Fourfold Growth in IoT Service Revenues to be Spearheaded by Data and Analytics

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14 Feb 2019

A recent report from ABI Research, a market-foresight advisory firm providing strategic guidance on the most compelling transformative technologies, comprehensively defines the growth dynamics in IoT service revenues. Internet of Things (IoT) connections are supported by services and software platforms that reside in distinct segments of the IoT solution value chain: data and analytics management, device and applications management, network management (including connectivity and subscription management), and security platforms. Revenue generated from the sale of services and platform licensing is augmented by professional services and IoT data plans, to constitute total IoT service revenues. This is money that is paid by enterprises and municipalities to the software vendors and service providers that enable IoT connectivity. It is the supply-side of the IoT service opportunity.

Jamie Moss, Research Director for M2M, IoT, and IoE at ABI Research, describes the lay of the land, “The earliest software services developed specifically for M2M were connectivity management platforms, which we consider as part of network services. It is a market segment well-known to have been led by Cisco Jasper and Ericsson. But its value was always eclipsed by the professional services (custom solutions development and systems integration) aspect of IoT service rollout. Yet, as new software services and end-to-end solutions have grown in importance, professional services’ market share has been falling. The first such up-and-comer services segment challenging professional services was application development and management platforms, a popular commercially-available example being PTC Thingworx.”

At the end of 2018, IoT service revenues will total over US$110 billion worldwide. This figure will increase fourfold by 2026, to an annual total of more than US$460 billion. Connectivity revenues, i.e., IoT ‘tariff plans’, will constitute a modest portion of overall service revenues in 2018 with a 13% market share, this being a long-established trend. Meanwhile, the most valuable elements of the current service revenue mix will be device and application platform services, as well as professional service fees, constituting 65% of total services revenues. However, the future of IoT service revenues belongs to an even newer entrant, in the form of data and analytics.

Critical in the evolution of M2M into the IoT, the rise of data and analytics services and the revenue they generate represents a crucial transition from the initial and principal concern of enterprises and municipalities having been the tactical real-time status and control of connected devices, to their new goal being the strategic intent of creating informed business decisions based on the accumulation of data lakes and mid-to-long-term trend analysis. Consequently, by 2026, data and analytics services will account for 28% of all IoT service revenues and will be second only in value to the perpetually-important device and application development services segment.

Moss looks to the future by concluding, “IoT service revenues are a portion of the IoT opportunity. It does not include the cost of device hardware, nor does it represent the enterprise IoT return on investment. The latter is, of course, the ultimate focus for the market and represents the economic value of the transformation of the underlying fabric of society through intelligent connectivity. Enabling technologies, hardware, and software alike, need to be affordable to be applicable to as many uses as possible. This means that it is the scale of deployment that vendors must rely upon, and perhaps in the future, the proven value those technologies generate for customers will define their income.”

These findings are from ABI Research’s IoT Market Tracker – Worldwide market data report. This report is part of the company’s M2M, IoT and IoE research service, which includes research, data, and Executive Foresights. Market Data spreadsheets are composed of deep data, market share analysis, and highly segmented, service-specific forecasts to provide detailed insight where opportunities lie.

About ABI Research

ABI Research provides strategic guidance for visionaries needing market foresight on the most compelling transformative technologies, which reshape workforces, identify holes in a market, create new business models and drive new revenue streams. ABI’s own research visionaries take stances early on those technologies, publishing groundbreaking studies often years ahead of other technology advisory firms. ABI analysts deliver their conclusions and recommendations in easily and quickly absorbed formats to ensure proper context. Our analysts strategically guide visionaries to take action now and inspire their business to realize a bigger picture. For more information about ABI Research’s forecasting, consulting and teardown services, visionaries can contact us at +1.516.624.2500 in the Americas, +44.203.326.0140 in Europe, +65.6592.0290 in Asia-Pacific or visit www.abiresearch.com.

About ABI Research

ABI Research is a global technology intelligence firm uniquely positioned at the intersection of technology solution providers and end-market companies. We serve as the bridge that seamlessly connects these two segments by providing exclusive research and expert guidance to drive successful technology implementations and deliver strategies proven to attract and retain customers.

ABI Research 是一家全球性的技术情报公司,拥有得天独厚的优势,充当终端市场公司和技术解决方案提供商之间的桥梁,通过提供独家研究和专业性指导,推动成功的技术实施和提供经证明可吸引和留住客户的战略,无缝连接这两大主体。

For more information about ABI Research’s services, contact us at +1.516.624.2500 in the Americas, +44.203.326.0140 in Europe, +65.6592.0290 in Asia-Pacific, or visit www.abiresearch.com.

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