Portland - Verizon Communications is seeking to grab a bigger share of sales from linking devices like smoke detectors, home thermostats and factory pumps to the Internet.
Starting in the first quarter, the company will offer options that use less overhead so devices can connect to the Web for less. The idea is to make cellular Internet access - currently used with only 20 percent to 25 percent of Web-connected devices in the US - more mainstream so gadget makers can bake lifetime cellular access into the cost of more devices, Mike Lanman, a senior vice-president at Verizon, said in an interview.
A Web-connected pump can tell its operator that it’s due for maintenance, averting costly repairs. An Internet-connected thermostat can let its owner change temperature in the home remotely. Today, as much as 80 percent of Web-connected devices hook into the Internet via Wi-Fi, Bluetooth and other non-cellular technologies, according to researcher IDC. Most devices that could talk to the Web don’t because of the high costs of connectivity service and building it into devices.
“The current network was built around smartphones,” Lanman said. “By lowering the cost of the modules and providing an offer where network access is more affordable” it could make Verizon’s cellular service better positioned to compete with technologies like Wi-Fi, he said.
Greater competition
New companies are entering the market: Startup SIGFOX, which introduced its network in San Francisco this week, expects its network connectivity to cost $2 to $3 a year per device at scale, said Allen Proithis, president of SIGFOX North America. Today, connectivity may cost this much or more monthly, depending on the provider. SIGFOX plans to be in 10 major US cities by the first quarter.
Verizon has already booked about $500 million in revenue from providing services to Web-connected devices this year. The company is starting to offer additional services like access to data analysis to companies wishing to connect their devices to its network. It also has a new chip that lowers the cost of building connectivity into devices.
By 2020, there will be 30 billion connected devices globally, up from 12 billion at the end of last year, IDC estimated. The market for Internet of Things (IoT) gadgets, connectivity and other related services will reach $1.7 trillion, according to IDC.
Cellular may not be right for many businesses, like those located in rural areas without robust cellular access, Carrie MacGillivray, a vice president at IDC, said in an interview.
“IoT isn’t going to be synonymous with cellular connectivity,” MacGillivray said. Still, Verizon “will move the needle a little bit”, she said.
BLOOMBERG