By 2021, There Will be 16 Billion IoT Devices – Almost Twice the Number of Mobile Devices

Mobile phones are believed to be the gateways to a successful business as they are estimated to be the largest category of connected devices. In fact, the mobility report published in June 2016 by Ericsson suggests that subscriptions associated with smartphones continue to increase and during Q3 2016, the number of smartphone subscriptions will surpass those for basic phones. In Q1 2016, smartphones accounted for close to 80% of all mobile phones sold.

By 2021, 1.5 billion IoT devices will have a cellular subscription

But by 2018, they are expected to be surpassed by IoT, which according to the report, includes connected cars, machines, utility meters, remote metering and consumer electronics. Between 2015 and 2021, IoT devices are expected to increase at a CAGR of 23%, driven by new use cases. Out of 28 billion connected devices forecasted by 2021, 16 billion will be related to IoT.

Out of the total number of IoT devices, the report predicts that 1.5 billion will have a cellular subscription by 2021. For comparison, at the end of 2015, there were ‘only’ ~400 million IoT devices with cellular subscriptions.

The region to add the most connections is expected to be Western Europe, where the growth will be led by the connected car segment. According to estimations, the number of IoT devices in Western Europe is expected to quadruple between 2015 and 2021. However, in absolute numbers, the APAC region is the world’s leader in terms of total IoT connected devices.

Source: Ericsson, June 2016

IoT devices will surpass mobile devices in 2018

With such a rapid growth rate of IoT devices facilitated by falling cost of devices, enhanced mobile broadband services and 5G development, mobile devices are poised to be outpaced in 2018.

Source: Ericsson, June 2016

The year 2018 will be the year when the number of mobile devices are predicted to be outpaced by IoT devices. While the growth rate of mobile devices between 2015 and 2021 is expected to be at ~3%, cellular IoT is expected to grow at 27% and non-cellular IoT at 22%. In total, by 2021 there will be 15.7 billion IoT devices, while the number of mobile phones is expected to reach 8.6 billion – almost twice less.

The growth facilitators

There are different factors to facilitate such a rapid growth of IoT devices. One of them is believed to be the increased industry focus and 3GPP standardization of cellular IoT technologies. Another reason is suggested to be the falling cost of devices themselves.

The range of use cases for IoT will be driven by 5G development in addition to enhanced mobile broadband services. Ericsson brings as an example a greater capacity that will allow more devices to be connected, and lower energy requirements that will extend device battery lives more than 10 times what we see today. Both these characteristics will be critical for the growth of IoT.

The first countries where 5G subscriptions will be available are expected to be the US, Japan, China and South Korea.

Emerging IoT segments

Within IoT, the two major market segments with different requirements are reported to be emerging: massive and critical applications.

Massive IoT connections are characterized by high connection volumes, low cost, requirements on low energy consumption and small data traffic volumes.

Among the examples are smart buildings, transport logistics, fleet management, smart meters and agriculture. While today ~70% of cellular modules are GSM-only, over time many things will be connected through capillary networks. The implementation of network mechanisms will result in extended network coverage for low-rate applications.

According to the report, additional functionality will allow existing networks to support different device categories, and enable prioritization of devices accessing the network. Network system improvements (such as sleep mode) will support battery lifetimes beyond 10 years for remote cellular devices.

Critical IoT connections are characterized by requirements for ultra-reliability and availability, with very low latency.

Among the examples are traffic safety, autonomous cars, industrial applications, remote manufacturing and healthcare, including remote surgery. Even in 2016, the LTE’s share of cellular IoT device penetration is only ~5%. However, cost reductions will make LTE-connected devices increasingly viable, enabling new, very low latency applications. However, the boost of the LTE’s share of cellular IoT device penetration will require reduced complexity and limited modems to IoT application capabilities.

Evolved functionality in existing LTE networks, as well as 5G capabilities, is expected to extend the range of addressable applications for critical IoT deployments.