The total number of wireless IoT connections worldwide will increase from 1.5 billion at the end of 2019 to 5.8 billion in 2029. The growth rates for the number of connections and connectivity revenue in our latest forecast update are lower than those in our previous forecast.This is partly due to the negative impact of the COVID-19 pandemic, but also due to other factors such as the slower-than-expected take-up of LPWA solutions.
These factors have increased the pressure on IoT operators, who already face a squeeze on connectivity revenue. Operators’ efforts to generate more revenue from elements beyond connectivity have also had mixed results.
The IoT market has suffered from the effects of the COVID-19 pandemic, and the effects will be seen into the future
Growth in the number of IoT connections has slowed down during the pandemic due to both demand-side and supply-side factors.
- Some IoT contracts have been cancelled or postponed due to firms going out of business or having to scale back their spending.
- The demand for some IoT applications has fallen during the pandemic. For example, the demand for connected vehicles fell due to reduced usage and deferred spending on new cars. The ACEA reported that the demand for cars in the EU fell by 28.8% in the first 9 months of 2020.2
- IoT supply chains were disrupted, particularly during the early part of 2020. Firms that are reliant on imports were affected by strict lockdowns in the exporting countries, and there were disruptions caused by workers that were unable to work during lockdown periods. There were also chip shortages, which made it difficult for IoT device manufacturers to obtain chips at reasonable prices.
The pandemic has affected some sectors more than others. The automotive and retail sectors have been the most severely affected, while others such as the agriculture sector have been far less disrupted. Demand for a few IoT applications, such as remote patient monitoring solutions, has increased during the pandemic; these solutions allow patients to be monitored from home rather than in over-burdened hospitals and healthcare clinics.
Some of the negative effects of the pandemic may not be realised until further into the future. Indeed, there is often a lag between signing an IoT contract and the first devices being switched on, so the true impact of the pandemic in 2020 will not be felt until 2021/2022. This is demonstrated in Figure 1, which shows the growth rate for the number of automotive connections in our latest IoT forecast compared to that in the previous forecast. We estimate that the growth in the number of automotive connections was almost 10 percentage points lower in 2020 than we had expected in 2019 (17.9% versus 27.2%), and will still be four percentage points lower in 2022 than we had expected in 2019 (19.4% versus 23.6%).
Figure 1: 2019 and 2020 forecasts for growth in the number of automotive connections, worldwide, 2020–2029
Source: Analysys Mason, 2021
Post time: Aug-09-2022