Key IoT Trends 2023
2023 promises to be another interesting year in IoT, as the market continues to mature and IoT solutions become ever more critical to every day life.
We've put our heads together, to think about the trends and opportunities that will shape the coming twelve months.
What do you think? What are your priorities and challenges? Please share your thoughts and ideas...it would be great to hear them.
The IoT market continues to enjoy substantial potential for growth and is forecast to be worth $1.1 trillion by 2024. Hockey stick growth predictions have been made for many years regarding the IoT market; however, there is now good evidence of real growth in IoT adoption, usage and revenue as the market becomes more mature.
In addition, the increasing use of cloud and edge computing, the development of LPWAN and 5G, and the growth of software-defined mobile networking (that challenges the notion of mobile connectivity being just a ‘dumb pipe’) will all help drive IoT’s importance as a technology trend during 2023.
Looking at the mobile connectivity market in particular, in 2023, consolidation amongst connectivity providers is expected to continue, with smaller and less innovative providers (who can only compete on price) being acquired by well-funded market leaders, intent on consolidating global scale.
As IoT becomes more critical to their operations, enterprise and public sector customers’ IoT requirements will inevitably become more sophisticated, particularly in relation to security. IoT service providers will need clear plans to address challenges in IoT security, including the need to address increasing government regulation in the UK, EU and USA.
IoT is fast transitioning towards mass adoption. IoT MVNOs/MVNEs and Mobile Operators must keep pace with the latest IoT industry changes to stay competitive and provide more valuable connectivity services.
Here are some trends that we at stacuity are keeping our eyes on, as we head into 2023 and beyond.
1. One in ten VC deals will be in IoT.
IoT is still a developing market and remains recognised as having huge potential, as it encompasses diverse technologies and opportunities. IoT has been labelled as the power behind the fourth industrial revolution, so it’s hardly surprising that in Q1 2022, global funding for IoT-focused companies increased to a record $1.2 billion (up from $266m in Q1 2021). Around 45% of all significant IoT acquisitions have been focused on IoT companies specialising in AI and Analytics, IoT software and semiconductors/chips, driven by the desire of acquirers to create a complete technology stack or portfolio and reduce external dependencies.
The IoT market is valued at $800 billion and will grow to $1.1 trillion by 2024. According to Verdict, 1 in 10 VC deals is in the IoT space. VC investments will focus on overlaps between IoT and other sectors, such as the medical metaverse and cybersecurity. In the IoT connectivity market, the focus will shift to M&A as consolidation continues - acquisitions of smaller, less innovative providers who can only compete on price.
2. LPWAN and 5G (in-time) will accelerate IoT adoption
IoT will continue to represent a significant growth opportunity for telecoms in 2023, as LPWAN and 5G enable new waves of IoT applications and services.
4G based Low Power Wide Area Network technologies (LPWAN) are specifically designed to enable new IoT use cases. The growing footprint of LPWAN technologies (LTE-M, NB-IoT) will accelerate IoT adoption in 2023. A key determinant of the growth rate will be mobile operators’ willingness to make LPWAN connectivity available to partners via roaming and IMSI donation agreements.
Much has been said about the potential of 5G to accelerate IoT adoption. It offers significantly lower latency and enhanced network capacity, which is essential for smart-city and some industrial applications. In addition, from an engineering perspective there are significant benefits to 5G – particularly when it comes to utilising a cloud-based architecture for the core network - with corresponding benefits to scalability, agility and efficiency.
There is no getting away from the fact that some use cases – such as connected cars – will require 5G to deliver on performances promises. It is the future – that is not in doubt. However, how many of 2023’s real use cases will be so demanding? Although 5G has raised much interest, many ‘5G’ capabilities, such as network slicing, can in fact also be delivered, today, on widely available and more cost-efficient 4G.
3. The role of Edge computing in IoT will expand.
Edge computing won’t replace cloud computing, but its growth is one of the most important technology trends and continues to advance rapidly in the IoT market. Gartner predicts that by 2025, 75% of enterprise-generated data will be created and processed outside a traditional data centre or cloud. In addition, Statista estimates that the value of edge computing could reach $250 billion by 2024.
Processing IoT at the edge will be a key IoT trend for 2023. The benefits include reduced latency and data transmission costs and the ability to efficiently run AI at the edge to generate more powerful results. Edge computing also facilitates greater security for IoT devices since the data is processed near the source rather than being transferred to another server. As IoT devices proliferate, the attractiveness of incorporating edge computing in end-to-end IoT platforms will grow.
Associated with processing IoT at the edge is the concept of ‘edge networks’ - reducing the gap between the edge and the cloud to bring flexible, fast and secure connectivity between devices and applications whilst avoiding the internet's overhead, penalty and risks. In many IoT applications, the endpoints only need to communicate with a few destinations or just one; in those cases data transmission over the open internet isn’t necessary or appropriate.
4. Software-defined control capabilities will empower customers
Increasingly, the flexibility which is normally associated with cloud-based services will be applied across the whole IoT solution value chain.
eSIMs represent an example of such virtualisation. Apple’s introduction of an eSIM-only phone is enabling eSIMs to enter the mainstream consumer market. Although the IoT market has been slower in adopting eSIM, it is the future and promises to deliver important customer benefits. However, it represents both a risk and an opportunity for mobile operators – weaker operators may face an increased churn risk and further downward pressure on connectivity margins unless they can successfully differentiate their connectivity services.
