Wireless communications providers will need to beef up their networks – and fast – suggests a new report from Compass Intelligence, an IT and telecommunications analyst group.
Cellular Internet of Things (IoT) connections for business purposes will balloon to 145.6 million links by 2020, after expanding compound annual growth rate (CAGR) of 37.7 percent, predicts the firm. In 2014, there were 20.3 million such connections, 9 million of which were devoted to fleet and portable asset tracking.
In five years, the market will look very different. "In 2020, retail applications such as vending, PoS [point of sale], transaction terminals and digital signage are expected to be the largest applications with the expectation of more advertising and the need for quick updates to content," said the company.
Compass Intelligence's outlook aligns with a recent forecast from International Data Corporation (IDC) stating the IoT market will grow 19 percent this year. The world's retailers, looking to "digitize the customer experience," will push the digital signage market to $27.5 billion by 2018, compared to $6 billion in 2013.
Verizon, meanwhile, is bracing for a massive amount of IoT traffic.
Backed by data from ABI Research, the telecommunications giant said in February that by 2020, there will be 5.4 billion business-to-business (B2B) IoT connections in use. The increased demand is already having an effect on the company's cellular network. Verizon reported that its 4G LTE activations grew by 135 percent last year on the strength of its IoT business division.
"The IoT market is revealing itself to really focus on businesses, rather than consumers," observed Keith Robinson, director of M2M and IoT Research and Consulting at Compass Intelligence. And only by collaborating with business IT giants will IoT solutions providers find their fortunes in this burgeoning market.
"To be successful in the industry, vendors and service providers must work with enterprise management software powerhouses to develop solutions that integrate all aspects of a business with IoT," Robinson said.
Consumers will also drive up cellular IoT use, although not to the extent of businesses, said Compass Intelligence.
Connected cars helped the consumer space rack up 21.7 million cellular IoT connections in 2014. By 2020, consumers will account for 57.5 million cellular IoT links, due primarily to the growing popularity of the smart home.
Pedro Hernandez is a contributing editor at Datamation. Follow him on Twitter @ecoINSITE.
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