Proving the Business Case for the Internet of Things

Time running out for chipset makers to meet IoT forecasts

Steve Rogerson
June 27, 2018



Global chip manufacturers do not have the capacity to meet tomorrow’s IoT demands, according to Ville Ylläsjärvi (pictured), chief marketing officer of Finland-based telecoms provider Haltian Oy.
 
According to the McKinsey Global Institute, IoT will generate revenues of up to $11tn by 2025 with some experts predicting there will be more than 26 billion devices connecting to the IoT by 2020. And market research company IHS Markit reckons that more than 75 billion smart devices will be in use by 2025. That's a 400% increase over the roughly 15 billion devices in use today.
 
“Putting this in perspective, chipset manufacturers must build microchips at a rate six times greater than has ever been produced,” said Ylläsjärvi. “But global chip manufacturers simply do not have the capacity to meet tomorrow’s IoT demands. Unless chipset manufacturers start increasing their investments to up their capacities now, the full potential of the IoT business is unlikely to be realised by 2025 or any year close to it.”
 
However, aside capacity issues, the fundamental problem, he said, in laying out a roadmap for the coming all-embracing IoT device world was first deciding which chipset technology to adopt to connect them – LTE-M or NB-IoT?
 
There will never be one IoT connectivity technology good for providing a one-size-fits-all for all use cases. The IoT application space will be occupied by several technologies, each serving selective purpose-fitted use cases. Where Bluetooth-based connectivity technologies at one extreme will provide a robust, low-bandwidth and short range coverage, technologies such as wifi, LTE and 5G will be required at the other end for high bandwidth, high mobility applications.
 
The most topical technologies today are NB-IoT and LTE-M, which are versatile, mid-range connectivity technologies.
 
LTE-M is the response of the 3GPP, the technical body that standardises cellular communications, to IoT and low-power wide area networks (LPWANs).
 
“It is an attractive option for device manufacturers looking to deploy on current cellular networks, but need an option that is more resource-efficient,” said Ylläsjärvi.
 
There are two innovations that help LTE-M improve battery life: LTE eDRX (extended discontinuous reception) and LTE PSM (power saving mode). LTE-M will serve applications that LTE has never been used for before such as smart water meters and agricultural monitors. The unique part of LTE-M is that it can be extremely power efficient and move 10byte of data a day, but also has access to move a megabit per second. LTE-M serves a very broad set of use cases.
 
On the competing side, some experts predict that NB-IoT will become the best LPWAN connectivity option. Sigfox was at the origin of NB-IoT. In 2009, it affected the plans of 3GPP by insisting that there was a huge market for devices that don’t have a lot to say, are very inexpensive, require minute power budgets and have a very long range. Hence NB-IoT became a major player in IoT’s future direction.
 
In North America, he said both Verizon and AT&T would likely use LTE-M as both companies have poured billions into their LTE networks.
 
“In all probability, they will have very little interest in something that is not LTE-based, although Verizon has announced support for NB-IoT as well,” he said. “T-Mobile and Sprint may eventually look towards deploying NB-IoT on existing GSM spectrums.”
 
Outside the USA, and driven by China in particular, countries with larger GSM deployments and less LTE will likely have more reason to turn to NB-IoT. In June 2016, 3GPP completed the standardisation of NB-IoT. NB-IoT supports up to 65kbit/s data rates and is suitable for simpler static sensor applications.
 
NB-IoT players include Huawei, Intel, Qualcomm, Samsung, Sierra Wireless and U-Blox.
 
“While IoT technology is far from being established, the 3GPP’s standardisation efforts have helped to settle some of the design variables prior to real-life IoT implementations,” said Ylläsjärvi. “But time is running out. If the forecasts are right, any further delays in choosing LTE-M or NB-IoT as chipset technology for smart devices can only delay expected $11tn revenues from connecting 75 billion devices by 2025.
 
Prior to co-founding Haltian, Ylläsjärvi held various senior product and portfolio management positions with Nokia. He holds a degree in industrial design and went through a product management graduate programme at Nokia. During his career, he has lived and worked in five countries mixing business, design and technology and constantly coming up with new products and business designs.