Ericsson slashes cellular IoT device forecast by 20 billion

Back in 2010, Ericsson set the bar for much of the subsequent hype around the Internet of Things by making a very pubic prediction that by 2020 there would be 50 billion internet connected devices.  Others have been more or less aggressive, suggesting “conservative” numbers of 20 billion, while some have stretched credulity with projections up to 1.5 trillion.  The 50 billion isn’t just IoT, it covers everything from phones to smart TVs to tractors, but the biggest single element is what we now call the Internet of Things, with the original 50 billion prediction including around 20 billion cellular IoT connections.

Most analysts have supported the Ericsson line with an estimate somewhere between 30 and 50 billion.  But just before Christmas, in their latest Mobility Report, Ericsson quietly changed their minds.  They still kept the headline number of around 50 billion connected devices, but dropped the number of cellular connected IoT devices in 2020 from their previous estimate of 20 billion to just over 1 billion.

The important word here is cellular.  This week, as the mobile community gathered in Barcelona for their annual jamboree, which is the Mobile World Congress, the industry was still full of expectation that they would own the Internet of Things, and more importantly, the revenue associated with it.  Ericsson doesn’t want to spoil that hope with any blatant contradictions, but if you look more closely at the implication of their new numbers, the IoT aspirations of the networks look less than rosy, as their revenue projections begin to disappear into thin air.

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LoRa vs LTE-M vs Sigfox

There‘s a battle going on for the infrastructure technology that will support the Internet of Things.  Currently the three most talked about contenders are Sigfox, LoRa and LTE-M.  There are a lot of other alternatives and it’s quite possible that none of LoRa, Sigfox nor LTE-M0 will win, but that’s another story.  If you search for LPWAN (Low Power Wireless Area Networks) you’ll see that the battle for supremacy is a hot topic.  It’s largely because of the impending loss of the GPRS networks which power much of today’s M2M business.  As a result, almost every day you’ll find another article debating their respective technical merits.

I’m going to argue that these comparisons miss the point.  Which technology will win depends far more on the business model than on the underlying technology.  The three technologies listed above are interesting to compare, as they exemplify three significantly different approaches to an IoT business, which can be broadly summed up as:

  • Sigfox – become a global Internet of Things operator
  • LoRa – provide a technology that lets other companies enable a global Internet of Things
  • LTE-M – evolve an existing technology to make more money for network operators

Between them they promise to help us get to the predicted 50 billion connected devices in 2020.  A winning solution could allow the IoT to take off and make its supporters a lot of money.  The ones that fail may be limited to niche applications and lose investors hundreds of millions of dollars.  Only one is likely to win.  It’s also possible that all of the current pretenders could lose.  So let’s forget the technology and look at the business models.

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FCC and OFCOM plans threaten the Internet of Things

If you’ve invested in any Internet of Things companies or bought a smart thermostat or Apple watch you may live to regret it.  Current plans by the people who regulate the radio spectrum – OFCOM in the UK and the FCC in the US have plans in place which may stop most of these devices working.  As a result they could cost investors and the industry hundreds of trillions of dollars.

To most people this is a very obscure technical subject, but I’d urge you to read on.  The problem is that the debate is being conducted by regulatory specialists, who appear to have little idea of the damage they may be doing.  The consequences are not percolating up to CEOs and investors, who should be screaming blue murder.  The result of that resounding silence could be that any products that use Wi-Fi, Bluetooth, ZigBee, Thread or any other radio that works at 2.4GHz will degrade or stop working.  That includes your home internet, smart watches, fitness trackers, hearing aids, smart meters, health monitors, wireless headsets; in fact most of the products which collectively are beginning the make up the Internet of Things.  It will be a self-imposed wound which could put the industry back ten years, allowing China and others to leapfrog to a position of technical leadership.

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Wanted – the Infrastructure of Things

The Internet of Things has a problem. Unless we start looking at a new infrastructure, it may peter out after the first fifty billion devices. Everyone seems to be so excited about predicting whether it will be 20 billion or 50 billion or 1.5 trillion that they’ve forgotten about how the connectivity and business models will scale.

There’s a general consensus that we’ll get to between 25 and 50 billion connected devices by 2020. The first 25 billion of these is foreseeable. Around a quarter of it will come from personal devices – mobile phones, tablets, laptops, gaming devices, set-top boxes and even cars, using cellular or broadband connections. They need moderately expensive broadband contracts, but we’ll pay as we can stream lots of data. The same again will come from machine-to-machine (M2M) connections where broadband or cellular connectivity is embedded in commercial products to monitor their performance. That covers everything from telematics, connected medical devices, asset tracking, smart buildings and everything from vending machines to credit card readers. In this case the service contracts are justified by improved business efficiency.

The second 25 billion is likely to come from locally connected devices – generally personal products which connect to smartphones. Eighteen months ago I wrote a report on these appcessories, predicting that they could grow to an installed base of around 20 billion in 2020, getting us close to the total of 50 billion. These will piggy-back on existing broadband contracts, so most won’t have a service model. At best, there may be an opportunity for selling apps or subscription services.

However, at that point, future growth may start to slow. Although these products all get referred to as the Internet of Things, they’re only that in the loosest sense, as they rely either on personal user setup, or professional installation. Both are time consuming and a barrier to ubiquitous deployment. To achieve the real Internet of Things we need products which can be taken out of their box and which connect and work autonomously. Without that, we’ll never get past the tens of billions. Despite all of the IoT hype around, no-one is really addressing the hole that needs to be filled. We need an Infrastructure of Things – a new Low Power, Wide Area, end-to-end wireless Network (LPWAN), along with a new approach to data provisioning for life. This article explains why and what the options may be.

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