The IoT Value Chain and What It Means for Telecom Service Providers
- by 7wData
When we think of the Internet of Things (IoT), we tend to think of its potential to affect consumers. Your fitness tracker talks to your healthcare providers. You hop in your car and it drives you to work.
But businesses are equally benefiting from the IoT. In fact, most IoT market potential will be found in enterprises as companies use it to drive operational efficiency and introduce new connected products and services while enhancing customer experience.
Ericsson’s recent research on the IoT forecasts that by 2026, there will be 20 billion IoT connections worldwide, up from 7 billion in 2017. This 20 percent compound annual growth rate (CAGR) means that connecting these devices and helping them communicate is going to be big business. The research also predicts that telecom service providers will be looking at a $619 billion industry digitalization market by 2026, a 35 percent bump compared to the revenue from their services today.
This market opportunity consists of everything from network connectivity up to software and applications. As the IoT market becomes mature, the higher a service provider is on the IoT value chain, the more potential for revenue growth.
Defining the IoT value chain As with any industry, there is a value chain associated with the IoT when it comes to telecom services. The first level is all those connected devices: cars, fitness watches, pet trackers. On the industrial side of things, these devices can be anything from connected machinery in factories, to the cameras and sensors that help cities become “smart.”
The next level relates to the network and connectivity. This level deals with how devices communicate and how they’re connected, it’s also where the device and network data is collected by service providers and uploaded to the cloud.
The third level brings the software platforms that manage devices and applications and all the data in use, and includes all the features you would expect: charging and billing, security, analytics, and even ecosystem partner management.
The final level in the value chain brings us closest to end users, whether they’re consumers or industry: All the applications and services that they use to take advantage of the IoT.
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