Global IoT Cellular Module Shipment Demand in Growth Mode as 4G, LTE Cat-M & NB-IoT Deployments Ramp

According to the latest research from Counterpoint’s IoT (Internet of Things) service, global cellular IoT module shipments grew 35 % annually.

Cellular connectivity is the backbone to drive secure connection of different devices to the internet across different verticals. The role of cellular modules to securely and reliably connect the devices with the management platforms, the cloud is critical to enable flow of data and information both ways. From monitoring health to smart utility meters, integrated logistics, manufacturing systems, drones and more, the cellular modules will play a crucial role in transformation from M2M to IoT to IIoE (Intelligent Internet of Things).

The ability of IoT cellular modules to deliver multiple benefits that can lower the costs, and extend the range of solutions have made IoT cellular modules a successful growth story in recent years. Technology evolution in cellular from 2G to 3G and 4G has delivered enormous spectral efficiency gains and much improved resource utilization with availability of greater peak data rates and lower latency. New Low Power Wide Area networks (LPWANs) such as Narrowband IoT (NB-IoT) modules are poised to make inroads into the IoT market. This promises long range cellular connectivity at a substantially lower cost, lower power than the traditionally 2G/3G/4G cellular modules special designed for IoT applications. However, 90 % of the cellular modules shipped in 1H 2017 were still the traditional 2G/3G/4G cellular modules, but this is bound to change rapidly in near- to mid-term as the LTE Cat-M and NB-IoT network rolls out.

According to our research, cellular IoT connections crossed half a billion subscriptions in 1H 2017. It took a decade for our industry to reach half a billion IoT connections, however, the next half a billion milestone will reach in less than a fourth of the time it took earlier. This will drive the demand for cellular IoT modules, especially LPWA modules for low power applications and 4G /5G capable modules for data driven applications such as connected cars.

While, the global operators will mainly drive cellular deployments, competitive forces from proprietary non-cellular LPWA networks such as SigFox, LoRaWAN and others will find traction in ultra-low power, low-cost and low-scale deployments. We could see hybrid strategy of cellular+non-cellular IoT deployments from operators segmented based on types and scale of IoT applications to bear fruit in next couple of years.

Exhibit 1: Global Cellular IoT Module Shipments market share by Volume in 1H 2017

Despite failed acquisition by u-blox, the Shanghai based SIMCom Wireless continue to lead the cellular module market in terms of volume with 23% market share growing 122% YoY. Whereas, Canada based Sierra Wireless remained the leader in terms of revenue, capturing a third of the total cellular IoT module market.

While Chinese brands like SIMCom Wireless or Quectel are winning with affordable 2G and 3G module shipment volumes, the competitive landscape might look different in a year’s time as the industry transitions from 2G/3G to 4G/LPWA networks. We expect to see more hybrid cellular module solutions integrating multiple flavours of cellular access technologies. Integrated players such as Sierra, Telit and Gemalto are well positioned to cash on this trend. Likewise, the cellular chipset vendors such as Qualcomm, Altair and Sequans will see more of their solutions integrated into these modules and witness a considerable uptick in coming quarters.

In recent months, major operators and players across IoT value chain are highlighting the upcoming wave of 4G and LPWA deployments, for example:

At Mobile World Congress Americas earlier this month, CTO for China Telecom, Qi Bi, noted, “We ran out of devices; people are lined up, I think NB-IoT will take off big time in China”

Discussing this key competitive development, CTO in North America for Nokia, Michael Murphy, added, “Carriers would like to wipe out their LPWA competitors, and I believe they will”

Chief Executive of Link Labs, Bob Proctor added, “Cellular IoT is also getting traction in asset tracking, often coupled with Bluetooth in delivery vehicles or factory-floor systems. Generally speaking, you have to be able to work with many technologies”.

Exhibit 2: Global Cellular IoT Module Shipments market share by Revenue in 1H 2017

Source: Q2 2017 IoT Tracker

The cellular IoT module market is dominated by top five brands contributing two-thirds of the cellular module volume shipments and 85% of the revenues.

• SIMCom Wireless grew 122 % YoY, with 23% market share in cellular module volume and upheld the leading position in cellular IoT module shipment. During the first half of 2017, SIMCom obtained certification from Verizon Wireless for its new low-power LTE Cat M1 solution. This is a great step for SIMCom to expand into the important North American market and LTE segment
• Sierra Wireless grew 23 YoY % in shipments volume and led the market in terms of revenue with 32% market share. Sierra Wireless’s AirPrime AR Series embedded modules and Legato platform is going to power Car-Net connectivity for Volkswagen automobiles beginning in 2018, a great win during the first half. The vendor also announced industry’s first LTE-Advanced Pro embedded modules alongside its next-generation Narrowband IoT (NB-IoT) modules, which are expected to be certified and available for T-Mobile’s Narrowband IoT network in early 2018
• Gemalto grew 3 % YoY by shipments volume and cemented second spot in terms of cellular IoT module revenues with 18 % share. Gemalto‘s new Cinterion LTE Cat. M1 looks to deliver low-power and data rate LTE connectivity for Machine-Type-Communication (MTC) to drive power savings targeting10+ years battery life
• Telit Communications grew 7 % YoY in cellular module volume shipments and grabbed third position by volumes as well as revenue, hinting to a well-balanced price and product mix. Telit announced during the first half that its Cat-NB1 modules are under testing on T-Mobile’s Narrowband IoT network, which is expected to launch nationwide by mid-2018. This should help Telit gain significant traction as T-Mobile has been one of the disruptive and high-growth force in USA operator landscape
• u-blox grew 2 % YoY in volume. However, U-Blox lost cellular module volume’s market share from 6.1 % in 1H2016 to 4.6 % in 1H2017. The failed acquisition of SIMCom Wireless also didn’t help its cause to jump directly to number one module supplier. However, u-blox has been expanding its portfolio with different LPWA solutions, announcing a configurable LTE Cat M1/NB1 multi?mode module with worldwide coverage. The module SARA?R410M is expected to be certified and available in early 2018 for T?Mobile’s NB?IoT network, which is expected to launch nationwide in mid?2018. This is important as T-Mobile is the early mover driving NB-IoT in USA ahead of rivals AT&T and Verizon which are still banking on LTE Cat-M network for IoT strategy