IoT Predictions for 2023 ⋆

IoT Predictions for 2023

The Enterprise & IoT research channel at TechInsights recently published the annual IoT Predictions for 2023. TechInsights have identified 3 key technology trends and 2 key strategic trends which we expect will shape the IoT market in 2023 and beyond.

In 2023, the market for IoT is anticipated to increase by 18% to more than 14.4 billion active connections. According to IoT Analytics, predictions even predict that by 2025, there will be more than 27 billion linked devices.

Trend 1: IoT Connectivity Technologies Continue to Evolve iot 2023

IoT has evolved to a mature fully deployed technology and the evolution can also be seen in IoT connectivity technologies. From the initial days of M2M when mainly 2G & 3G cellular technologies are used for connectivity, now the industry has 10+ connectivity technologies to choose from for their IoT projects. The shift in IoT connectivity technologies will continue in 2023, 5G will pick up growth in 2023/24 as the market will see the commercial launch of 5G RedCap (Reduced Capability) modules.

Trend 2: Harnessing the Potential of eSIM

eSIM technology is a game-changing innovation that is highly underutilized and is yet to reach its true potential in IoT. It would be fair to say that any transition from traditional technology to something innovative takes time which is exactly what is happening with eSIM adoption. In 2023, we expect eSIM (including iSIM) to account for more than 50% of the total IoT module sales. The sales of eSIMs for IoT applications will grow from 190 million in 2022, to 978 million by 2030 at a CAGR of 23% according to TechInsight’s latest forecast update on eSIM sales by vertical industry and region. The eSIM market growth is fuelled by enterprise IoT applications in verticals like Automotive (Connected Cars), Industrial/Manufacturing, and Transport/Logistics, among others.

Source: IoT eSIM Sales by Vertical Industry and by Region 2022-30 Forecast Update, Enterprise & IoT, TechInsights

Trend 3: 5G RedCap will boost IoT expansion

5G Reduced Capability (RedCap) introduction in 3GPP Release 17 has given a new lifeline to IoT expansion into 5G. 5G RedCap is aiming at reducing the complexity and cost of IoT devices enabling 5 G-related features for higher-end IoT applications. TechInsights expect that the initial RedCap commercial products will be launched in the first half of 2023; though the RedCap commercial products lineup will mature only after 2025. According to TechInsights, 5G accounts for 2% of the total IoT connections. We believe that with the commercial launch of RedCap, there will be some spike in 5G IoT connections in 2023 and really take off after 2025.

Source: Qualcomm

Trend 4: IoT Market Consolidation iot 2023

In the recent past, a lot of discussions emerged on the IoT future because of some well-known players either exiting the IoT space (Ericsson, Google) or being acquired by other companies (Sierra Wireless-Semtech, Thales-Telit). The question is asked often – would the consolidation of the IoT market continue or M&A trend will decline in 2023 & beyond?

The short answer is – YES, the consolidation will continue and NO, M&A activity in IoT will not decline. The fragmentation of the IoT market is resulted due to the evolution of these key domains – semiconductors/chipsets/modules; connectivity technologies; software and other hardware devices, over the last 2 decades. Now as the industry is mature and scaling, companies across the IoT value chain are much more focused on attaining operational effectiveness and profitability. That’s the reason why the industry has realized that the intense fragmentation is not good for the IoT landscape and is open to massive consolidation which is happening now and will continue in 2023 and well beyond.

Trend 5: Enhanced focus on Sustainability/Green IoT

Sustainability has become a top priority for CxOs and is a part of every boardroom discussion across the industry and gaining importance with everyone right from investors to customers. IoT is seen as one of the significant technologies supporting organizations to achieve their sustainability targets with automation, data-driven decision making and immediate action for efficient and timely business results. Technologies like IoT are supporting in addressing many of these problems if not all and are deemed as part of the current solution as well as in the long-term to address Sustainable Development Goals (SDGs) defined by the UN. In 2023 & beyond, new use cases and business models would emerge as IoT continues to evolve to tackle sustainability issues.