Cellular: The new gold standard for IoT connectivity
In 2016, there were an estimated 6.4 billion connected things in use worldwide in 2016, and by 2020 that number is expected to more than double to 13.5 billion, according to Gartner. Whether they are child locators or security systems, all of these connected devices have one thing in common—the need for connectivity inside and outside of the home. Wi-Fi has become the standard for connected products, but it has limitations when it comes to reach, security, reliability and efficiency.
Although Wi-Fi works great in designated areas, it simply does not provide a ubiquitous connectivity solution due to its limited reach. Reliability is also an issue. In fact, more than half of U.S. consumers have frequent problems with their Wi-Fi connections. Another issue with home Wi-Fi networks is that they are generally unsecured and not protected by the consumers that have set them up. Finally, some devices, if not designed correctly, can be very power hungry over Wi-Fi, resulting in a very poor user experience.
It’s unlikely that Wi-Fi will evolve to address all of these challenges, and as a result, the device industry has begun looking to other technologies to plug the gap – cellular top among them.
Cellular Connectivity: Enabling the IoT
Cellular is on the cusp of becoming the new standard for IoT connectivity for a variety of reasons. Cellular networks offer more reliable connectivity and a documented lower Mean Time Between Failures (MTBF), which is important for IoT devices inside, and especially outside the home, where Wi-Fi can be spotty or unavailable. Furthermore, cellular doesn’t require pairing devices to the network, and it is much less prone to interference than a Wi-Fi connection.
Widespread adoption of cellular connectivity for IoT products hasn’t happened yet, as there are several challenges, the first being cost. The price of consumer-connected products sold in retail is typically based on a multiplication factor of the device’s manufacturing costs. To date, the cellular component of connected products has been the largest percentage of cost and in some cases this has resulted in devices that are not economical for the target market. With demand adversely impacted by the price of these products, some original equipment manufacturers (OEMs) have delayed adopting cellular connectivity in order to offer Wi-Fi only products at a more compelling retail price.
The good news is the cost of cellular modules, even with the introduction of new technologies such as LTE, are rapidly decreasing. OEMs must begin capitalizing on this market opportunity, adopting cellular faster, and diversifying their core business models, to be ready for the rapid growth of connected devices. OEMs and retailers traditionally have relied on retail and wholesale mark-ups to generate their margin, but the adoption of cellular connectivity in these devices creates new recurring revenue streams that offer a better return on investment for the manufacturers.
Considerations for OEMs
The first thing OEMs should investigate when looking into cellular is which module is right for their product. Providing a seamless user experience should also be top of mind. Cellular connectivity is an advantage, so OEMs must make it easy for consumers to use and manage. With the speed of innovation today, even the most well-engineered devices have a limited lifecycle. Ensuring a good customer experience is critical to customer retention. Today’s consumers expect to be able to access account information and manage all aspects of their device connectivity through a simple online interface, including set-up, payment, activation, billing and support.
Use Case for Cellular: Wearables
At least one out of every six people in the United States now owns a wearable device, and Gartner estimates that by 2020 over 15 percent of all smartwatches and wearable devices will have their own cellular connection instead of requiring tethering to a smartphone or Bluetooth. There are many wearable products that need to work independently when there is no cellular connection available from the paired smartphone including wearable child locators and devices for tracking physical items such as luggage.
Child tracking, emergency SOS calls, and sending messages to and from the device are all powerful use cases for cellular connectivity, and these are just some of the features that have been deployed in products to date. The challenge for companies developing wearables is that the devices need a voice/text message and data plan, which is only available from a mobile carrier. There is a need for a simple out-of-the-box experience that enables a customer to seamlessly activate the cellular service plan on a wearable device and begin using it immediately.
Use Case for Cellular: Smart Home Security
Home security is the largest segment of the connected home category which IDC predicts will reach $1.29 trillion by 2020. Traditional home security vendors such as ADT have transferred the costs of their systems including sensors and cameras into a monthly subscription fee and locked people into a contract. On the other hand, new connected home security systems such as Simplisafe and iSmartAlarm, are disrupting the market by providing affordable home security solutions through a no-contract/zero-commitment monthly subscription service. Though many of these systems currently use Wi-Fi, cellular connectivity provides security systems with distinct advantages. Wi-Fi service can be interrupted in the event of a power loss, leaving the home unprotected, but cellular can ensure that the home remains secure.
Cellular connectivity offers a true out-of-the-box experience by eliminating the need to pair the system with a Wi-Fi network. It is also more reliable than Wi-Fi because cellular networks are encrypted and the connection cannot be cut by intruders, both of which can offer consumers more peace-of-mind. OEMs developing connected home security systems also benefit from the added security of cellular because cellular connected security systems are less likely to be targeted by distributed denial of service (DDOS) attacks.
To really take advantage of cellular connectivity, OEMs need a turnkey platform designed to help them quickly and easily integrate connected devices with cellular networks without having to invest significant time, money and effort.
This where Catalyst IoT can help. Catalyst IoT eases complexity by providing a simple platform from which companies can activate devices and enroll customers to quickly monetize their products. Airfi has partnered with carriers in North America to bring the Catalyst IoT platform to customers in a variety of flexible configurations and will roll out globally this year.
Partnered with mobile networks worldwide, Catalyst IoT reduces time, money and effort for OEMs to integrate with cellular networks. OEMs leverage Catalyst IoT to bring products to market more quickly by removing the technical barriers of working with multiple carriers and network infrastructures in different markets. Catalyst IoT also helps to generate additional revenue for carriers by enabling them to more quickly and efficiently support OEMs interested in using their networks.
The use of cellular connectivity brings a wider range of value-added features to a number of products both in the connected home and out of home. The OEMs that adopt cellular now will not only see economic benefit in the short term, but greater benefit in terms of profitability as the pricing decreases and innovative advantage.