This autumn we carried out our annual survey on IoT and found some big shifts in priorities since last year.
The biggest single change was in the rise of industrial IoT, somewhat to the cost of smart cities, and we also found our operator and non-operator respondents had considerably different views and priorities in a number of key areas.
We had 105 respondents, 39% of whom were from network operators (all numbers are rounded) and 23% were from equipment vendors, while 38% chose the ‘other’ category, which included analysts, consultants, systems integrators, regulators, water managers and public sector executives, including people working in the healthcare sector.
We began by asking respondents to list what they see as the three biggest opportunities for IoT. Although the same three sectors came top in responses from the operators and the non-operators, the order and degree of emphasis varied sharply.
For the non-operators, smart cities were top at 63%, with Industry 4.0 at 44%, followed by with connected cars at 41%. The operators chose Industry 4.0 and eHealth as joint top opportunities at 51%, followed by smart cities scoring 46% – almost 20% less than the non-operators – and connected and automated vehicles at 44%. Answers in the ‘other’ category included agriculture, smart grid, water management and private networks for smaller as well as large companies – see below.
A comparison with last year’s thinking by all respondents reveals a shift: at the end of 2018 smart cities were a clear winner with a score of 79% and smart factories had only 33% of the vote, in sixth place. One reason that industrial IoT has shot up operators’ agendas is 5G deployments began in 2019 and private networks have proliferated (see article on page XX).
Biggest challenges for operators
Next we asked respondents to tell us what they think the single biggest challenge operators are facing in IoT now. Both operators (32%) and non-operators (30%) identified business models as being the greatest hurdle. In last year’s survey, too, business models took the top slot, followed at a distance by cybersecurity, which seems to indicate an overall lack of progress – or perhaps confidence – on both fronts.
However, this year the operator-only responses put cybersecurity in a tied fourth place with lack of company strategy (both 12%), hence it seems the operators are more confident in their ability to secure IoT than the overall market is. As one respondent noted, “Customer perception of security risk” is also a concern in itself, in the same way that people’s fear of crime is often disproportionate
Biggest security risks
We probed a bit deeper, asking what is the biggest security risk for IoT? Operator and non-operator respondents chose the same top three, but the order and emphasis was, again, markedly different.
The non-operators’ biggest concern was the failure to implement security by design (that is as an inherent component) with 31%, while for operators, this was a distant third at 20%, way behind there being too many potential attack vectors as IoT proliferates (32%) and the lack of cooperation in the IoT ecosystem (27%). In other words, they have faith in the security of what they control directly.
The non-operators put the failure to implement security by design as their second biggest worry (28%) and the lack of cooperation in the IoT ecosystem as a distant third with 11%.
LoRaWAN in the middle
Which IoT communications technology will be the most prominent at the end of 2019 in Europe was next. Non-operators put LoRaWAN in second place (27%), above LTE-M with 23%, but greatly lagging NB-IoT at 41%.
LTE-M’s time is coming
We asked which IoT technology would dominate in Europe by the end of 2025. The operators reckon it will be LTE-M (44%), followed by NB-IoT with 37% and LoRaWAN at 12%. Hence the biggest change they foresee here is LTE-M overtaking NB-IoT.
While LoRaWAN has lost 3% of its market share from answers to our survey in 2018, clearly the operators still see the technology as having a significant presence in what will be a very much bigger market. IoT Analytics reckons there are 8 billion connected devices as 2019 draws to a close, which it predicts will rise to 13.5 billion by 2020 and 21.5 billion by 2025.
The non-operators view of the IoT world in 2025 is the NB-IoT will still be top dog with 45%, followed by LTE-M at 25% and LoRaWAN at 17%.
Other responses included that 5G will lead by 2025, 6G will be a force to be reckoned with by then and that IoT-connected satellites will have made their presence felt. We think that the unique attributes of 5G – the powerful combination of network slicing and ultra-low latency – will only be needed by certain sectors, such as autonomous vehicles (and most of them are likely to be in industry, such as in factories and mines), connected cars (where safer driving technology will have a growing presence, such as detecting when a driver is distracted), gaming (which could be a big money spinner for operators) and sports coverage (which will change beyond recognition in the next decade).
Is IoT a priority?
Four-fifths or 80% of operators said IoT is either essential or important to their company, while for non-operators this was 68%. In both cases, most said it was ‘important’ rather than ‘critical’. Eight per cent of the non-operators said that IoT was not a focus at all: none of the operators agreed.
We asked which technology would have the biggest impact on IoT next year? Just over half (52%) of the non-operators said 5G, which dropped to 39% for the operators, perhaps reflecting those at the sharp end being more realistic in terms of rollout, waiting for standards to be finalised, pending spectrum auctions and other challenges. Also, as mentioned above, 5G is not needed for the deployment of IoT in many sectors to progress.
