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Where do CSPs fit as cloud hyperscalers grow IoT platform share?

CSPs are weighing up differentiated, vertical IoT solutions as enterprises adopt IoT at scale and increasingly turn to hyperscale cloud providers for IoT platforms.

Joanne TaaffeJoanne Taaffe
16 Jun 2021
Where do CSPs fit as cloud hyperscalers grow IoT platform share?

Where do CSPs fit as cloud hyperscalers grow IoT platform share?

Hyperscale cloud providers have cornered 30% of the IoT platform market, which grew 48% in value from 2015 to reach $5 billion in 2020, according to IoT Analytics’ 2021 market report on IoT Platforms, which includes few communications service providers (CSPs). AWS and Microsoft together made some of the biggest gains, having entered the IoT platform space in 2015 and 2016, respectively. Drivers for growth include advances by large multinational corporations in IoT platform rollout, with several deployments now approaching 1 million endpoints. There have also been changes to application architectures for IoT platforms, which have evolved from monolithic to modular, and use of technologies such as containers and serverless computing, according to the report.

Very few CSPs were included in IoT Analytics’ measurements of IoT platform market size because the report focuses on platform services that customers can purchase independently of the underlying connectivity service. Indeed, IoT Analytics notes that a growing number of enterprises are seeking solutions that do not tie them to a specific CSP.

“We increasingly see IoT end-users opting for device management and provisioning platforms that are CSP-agnostic or offered by an IoT-focused MVNO in order to reduce CSP-vendor lock-in and/or be better able to provide a ‘single pane of glass’ by which devices connected to multiple service providers can be provisioned,” according to Matthew Wopata, principal analyst at IoT Analytics.

Partnering & differentiation A trend towards CSP-agnostic platforms and solutions could weaken CSPs’ position in the IoT market, according to IoT Analytics. However, Wopata notes that CSPs are seeking to carve out a role in developing differentiated, vertical solutions. “One way we are seeing CSPs…combat this trend is by offering differentiated, often vertical-specific, solutions that combine connectivity, IoT platforms, services, and even applications,” says Wopata. IoT Analytics also believes it is important for CSPs to partner with the cloud hyperscale providers, rather than attempt to compete head-on.

“It is crucial to understand that the key to success for CSPs is partnering with players hardware and cloud side. The new trend of out-of-box connectivity solutions and secure zero-touch provisioning are two of the critical examples of this partnership-based strategy,” according to Satyajit Sinha, Senior Analyst, IoT, Security & Devices at IoT Analytics.

The report divides IoT platforms, which are used for building and managing IoT solutions, into four principal segments: It is also important to bear in mind the difference between a platform and a platform business model. “It is often assumed that IoT platforms are associated with platform business models, but this is not usually the case,” says Andy Tiller, Executive Vice President of Member Products and Services at TM Forum. A true platform business could be more advantageous.

  • Application management/enablement –this encompasses rapidly developing, testing and seamlessly managing IoT applications
  • Data management/enablement – providing the ability to gather, store, and analyze data from IoT devices
  • Telco management – enabling telecommunications companies to manage connectivity with IoT devices at scale
  • Device management –making it possible to remotely configure, monitor and manage IoT

Tiller offers the example of a medical device company that needs to connect its devices to an IoT platform. As a platform provider, the CSP can offer connectivity, over-the-air device management, device monitoring and collection, and analysis of data from the devices. It can also provide apps that end users of the devices can use to see and interact with the data. In this case, the IoT platform provider is paid for the services by the device maker. “However, if the IoT platform also enables patients, doctors, pharmaceutical companies and others to connect and trade with each other, the platform provider can earn a share of revenue from transactions on its platform,” Tiller says. “This is something the hyperscalers understand.”