Internet of Things (IoT) is often associated with household appliances such as smart clocks, voice assistants, kettles, fridges, etc. But this is only 10% of the total market. 90% of objects are not yet connected to IoT. The Internet of things market in Russia is still in its infancy. According to the 2019 results, the domestic IoT market grew by 8.3% compared to 2018 and amounted to $3.7 bln, and according to forecasts by IDC international consulting agency, by 2023 it may reach $7.6 bln.
The Internet of Things includes a range of technologies in which smart devices, communication protocols (wi-fi, bluetooth, LORA, Sigfox, Zigbee, etc.), cloud storage and smart platforms, robotic systems and services communicate with themselves and with humans through wired and wireless channels.
Given the fragmentation of the domestic IoT market and the variety of players, this article will identify the main players differentiating them by data transmission technology (protocols). It should be noted that there is no universal solution. The use of certain technology is conditioned by three main parameters: data transmission speed, range and penetration ability. These characteristics allow comparing them by channel width, type of signal, frequency range, openness, data transmission speed.
Let’s consider the market in terms of licensed and unlicensed spectrum of technologies, as well as local networks.
As the name implies, technologies in the license spectrum require a license to use a frequency channel. Here we are talking about mobile operators. This can include both traditional GSM cellular networks (2G, 3G, 4G), and LTE, and NB-IoT (Narrow-Band Internet of Things).
Currently, the use of 2G is practically stopped. It is expected that the use of 3G will also decrease during 2020s with the development of LTE and NB-IoT technologies. LTE and NB-IoT standards were developed by the 3GPP consortium in order to reconstruct the network architecture and create new generation networks. The use of cellular protocol technologies is appropriate in cases where large data transmission is required.
Low Power Local-Area Networks (LPLA) includes such technologies as wi-fi, Zigbee and Bluetooth. They do not have a direct connection to data networks but can use different gateways to extend their reach. The technologies have a small range.
The Russian market of unlicensed technologies is represented by LORAWAN, UNB (ultra-narrow band), XNB and NB-FI. These are wireless data transmission technologies with low power consumption providing long battery life and wide range of action. The technology does not require SIM cards, unlike cellular protocols.
The data transfer rate of these technologies depends on the purpose. For example, in Sigfox protocol messages are limited to 12 bytes (the size of one message).
Such ergonomics allows increasing the efficiency of the radio signal, its bandwidth and range. The throughput of LPWAN technologies is high enough to ensure stable operation in densely built environments. LORA (Long Range) technology is developed by Semtech and uses a narrow channel for data transmission. Sigfox has been in existence since 2010 and is developed by a French company of the same name and uses an ultra narrow channel.
According to ABI Research, the majority of connections (53%) will operate in the unlicensed spectrum and 47% in the licensed spectrum in the global IoT market in 2023.
The forecast by various analysts and consulting companies for IoT (LPWAN + NB-IoT) market volume in Russia varies from 200.5 bln to 1.1 tln connections by 2026. Based on the market assessment and analysis of the companies’ forecasts, we believe that in six years’ time the domestic Internet market will amount to about 800 bln connections.
If we consider the spheres of application of Internet of Things technologies, today IoT is mainly used in the following segments:
1. Smart Home (intelligent climate control (temperature, air quality), optimized use of energy, water, gas);
2. Smart City (smart parking, lighting);
2. Industry (quality control, machinery management);
3. Logistics and supply chain (tracking of goods, warehouse management);
4. Automotive industry (car diagnostics, optimized traffic flow);
5. Agriculture (crop care, livestock care, soil analysis);
6. Healthcare (optimized patient care, telemedicine);
7. Retail (tracking perishable products, increasing customer loyalty, door delivery);
8. Ecology (forest fire detection, weather forecasting).
According to Gartner, the world’s fastest growing segments of IoT use are smart buildings (expected to grow by 42% in 2020), followed by the automotive and healthcare industries, which are projected to grow this year by 31% and 29% respectively.
PWC estimates that by 2025 the cumulative effect of IoT introduction in electricity, healthcare, agriculture, transportation and storage of goods, in the segments of Smart City and Smart Home in Russia will be about RUR 2.8 tln ($37 bln).
The development of industrial Internet of Things is directly related to mass distribution. Development of mass IoT in Russia requires several components.
First, a wide ecosystem of device and platform manufacturers. Any development of the IoT technology directly depends on available choice of technologies, be it smart devices, cloud solutions, intelligent platforms, etc. The more such solutions are available on the market, the more active is the development of mass Internet of Things.
Secondly, multiple technologies must be compatible with each other. There are no universal technologies on the IoT market that solve all business problems. Businesses often adopt multiple technologies that are not compatible or complementary to each other. Developing industry-specific interoperability requirements for different technologies will help accelerate the introduction of the industrial Internet of Things.
Thirdly, cybersecurity needs to be ensured. The growing use of Internet-based devices increases their vulnerability and the number of cyberattacks.
The pandemic today has intensified the business demand for process automation. Companies with sites in different geographical locations and remote locations want more process visibility and real-time control. The companies which are involved in delivery service, see strengthening of demand for delivery to a door. This demand will remain after the pandemic too. In the changing environment companies will continue to expand logistics infrastructure and services. We also see construction and “smart home” and telemedicine as promising areas for IoT development.
The world is celebrating today a new turn in the development of the IoT market by connecting non-electrified business objects. We are talking about returnable containers (pallets, bogies, pallets, etc.), machinery (loaders, trailers, conveyors, etc.), containers, wagons. Previously, they were not connected to IoT due to inexpediency or high connection price. These objects are important for business, with 90% of them are not currently connected to the Internet of Things.
The active implementation of industrial IoT in Russia is hindered by a number of factors such as lack of a suitable solution, budget for modernization, qualified specialists, the need to confirm the economic efficiency of the solution, and security. We predict that IoT market will develop not sales of individual products, but solutions. These are the points on which all participants of the Internet of Things market should focus on.
By Eric Brisset, founder and President of Sigfox Russia