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A heavy focus on software solutions
for verticals (automotive, healthcare,
smart cities, manufacturing) is likely to
create more opportunities for special-
ists that already sell software solutions
into those verticals.
It might also be safe to predict that
channel partners will sell way more
“connectivity” services than “TaaS”
services, to enterprise customers using
IoT services, for several reasons. The
TaaS market will be highly fragmented,
and much of it will logically be sold by
vertical market specialists, not “hori-
zontal” communications specialists.
While the value of IoT apps will be
higher than the value of IoT communica-
tions services, almost all the “apps and
solutions” business will be oriented to
specific industrial or enterprise buyers.
Most apps, in other words, will be orient-
ed to verticals, tailored to solve problems
specific to particular industry categories.
Conversely, IoT communications
are classically horizontal: akin to
special access or Internet access
services, which channel partners
are well used to selling.
Assume that by 2020 or so, global
enterprises are spending about $250
billion on IoT products (hardware,
software, services, connectivity). As-
sume connectivity revenue is 15 per-
cent of the global total. That implies
global IoT communications revenue
of about $38 billion. Assume about
25 percent of that revenue is earned
in the United States. That implies
U.S. connectivity revenue of about
$9.5 billion.
Further assume that 55 percent of
that communications spending is by
enterprises, not consumers, implying
enterprise spending of about $5.3 bil-
lion. If 10 percent of IoT communica-
tions sales to enterprises are made
by channel partners, that suggests an
annual market of about $530 million in
connectivity sales.
Present-day enterprise informa-
tion technology spending estimates by
CompTIA suggest telecom services are
30 percent of IT spending.
So if U.S enterprises represent 30
percent of total global enterprise IoT
spending, and total spending is $250 bil-
lion, then U.S. enterprises might spend
$75 billion on IoT, by about 2020.
If 30 percent of that amount is com-
munications spending, then enterprise
IoT communications spending might
be $22.5 billion. If 10 percent of that
amount is earned by channel part-
ners, then IoT-driven communications
spending by enterprises could reach
$2.3 billion.
So it is possible that, by 2020, be-
tween $530 million to $2.3 billion could
be earned by channel partners selling
IoT communications services.
That is likely going to dwarf TaaS
sales volume booked by telecom chan-
nel partners.
o
at your service: Xaas
Channel
Vision
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May - June, 2017
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