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Mobile operator IoT revenue hits €11bn in 2016

Wed 14 Dec 2016

IoT revenue

Mobile operator revenue from the Internet of Things (IoT) has reached €11bn this year, according to latest findings released by Berg Insight.

The study found that in the third quarter of 2016, Vodafone and Verizon generated an estimated €200mn each in direct sales from IoT connectivity, systems and applications.

In 2017, Berg expects the good news to continue for operator groups, with a handful set to generate over €1bn each from the IoT.

Tobias Ryberg, senior analyst at Berg Insight and lead author of the study commented: “Until recently the principal financial metrics for IoT has been projected, not actual, revenues. Now the market has entered a new phase in which hard business facts take precedent over lofty projections. Wireless connectivity is now near ubiquitous and there will be half a billion cellular IoT connections in 2017, but revenues are still relatively small.”

The research also pointed to estimates that the global monthly average revenue per user (ARPU) for mobile IoT devices was 1.40 euros in 2016. There were also marked differentiations between various regions, ranging from less than 0.30 euros in emerging markets to more than 3.00 euros in less competitive developed economies.

The biggest challenges for mobile operators in IoT were reported to be identifying and implementing successful strategies for moving up in the value chain. For those operators based in car manufacturing countries, the automotive industry was identified as a natural starting point.

The Berg report suggests that management styles vary across different operators, with big players such as AT&T, Vodafone, Verizon and Deutsche Telekom having established dedicated strategies to support automotive OEMs in the development of connected car solutions. Verizon and Vodafone also acquired telematics businesses to boost their IoT strategies.

For smaller mobile operators it was found that a better-suited strategy is to develop a wider ecosystem and sell IoT solutions through partners. By teaming up with top solution providers, smaller operators can ensure that they are offering the best products to business customers without having to invest in product development.


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