Cellco IoT revenues reach $11.7b in 2016

Mobile operators worldwide earned a combined €11 billion ($11.7 billion) in revenues from the IoT in 2016, but revenues remain relatively low compared to lofty industry projections, according to Berg Insight.

Despite a significant early install base, low monthly ARPUs are restraining growth, Berg Insight senior analyst Tobias Ryberg said.

The global monthly ARPU for cellular IoT devices is estimated at €1.40 this year, but with major variations between regions. In some emerging economies ARPUs were less than €0.30, and in some less competitive developed markets, ARPUs exceeded €3.00.

“Until recently, the principal financial metric 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,” Ryberg said.

“Wireless connectivity is now near ubiquitous and there will be half a billion cellular IoT connections in 2017, but revenues are still relatively small.”

But in the third quarter Vodafone and Verizon each generated €200 million in IoT sales revenues, and next year Berg Insights predicts that a handful of major operator groups will generate over €1 billion each from the IoT.

Many early operator-led IoT efforts have focused on the automotive market as a starting point, with major players including  AT&T, Vodafone, Verizon and Deutsche Telekom establishing dedicated ventures centered on the connected car.

But Berg Insight said a better strategy for smaller operators is to develop a broad IoT ecosystem and sell IoT solutions from preferred partners through existing B2B channels.