Marek’s Take: IoT visionaries say industry hasn’t lived up to its hype

Many wireless companies may have expected IoT revenue to be on par with smartphone revenues. (Getty Images)
Marek's take

It’s been a little more than 10 years since the cellular industry first started talking about embedding cellular connectivity into consumer devices other than smartphones and laptops. Although wireless operators had long used their slower 2G networks to help customers keep track of fleets of trucks and other industrial uses (often referred to as machine-to-machine communications), it wasn’t until about 2008 or 2009 that the industry started talking about using the 3G and 4G LTE networks to connect consumer devices like e-readers, laptops, dog collars, and picture frames.

In late 2008, AT&T formed its emerging device group with the sole focus of getting AT&T modules embedded in many more devices. Sprint was also an early leader in embedded devices by becoming the first operator to provide cellular connectivity for Amazon’s first-generation Kindle e-reader. Amazon later switched to AT&T for its second version of the Kindle because AT&T’s 3G network used the GSM air interface technology, which was available in more countries globally.

But what the industry first called embedded devices quickly morphed into what is known today as the internet of things (IoT), and soon wireless operators and vendors like Qualcomm, Ericsson and more were talking about connecting much more than e-readers but also cars, refrigerators, and entire homes to the internet. And like a lot of things in the wireless industry, IoT quickly fell victim to hype (kind of like what we are seeing with 5G today) with bold predictions of IoT connecting trillions of devices and bringing in billions in revenues.

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Bold predictions

Many of those bold projections for IoT still exist, the timeline has just been pushed out further to the future. Ericsson recently forecast that the number of cellular IoT connections will reach 3.5 billion in 2023. And IDC predicts that IoT spending will reach $1.2 trillion in 2022.

I reached out to a few of the early IoT visionaries to see what they think of the industry today. “We are an industry that overhypes things,” said Glenn Lurie, who created AT&T’s emerging devices unit and today is the CEO of Synchronoss. Lurie added that billions of IoT devices have been connected in the past 10 years and the industry is a lucrative business. But the problem is that many wireless companies expected IoT revenue to be on par with smartphone revenues. “That isn’t a fair comparison,” he said. The average revenue per smartphone user is around $50 per month. The average revenue per IoT device is typically less than $2 per month.

However, Lurie notes that IoT has come a long way. When AT&T first started talking about connecting cars to the internet, he said that he couldn’t get car manufacturers to buy into the vision. Fast-forward to today, and all new cars have some sort of connectivity or offer a way to connect a smartphone to the car. “The car is a safer place now,” he said.

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He also noted that IoT has made huge inroads in industries like farming where connected tractors and water monitoring systems have helped farmers more efficiently grow and manage their crops.

And the number of connected devices has helped drive down the cost of the cellular module. Lurie said that when the industry first started talking about connected e-readers and laptops, a 3G cellular module cost about $75 to $100. Today that price has dropped dramatically and is on par with adding a Wi-Fi module to a device.

IoT networks

But when it comes to network connectivity, there is still a lot of fragmentation in the IoT space. John Horn, formerly the national director of M2M at T-Mobile and currently the president and chief strategy officer at CoreKinect, said that he doesn’t believe IoT will live up to the expectations until it becomes easier to connect devices to wireless networks. “You can make it work,” he said, but it requires a “hodgepodge or combination of multiple technologies. It’s not perfect, nor is it ubiquitous.”

That hodgepodge that Horn is referring to is the alphabet soup of different standards for IoT networks, from narrowband IoT (NB-IoT) to LTE-M to Zigbee. The Global Mobile Suppliers Association recently reported that 102 operators in 52 countries have either deployed or launched at least one NB-IoT or LTE-M network. And about 20 operators have deployed both NB-IoT and LTE-M networks.

Lurie said that the increase in NB-IoT and LTE-M networks is a good sign for the IoT industry as is the move to 5G. NB-IoT and LTE-M are engineered specifically for IoT. And both NB-IoT and LTE-M are part of the 5G specification, so mobile operators can continue to leverage their low-power wide area network investments. “5G was built on the premise of IoT and IoT use cases,” he said. “It’s not just about speed and capacity. IoT is the center of what 5G is.”

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