2023 in Review: Connectivity Dominates but IoT-system Gaps Remain

Two investment themes bookended 2023. In January, the European Union backed a $100m venture capital fund, managed by Momenta Partners. In December, Softbank announced its EUR473m ($514m) investment for a 51% stake in Cubic Telecom. This development more than drew the eye as
exemplified by the analyst commentary around the high (16x) revenue to implied enterprise value multiple. 

In between, the level of corporate activity in the IoT sector continued at roughly the same pace in prior years, albeit down on the years of heightened activity going back five or so years ago. There were several developments among the vendor and network operator communities, but less so among the IoT platform providers. Governments became more active with an emphasis on security and protections for the consumer sector. 

Against the backdrop of 5G developments and 6G pathfinding, IoT is becoming a part of the fabric of enterprise operations and national infrastructure. Established players continue to emphasize connectivity, a relatively small portion of IoT value chains, while enterprises focus on quick-to-market solutions enabled by cloud providers and systems integrators. Both approaches risk leaving ‘system of systems’ issues for later consideration. 

2018 in Review: IoT puzzle-pieces falling into place

Compared to previous years, the pace of corporate activity in the IoT arena has settled down. This is to be expected in a maturing market cycle. This impression may be at variance with wider industry sentiment where the use of AI/Blockchain/IoT/Machine Learning labelling continues to sensationalize.

As a sign of IoT market reality, the opening event of 2018 dealt with the commercial reality. It took the form of Telefonica O2 withdrawing from the smart home market through the closure of O2 Smart Home. The year ended with a couple of more promising events for the mobile and IoT industries. I’ll touch on these later.

Most activity was concentrated among three groups: technology vendors; network operators (mobile, low-power and virtual); and, platform providers.

M2M Platform Permutations

Ericsson’s 5 February announcement to supply its M2M Device Connection Platform (DCP) in support of XL Axiata in Indonesia has prompted this update to an earlier article on the competitive dynamics of international alliances and M2M platforms.

The DCP deal is something of a coup, providing Ericsson with a meaningful customer reference in the highest population country in South East Asia. The news announcement actually formalizes a business relationship that dates back to early 2012. In October 2012, both companies highlighted an achievement of 89,000 M2M connections. The pace of growth seems to have accelerated with XL Axiata’s M2M base reaching a total of 125,000 in the intervening months. The latest announcement provides some timely marketing collateral for Ericsson to use with mobile operators that cannot justify an investment in their own M2M platforms and the delegations of mobile-operator executives who will shortly be congregating at Mobile World Congress.

The move by XL Axiata is not unique in the market. Other mobile operators have partnered for M2M platform capabilities to handle large scale application opportunities using processes that are geared specifically to M2M operational needs and economics. AT&T was an early partner of Jasper Wireless, for example, while Everything Everywhere in the UK has been working with another platform provider, Transatel.

These developments and the changing competitive dynamics for M2M platforms will have far-reaching implications for all device vendors, service providers and users in the M2M eco-system.