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December 6, 2019updated 12 Dec 2019 10:55am

IoT revenue in Europe to reach US$96bn by 2023 on the back of the software and services growth

By GlobalData Technology

To remain competitive and find new revenue opportunities in the field of IoT, telecom operators are shifting towards services, software and devices to ramp up their IoT portfolio and ascend the IoT value chain.

GlobalData forecasts Europe’s IoT service revenue to achieve a robust uptake during 2018-2023, with a compound annual growth rate (CAGR) of 18% and revenues reaching US$96bn by 2023, from US$40bn in 2018.

The growth in the region is driven primarily by the software and services segment while connectivity revenues will remain relatively low over 2018-2023, making up circa 11% of the IoT service revenue opportunity. To drive IoT revenues, telcos in Europe have been expanding their enterprise portfolio by offering more end-to-end solutions by striking new partnerships or expanding existing ones. The IoT growth opportunity for IoT market players lies in expanding their service IoT capabilities with machine learning, AI, complex event processing, and edge computing. 

Additionally, telcos are expanding their offerings within existing verticals. For example, Deutsche Telekom expanded its partnership with SAP in 2018 to include IoT solutions for real-time logistics. Furthermore, some telcos are moving towards an IoT business-to-business-to-government (B2B2G) model to capture additional revenue opportunities. 

For instance, MTS launched an IoT platform with open APIs in 2017, which is compatible with a variety of IoT technologies for businesses and government. Telcos are conventionally strongly positioned within the connectivity segment. However, to further capture revenues in the IoT market, operators should expand their offerings to IoT platforms and software as a service solution. 

Going further, telcos could consider offering one-stop-shop IoT solutions on a national or global scale. Additionally, telecom operators should be proactive in identifying and building new use cases for industry verticals.

Related report

Telco IoT Offerings and Market Opportunity Assessment in Europe

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