#5 – WiFi edges mobile in connected devices

 

Summary: Growth in connected device numbers will continue to accelerate, particularly in M2M applications, but in 2014 most of the growth will depend on Wi-Fi connections rather than mobile. Now that the most valuable applications for connectivity have been deployed, the high costs and complexity connecting devices over mobile will push the next use cases to Wi-Fi.

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Mid term expectations for M2M vary widely, but mobile connected devices (M2M) numbers are expected to reach billions over the next few years. The current number is somewhere around 200 million and has been growing quickly, with a 50% CAGR. Each new device connected to a mobile network depends on a financial assessment showing the value of connectivity is higher than the cost. The most valuable use cases have now been connected, to the point where the financial case of connectivity is marginal for the next generation of devices. It is not for lack of innovation in use cases but rather business model and economics that is holding back the mobile connected world. Deployment of mobile connected devices will slow until costs fall sufficiently to enable the next generation, which will likely happen but not in 2014.

The cost of connecting a device to a mobile network rather than Wi-Fi network is, on average, much higher. Radios, both access point / base station and device embedded, cost approximately six times more for mobile. The power that the radios consume is approximately four times higher (per data transferred) on mobile. Connectivity over mobile is more expensive since a fixed connection to Wi-Fi is often pre-existing and, either way, will have no per device charge. Solution development costs are higher for mobile than for Wi-Fi because of fragmentation between multiple operator platforms and markets. The complexity of management is increased as relationships are needed with each mobile operator who may host the connected devices.

Wi-Fi has clear connectivity limitation when compared to mobile, most notably in mobility, reliability and coverage. On the other hand, there is a large pool of applications which are as, or nearly as, suited to Wi-Fi as mobile. These ‘non-critical’ use cases will constitute the bulk of connections in the next year as the mobile industry works to address the higher barriers to connectivity over their networks.

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