More generally, we expect enterprise customers’ demand for software-defined control of mobile connectivity for IoT to continue to grow in 2023. We believe that a growing segment of customers want this control, so that their connected devices can be managed by them, just like any other asset in their IT estate. Mobile operators and IoT MVNOs who can support such flexibility, will enjoy faster growth and improved connectivity service margins.
5. Digital Twins will bridge the gap with the virtual world
In 2023, we expect to see a convergence of two significant tech trends shaping how technology is used across industry: IoT + Virtual Reality = Metaverse of Things.
Cutting through the hype, we expect solid use cases to emerge in 2023, with applications enabling businesses to bridge the gap between the real and the virtual worlds, in valuable ways.
For example, data from IoT sensors will allow companies to build realistic digital twins of manufacturing facilities. In so doing, they will improve operational efficiency by simulating operational processes before they are rolled out. Digital twins can enable designers of manufacturing plants to experiment with different machinery configurations, highlight potential safety issues and predict when breakdowns might occur. In retail, this convergence of technology will allow store planners to model footfall and optimise displays to impact on consumer behaviour.
6. IoT Security - building trust will be critical.
According to Kasperksky research, 43% of businesses have unprotected IoT infrastructure, and cybersecurity concerns remain a barrier to widespread IoT implementation.
Some banks and financial institutions are using blockchain-like technologies for safeguarding IoT networks, and in 2023, we expect the IoT market to place renewed focus on security.
An example of growing IoT security trend involves a zero-trust security approach, whereby devices are prevented from connecting to the network unless they are specifically entitled to do so.
Transport Layer Security (TLS) is a standard encryption protocol that establishes zero-trust connectivity. However, TLS is not a magic bullet, as there are certain common use cases (e.g. use of IoT devices on low bandwidth networks) where TLS cannot function efficiently. So, a blend of complementary security approaches will inevitably be required.
‘Zero-touch’ is another interesting concept. This involves securing the connection between the application and the SIM/device in the connectivity network, using flexible/configurable security and data routing policies, in real-time, without having to ‘touch’ the device itself. This can be valuable where TLS encryption is not viable, or the IoT device is too ‘dumb’ to support VPN configuration.
Other IoT security trends we expect to see more of in 2023 will involve the more flexible creation of secure private networks for IoT SIMS and the fine-grained control of application connectivity, so that unused applications cannot provide a surface for security attack.
There will be lots of action in this space.
7. IoT regulation will increase.
In 2023, you can expect to see new legislation introduced worldwide as Governments start to get to grips with the legal and social implications of an ever-expanding IoT. China will begin implementing its three-year plan in 2023, which will involve policies to enable the widespread adoption of IoT technology across the country. The US White House Security Council has stated that it hopes to have standardised security labelling in place for consumer IoT device manufacturers by early 2023. The UK is also expected to introduce its Product Security and Telecommunications Infrastructure bill, requiring manufacturers, importers and distributors to ensure that consumer-connected products meet minimum security standards. The EU is expected to introduce legislation in 2023 requiring manufacturers and operators of smart devices to follow stricter rules on how data can be collected, where it can be stored, what they need to do to protect against data breaches and address issues around edge computing.
8. Internet of Healthcare Things (IoHT) remains a big prize.
According to Forbes, The Internet of Healthcare Things will be one of the top-4 IoT trends in 2023. COVID-19 accelerated growth in the IoHT market, so that it now represents an important area of concrete opportunity, with the market value of IoT-enabled health devices set to hit $267 billion in 2023.
Concrete use cases have established themselves, delivering important efficiency and experience benefits in over-stretched healthcare systems.
For example, wearables and in-home sensors are enabling 24/7 patient monitoring and care outside the hospital or doctor’s surgery. Such use cases are demanding, requiring the high levels of solution security and reliability. Interestingly, this is one vertical where blockchain may have a clear purpose in IoT – providing an auditable, secure record of patient data and IoHT solution performance.
Scaling innovation in healthcare is notoriously difficult. However, we believe that, through necessity, Covid has ‘popped the cork’ and wider adoption of IoT innovation will now flow more easily.
IoT has continued significant potential for growth due to its highly diverse technologies and overlap with other high-growth sectors. So it’s hardly surprising that one in ten VC deals are now in the IoT space, with significant M&A activity continuing in the connectivity market.
The development of LPWAN and 5G, the increasing use of cloud and edge computing, and the growth of software-defined mobile networking (that challenges the notion of mobile connectivity being a ‘dumb pipe’) will all help drive IoT’s importance during 2023 and beyond.
Real growth in IoT adoption, usage and revenue will continue as the IoT market matures. And as IoT becomes critical to business operations, enterprise and public sector IoT requirements will become more sophisticated, particularly in relation to IoT security.
IoT focused MVNOs and Mobile Operators must respond to these challenges, by enhancing their ability to innovate, differentiate, stay competitive and provide more valuable connectivity services to their customers.
It’s hard to provide a comprehensive list of all key IoT trends within a relatively short blog. So, if you have any IoT trends you think we should add or different views, please reach out. We’d love to hear from you.
How can stacuity help you?
We’re on a mission to help IoT MVNOs, Mobile Operators, Systems Integrators, IoT Solution Providers and IoT developers by empowering them to manage and secure IoT connectivity, with unparalleled flexibility and control.
If you want to join us on this exciting journey and access more control over mobile connectivity, contact our team today.
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