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February 10, 2015

Edge of network, beyond cellular, key to maximise IoT revenues

Revenues from data management and security services will exceed $1.8bn by 2020, report finds.

By Amy-Jo Crowley

Security and data management services are expected to create the biggest revenue opportunities for platform service providers in the Internet of Things (IoT) market over the next five years.

A report by Beecham Research, an analyst and consulting firm, predicts that revenues from data management and security services will exceed $1.8bn by 2020.

"Due to the growing complexity of IoT applications and trend to consumer-driven, multi-service environments such as smart cities, cars and homes, there is a growing need to manage edge devices such as sensors, switches, smartphones and tablets, connected using a variety of short range wireless and fixed line technologies," author of the report Saverio Romeo said.

"With this pace of change, companies will increasingly rely on outsourcing and we expect that revenues from device authentication, device management, data management, billing and security will exceed $3billion by 2020. And out of these, we see security and data management services generating some $1.8billion alone."

The report added that while data management services for IoT is currently a small market, it predicted that it has the most potential to drive high gross margins and profits in the future.

It also highlighted IoT security as the "most strategic" growth opportunity across the network, device and services domains rather than a cost.

He added: "While many market players still see security as a cost rather than a business opportunity, this is changing and we see IoT security providers offering high-value, end-to-end security to service and application providers."

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The report also looks at authentication, device management and billing/charging, as leading indicators of the growth potential for enabling services in an IoT environment.

"Service Enablement Services, usually configured as cloud-based platform services, cover all enabling services for IoT solutions," said Robin Duke-Woolley, CEO at Beecham Research.

"We see many changes in requirements for these enabling services in the IoT market now compared with just a few years ago. Our current research is assessing the impact of this on the Connectivity Services layer, the Application Enablement layer, and on other services that span both these."

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