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Analyst Angle: Asset tracking — millions or billions?

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We’ve recently completed a two-month project to investigate the market for asset tracking IoT devices …and we discovered two key facts that may surprise you:

Surprise #1:   In asset tracking, more NB-IoT devices will ship this year than LoRa or Sigfox devices.   China Telecom already has more than 5 million bicycles on their NB-IoT network, and there will be over ten million by the end of the year.   The network is barely warmed up yet, having been built with substantial hardware upgrades in only seven months.   This example shows the magic of having backhaul and towers in place — a mobile operator can move a lot faster than an unlicensed LPWA operator.   China Telecom is singlehandedly overtaking Sigfox and LoRa in the asset tracking segment. (LoRa is still in the lead overall).

Notably, China Mobile and China Unicom also have very aggressive plans for NB-IoT. In asset tracking, the bikes have put China Telecom into a leading position, but overall we expect the Chinese NB-IoT numbers to quickly reach 100 million or more.
Surprise #2:   About 10 billion devices are being tracked right now using RF technology.   RFID technology has been adopted widely by enterprises, with low costs for passive tags and long range for active tags.   Passive RFID doesn’t provide real time location (RTLS) and it’s cumbersome to use it since every device needs to pass near the reader.   But giant retailers like Macy’s and Target are famous for their RFID implementation, with clear ROI coming from higher inventory accuracy.

The challenge for IoT technologies will be to steal market from the RFID gang. How do you compete with $0.10 per tag? You offer wide area, real-time tracking at low prices. A ten dollar LPWA module works great, and even though it’s 100x more expensive than RFID, LPWA costs are already low enough for early-adopter applications. We expect 10+million NB-IoT shipments this year to drive down cost quickly.

In our study, we investigated agriculture, healthcare, transportation/logistics, Industrial, retail, and consumer applications. Every vertical market has different dynamics, but all of them have strong demand drivers. Clearly the retail and healthcare segments are more focused on short-range technologies such as RFID, Bluetooth, Wi-Fi, and ultra wideband. Other segments lean toward long-range technologies like LoRa, where an ad hoc enterprise network can be implemented easily.

Over the long term, we expect Bluetooth, LoRa, and NB-IoT devices to gradually steal market share from cheap technologies like RFID, NFC, and barcodes. Consider the 10 billion RFID tags, 1.5 billion NFC devices, and countless billions of barcodes used currently. The huge “trace and track” market involves tens of thousands of enterprise customers, and our survey indicates that a healthy percentage of the customers would migrate to real-time tracking technologies if the price were low enough.

The overall IoT market is normally viewed as new devices for new applications. In asset tracking, there is a huge existing market, so there’s no need to guess about market potential. Lower cost devices will lead to demand in the billions of devices.

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