For the non-operators, data analytics was a distant second with 14%, as it was for the operators with 17%. Cloud and eSIM tied for third place for operators and the non-operators.
The biggest difference was that 7% of operators believe blockchain would have the biggest impact next year, while only 1.5% of the others think so.
Overhyped, least impact
Like last year, blockchain topped the listings for the technology that is most overhyped and will have the least impact with 42% across all respondents. While it was down from 47% last year, the business case for its use in IoT is clearly not there yet, although many operators are running pilots, including Swisscom, which is working with Deutsche Börse on the settlement of securities transactions.
Lorenzo Solazzo, Technology Analyst at GlobalData, commented, “The implementation of blockchain will support telcos’ digital services transformation to a more competitive, agile and customer-centric service provider. Key areas in which blockchain can help telcos transform include roaming fraud management, wholesale fees settlement, mobile money payments and IoT management.”
Juniper Research suggests that using blockchain and IoT tracking technology to track food from farms to grocery store shelves will ‘revolutionize’ the food industry, reducing retailers’ costs by streamlining supply chains and simplifying regulatory compliance, which could reduce food fraud by $131 billion in five years.
IBM recently conducted a survey among IT industry professionals to find out how promising they find blockchain technology for IoT: one interesting finding was that blockchain could be used to adjust the level of control over the device – strengthening it in the face of increased risk, such as hacking, to defend the data exchange system. IBM has also just patented a blockchain solution to prevent anonymous theft of packages by hacked drones.
So blockchain isn’t going away, it’s just in that nadir between overexcitement and pragmatic solutions. Most technologies go through this trough, when we’re all bored with talking about something and want mainstream action. We never seem to learn that the time lag is almost always greater than we bargained for initially.
5G and IoT – short term
The biggest difference in answers between the two groups when we asked what 5G will bring to IoT by the end of next year was that 29% of operators thought it would give them greater ability to target enterprises, putting it in a close fifth place after low latency for specific applications at 34% and network slicing at 32%, with new use cases and new operator business models tied for first place (39%).
On the other hand, non-operators were less convinced regarding operators being better able to target enterprises, placing it in joint last place with new operator business models at 19%. Like their operator counterparts, non-operators put new use cases in first place but tied with network slicing.
The high ranking of network slicing by both groups is somewhat surprising, given that 5G-powered network slicing is unlikely to hit the mainstream before 2022-23 according to analysts, vendors and operators we have spoken to recently.
5G and IoT – mid term
The non-operators were more optimistic about new business models for operators by 2025, putting it in first place (41%) when asked what 5G will bring to operators by then, although operators having greater ability to target enterprises still languished second to last, only beating the response that 5G’s role in IoT is overhyped (11%) – very close to the 10% of operators thought that 5G’s role in IoT would be overhyped in 2025.
At 46%, the operators promoted low latency for specific models to the top slot for what 5G will bring to IoT by 2025, with new business models close behind (44%).
Which vendor?
We asked which vendor is most impressive in the IoT market. Huawei came top in both, but with the biggest lead among operators. The greatest discrepancy in perceptions was over ARM, with operators putting it last, albeit joint last with Gemalto, with 5%, while it came second for the non-operators with 22%.
This is probably because operators buy products and solutions from vendors, not components to build them: chip maker ARM claims its processor designs are in more than 150 billion chips, from sensors to supercomputers and it works in an ecosystem of more than 1,000 technology partners.
The fact that operators put Cisco Jasper in second place (27%), whereas it had the third lowest placing (14%) among the non-operators is also likely to be down to the respondents’ situation in the supply and deployment chain, and similarly the results for Gemalto.
Which European operator leads?
Among operators, Vodafone was chosen by 46%, light years ahead of Deutsche Telekom in second place with 20% of the vote. The results were similar among the non-operators, although DT gained more votes with (30%).
Vodafone has the advantages of first mover, but the IoT market is still in its infancy in terms of both scope and scale, so the market is still wide open for operators.
What should the operator’s role be?
Among the non-operators, 47% said provider of connectivity, with end-to-end solutions provider at 39%. The operators see things very differently, though, reversing the order to put end-to-end solutions provider top of the tree with 71% and 20% saying connectivity. This tells you everything you need to know about the operators’ ambitions and how others see them.
In addition to the very many challenges operators face with IoT and the coming era of 5G, how they are perceived could prove to be among the most serious. As one respondent said, “It should be end-to-end, but they don’t have the DNA.”
On the other hand, many respondents made additional comments suggesting that the path to success lies with platform-based models, and being effective and easy to work with as part of ecosystems, along with services integration.