China to see fastest IoT revenue growth of any major country
November 3, 2015
China's IoT services revenues will grow more than five times in the next five years, exceeding US$41bn by 2020. This is the fastest revenue growth rate of any country monitored in ABI Research's IoT Market Tracker.
The tracker provides IoT revenues across six services segments including connections, connection management, security, data analytics, platform and professional services.
"Driving China's IoT numbers is the smart meter segment," said Dan Shey, VP and IoT practice director at ABI Research. "It leads all other segments in both connections and revenues. In fact, by 2020, smart meter connections will exceed the next highest market segment in total connections by nearly ten to one."
Besides smart meters, other major segments driving the Chinese IoT market will be home security and automation, OEM telematics, video surveillance, home appliances, aftermarket telematics, and home monitoring. Home monitoring is expected to become an important market in China as it attempts to care for its aging population, which will reach nearly 340 million people in 2020 for citizens age 55 and older.
"Interestingly, data analytics revenues will generate the most IoT revenues in China,” said Shey. “This statistic is reflective of the sheer volume of smart meter connections. But it is also indicative of the relative lack of revenues in both platform and professional services in the China market. Platform revenues are not as high due to, for example, a higher share of proprietary embedded telematics deployments, especially by domestic OEM brands. Professional services revenues are similarly not as high, not only due to fewer connections in the telematics segments, with a higher proportion of tethered solutions, but also because IT and consultancy services are not as mature a market segment as in some of the more developed world markets such as Japan, South Korea and the USA."
The IoT Market Tracker provides connections and services revenues for 2G, 3G, 4G, fixed line and satellite connections across 30 application segments, 30 industry verticals and four sizes of business segments covering 18 countries and regions.
• Hardware revenues from M2M and IoT gateway devices used in commercial and industrial applications will have double digit growth over the next five years and eventually break US$1bn in 2021, according to market intelligence data from ABI Research.
As adoption of industrial IoT technologies keeps growing, gateways are emerging as critical components to address the increasing requirements and challenges of these applications, and consequently experiencing growing market traction.
"Any M2M or IoT application deploying end nodes that lack direct backhaul connectivity require gateways to enable communications with an enterprise network or a cloud environment," said Eugenio Pasqua, research analyst at ABI Research.
This is the case for many commercial and industrial applications, particularly in sectors characterised by long hardware replacement cycles, where gateways can enhance the existing assets and address their installed base without disrupting their operations.
"Sectors like industrial automation, utilities and smart cities applications, with replacement lifecycles on the order of five to twenty years, are expected to be among the major adopters of M2M and IoT gateways in the short term," said Pasqua.
On a regional level, North America currently holds the sceptre as the leading region for this market, with more than 40 per cent of global revenues in 2014. This is also reflected by the presence of several important US-based gateway OEMs such as CalAmp, Digi International, Cisco, MultiTech and Systech, all with a consistent business in the overall M2M and IoT routers and gateways market.
The European and Asian-Pacific markets still lag behind in a tête-à-tête, but the latter is quickly gaining ground and is expected to surpass North America both in terms of revenues and shipments within the next five years.