartphone devices to eSIM-only variants. It’s now not a case of if, but when, and the impact on the classical removable SIM cards market in the United States will be clear and swift. The rate of classical removable SIM card shipment decline over the next few years will ultimately be defined by Apple’s planned eSIM-only smartphone device expansion plans, alongside other OEMs, which may look toward Apple as an example to replicate.
Trusted Device Solutions Trends
72. The Chip-Shortage Will Remain a Significant Market Theme, Pushing Digital-First Approaches
It has been well documented that the semiconductor industry is continuing to experience a high level of uncertainty. Post COVID-19, the smart card market continues to contend with an array of related market impacts, most notably, continued supply chain issues, further impacted by sporadic and continued lockdowns in China, alongside the chipset shortage and increasing chipset Average Selling Prices (ASPs). Despite these ongoing and challenging conditions, new macroeconomic and geopolitical factors are adding fuel to the fire, further exacerbating and straining a smart card market already under significant pressure.
Newer issues related to increasing energy prices, driving up inflation and placing significant pressure on consumer spending in a trend set to continue into 2023 and possibly beyond, which will undoubtedly hit smart card markets that are contingent on consumer spending, such as consumer electronic devices.
ABI Research foresees a continuation of smart card supply chain, allocation, and capacity problems throughout 2023, impacting end smart card verticals, including payments, telco, and identity, alongside a softening in consumer spending that will directly impact consumer markets. The chip shortage is placing further emphasis on digital-first approaches, which will become a key trend in 2023. This is not to say that the digital will replace the physical, but rather a shift in approach will become more evident throughout 2023 as service providers look to move away from the physical-first approach toward the digital-first approach.
Wi-FI, Bluetooth & Wireless Connectivity Technology Trends
73. Standard Power Will Unleash 6 GHz Wi-Fi’s True Potential
The handicaps on 6 GHz outdoor transmission will finally begin to be lifted in 2023 as Automated Frequency Control (AFC) systems—the database lookup schemes that certify 6 GHz transmissions won’t interfere with incumbents—unlock standard power 6 GHz. AFC will unleash 36 Decibel Milliwatts (dBm) maximum power levels, delivering considerable performance and range improvements that will diminish 5G’s advantages over Wi-Fi in outdoor settings. Equally as impactful will be the permitting of external antennas, essential for industrial environments that require finely-tuned antennas.
In November, the FCC conditionally approved 13 AFC operators, and as was the case back in 2020 for 6 GHz’s unlicensed allocation, many other national regulators will follow close on the United States’ heels over the next 12 months. Canada is already in the advanced stages, with its Innovation, Science and Economic Development (ISED) regulator publishing requirements for AFC system operators in December, while both the Brazilian and New Zealand regulators are also expected to make moves in the near future.
While AFC services will mostly be free, we will likely witness some vendors introducing advanced offerings (e.g., spectrum mining features) in 2023, for which they will charge additional fees. The maturing of AFC will give Wi-Fi equipment vendors the confidence to incorporate standard power 6 GHz Access Points (APs) into their production roadmaps, and will also drive them to increasingly imbed geolocation abilities into their equipment (such as with the Global Positioning System (GPS)), as this will become essential for the AFC database.
The year 2023 will also see all equipment vendors actively developing strategic partnerships with reliable AFC partners in the markets they serve; in the United States, the most successful will be those with previous experience with Citizens Broadband Radio Service (CBRS) spectrum databases.
74. 6 GHz Spectrum Harmonization Will Not Arrive in 2023
The acceleration of Wi-Fi 7 device availability is assured for 2023. With Wi-Fi 7 chipsets having been in the hands of developers for almost 12 months now, expect numerous product announcements in 1Q in 2023 at Consumer Electronics Show (CES) and Mobile World Congress (MWC). Moroever, we anticipate the pre-standardization of Wi-Fi 7 APs to be unveiled throughout the year, reflecting strategic decisions many vendors made in 2022 to reduce Wi-Fi 6E development in order to be Wi-Fi 7 early movers. Yet, amid this ramp-up of Wi-Fi 7, the elephant in the room is how Wi-Fi 7 will address the 6 GHz spectrum challenge.
The world is split into three camps–those with access to the entire band, those with the lower half, and those with none at all–and as 2023 progresses, a 6 GHz divergence will come into focus, between “true” Wi-Fi 7 APs supporting 6 GHz (such as TP- Link’s range announced in November), and the APs claiming support for Wi-Fi 7’s features, but only transmitting on the legacy 2.4 GHz and 5 GHz bands (such as HCFL’s enterprise Wi-Fi 7 APs, coming in 2Q 2023). The latter will be well received in markets without unlicensed 6 GHz access or with a low 6 GHz client installed base, but their very existence threatens to damage the branding of the new standard. Spectrum harmonization will not be achieved any time soon, and given the lack of an industry consensus on how to tackle this branding challenge, the 6 GHz divergence will muddy the Wi- Fi 7 water in 2023.
Take the Guesswork Out of Technology Decisions
Those are all the technology trends our global team of research analysts compiled for 2023.
For technology innovators and implementers, every year brings with it new opportunities – and a host of new challenges.
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