Matthew BoyleAccording to analyst house Omdia, widespread adoption of reduced-capability 5G (5G RedCap) for mid-tier cellular IoT applications will begin in China starting in the following year (2024). According to new research by the company, the introduction of RedCap will contribute to the growth of all cellular IoT connections to 5.4 billion by 2030, a (rough) increase of about 70% compared to 20223. 2G, and by 2027, all 3G-based connections will effectively disappear.
Evolution of Cellular IoT: Dominance of LTE and Emergence of 5G RedCap Technology
At either end of the period, 4G/LTE-based IoT connections will continue to rule, growing from about 2.6 billion in 2023 to 3.2 billion by 2030, accounting for roughly 82 percent and 60 % of all mitochondrial Internet access points. In 2030, 5G-based IoT connections will account for about 1.2 billion, or about 22 % of the mobile Internet of Things market, up from essentially nothing in 2023. (Remember that these estimates are based on reading the Omdia graph below.)
Omdia claimed that LTE-based Cat- 1 bis modules and 5G modules based on non-RedCap‘s “massive IoT” will even drive overall volumes. It could be argued that the “massive IoT” category is odd, and Omdia’s classification of a 5G-based” Large IT” portfolio is not totally clear. The twin LTE-based technologies NB-IoT and M, pitched firmly at the mass-scale, low-power end of IOT, are the original 3GPP technologies specified in this class.
RedCap’s Emergence and LTE’s Continued Relevance
Unless NB-IoT and LTE-M are to be qualified as 5G technologies based on their forward-compatibility with 6G NR networks, there is no such thing as a large-scale 3G infrastructure. However, they continue to be Cellular solutions. Which, based on a press note rather than the entire report, may tilt Omdia’s category- numbers in the direction of 5G. Then, according to Omdia, LTE-based Cat-1 bis- a single-antenna version of LPE Cat- 1, which does not need an LNE upgrade like NB-IoT and LLE-M – will continue to gain traction and drive cellular IoE volumes alongside RedCap.
For its part, the hype surrounding RedCap is having an effect on the IoT vendor community in the same way that its parent technology, 5G, has had an impact on most of the wireless market. As a result, customer expectations are irrational, making LTE-based cellular IT solutions more difficult to sell. In any case, that is the prevailing opinion on the street. However, Omdia claims that starting next year, RedCap will find its niche as a mid-tier 5G – IoT solution to fill the gap between fully functional enhanced mobile broadband (eMBB ) comms and ultra-reliable low-latency communications (uRLLC).
Automotive Industry Demands and Asia-Pacific Dominance in Cellular Connectivity
It adds that “it will likewise enable device futureproofing as the industry anticipates the subsequent phase-out of 4G beyond the year 2030.” Additionally, according to its forecast, the Asian and Oceania region will account for more than 60 % of cellular IoT module shipments, accounting for about 80 % of all connections in 2023. Which is an astounding statistic in and of itself. The market is also aware that China dominates the biological IoT market, but in Asia Pacific, four-fifths of the total market constitutes a veritable lion’s share.
It turns out that the automotive industry will experience the majority of the growth because it is predicted to ship the most device modules according to the “growing demand for intelligent vehicles integrating 5G connectivity.” Which, to elaborate more, does not appear to add up to a significant amount of IoT, either, based solely on the global sales, also after-sales, of connected cars and trucks. The promise of large IoT will undoubtedly be realized through the deployment of low-cost and lower power cellular IOOT in cities, factories, and homes.
Or perhaps this is simply how the mobile market perceives large scale and that this only applies to mid-range RedCap modules? Omdia does, however, argue that China, where the majority of the growth will occur, will probably cover RedCap costs in order to boost sales. “2024 will be a pivotal year for 5G RedCap growth” says Alexander Thompson, top analyst for IoT at Omdia. This will start in China, where the majority of the volume is anticipated, and over time, subsidies will reduce module regular selling prices to levels comparable to LTE Cat-1.
Role of Application Enablement Platforms in the Era of 5G
The majority of the funding for cellular IoT will come from application enablement platforms (AEPs), according to a final note in the Omdia statement, and the market will continue to be sufficiently fragmented from an industrial perspective to prevent all-out monopolies by large hyperscaler cloud companies like AWS, possibly most notably. There is still a need for industry-specific/pure-play AEPs despite the exponential growth of hyperscaler offerings and monetary constraints for startups in the current economy, according to Andrew Brown, practice lead for IoT at Omdia.
In either case, Omdia claims that “the rise of 5G technologies will have a significant impact on the mobile IoT ecosystem over the next seven years. This paradigm shift underscores the changing landscape and rising prominence of superior telco connectivity solutions.”
