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Is rapid growth in IoT connectivity still buoyant or do CSPs need to take a more selective approach to targeting verticals and tailor their offerings to developing enterprise needs?

Based on the recent TecFutures survey, CSPs expect to see growth of 6.5% in enterprise IoT connections in the next 12 to 24 months. MNOs are expecting their enterprise IoT connections to grow by some 7.4% while MVNOs expect a lower rise of around 5.7%. 16% of MNOs forecast connections growth from 10% to 25% compared to just 3% of MVNOs.

Global players are forecasting highest growth at 14%. Analyzed by the number of enterprise connections managed, larger CSPs are anticipating strongest growth.

Geographically, Europe will have the highest growth rates, but growth is expected to be noticeably lower in Sub–Saharan Africa than other regions. Interestingly, while the Middle East and North Africa showed strong connection IoT connection numbers, growth is still expected to be lower than in Europe.

A flattening growth curve could be indicative of a market that is beginning to enter a more mature phase, but these growth rates are still strong given the size of the enterprise IoT market measured in billions of devices.

Of course, looking at the market growth rate is one issue but what is interesting from our survey is where we expect to see the most competitive intensity, because to maintain growth in an increasingly competitive market, CSPs need to focus on sectors of rising importance. We asked CSPs to give their view on the importance of vertical sectors in terms of size and revenue currently. The four most important verticals emerged as agriculture, healthcare, utilities and smart cities. In reality, many sectors are currently of comparable high importance demonstrating that enterprise CSPs have a significant and diverse presence in multiple sectors.

A few sectors appear to be relatively lagging the overall market at present, including automotive manufacturing, and non-automotive transportation. This could be a function of these sectors having few buying points or could represent an area that is difficult to crack – this could explain the lower importance of automotive manufacturing where a very specialist IoT application offering may be required.

Looking to the future – where are the areas of greatest growth and opportunity? Higher growth is expected from automotive manufacturing, as well as from non-automotive transportation, storage & logistics, and asset tracking. Retail is also expected to grow (but at a lower rate than the above sectors). Smart Cities and Utilities are becoming less important to CSPs compared to other areas. In absolute terms, the top three most important sectors for CSPs in the next 12 to 24 months will be storage and logistics, utilities, and healthcare. We expect to see most competitive intensity where CSPs see the most opportunity for revenue growth

CSPs can adopt a strategy of being specialist or generalist and the relative high importance of most sectors is reflecting a more generalist approach. We recognize from other parts of the survey that sector-specific solutions and those targeting SMEs are of importance to enterprise and see that some CSPs are refining their approach accordingly.

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