Low Power WAN Market Analysis

Low Power Wide Area Network (Global, 2023)

Introduction

In recent years the market for low-power wide-area networks has grown considerably, driven by the growing demand for long-range, low-power communication solutions adapted to the Internet of Things. The increasing interconnectedness of industries and cities offers a unique opportunity for low-power wide-area networks to communicate over long distances with minimal power consumption. It is particularly important for applications such as smart metering, monitoring and tracking, where the devices often operate in remote or hard-to-reach locations. NB-IoT, Sigfox and LoRaWAN are some of the communication solutions used in this market. Each of these solutions serves a specific purpose and has a different operating mode. There are many competitors in the market, both newcomers and established companies, who compete for market share and the development of solutions that meet the growing needs of the connected world.

PESTLE Analysis

Political

In 2023, the development of the LPWAN market was largely supported by government initiatives to develop the digital network. In the European Union, for example, the Internet of Things (IoT) network project, which was allocated € 1.5 billion, directly supported the use of LPWAN technology in the member states. In the United States, the federal government had provided more than one hundred cities with more than $500 million to help them develop their smart city projects.

Economic

The economic environment for LPWANs in 2023 is characterized by the increased investment in the IoT. According to recent estimates, global spending on IoT solutions will reach $1.1 trillion, with a substantial portion of that going towards LPWANs. Moreover, the cost of deploying LPWANs has fallen by about 20% since 2021, and the cost of sensors has fallen to around $5 per unit, making these solutions more accessible to companies.

Social

It is in urban areas that the acceptance of LPWANs is growing. In a survey, it was found that 75% of consumers in metropolitan areas are aware of the IoT, and that 60% have a favorable opinion of smart cities based on LPWANs. This growing awareness is reflected in the number of connected devices, which is expected to reach 30 billion by the end of 2023, and which will further drive the demand for LPWAN solutions.

Technological

There is a growing momentum in the LPWAN technology field, with the appearance of new protocols and standards to improve efficiency and coverage. In 2023, LoRaWAN 1.1 standard was introduced, enabling the connection of up to 100,000 devices per gateway, a significant increase compared to previous versions. In addition, the integration of artificial intelligence into LPWAN systems will optimize the data processing, and it is estimated that by the end of the year, 40 percent of LPWAN applications will be based on AI-driven data analysis.

Legal

In this respect, the legal framework for LPWANs is constantly evolving. The data privacy and security regulations are being adapted in different countries. In 2023, the cost of compliance with the General Data Protection Regulation (GDPR) for the European companies using LPWANs is estimated to reach €200 million. In the United States, the Federal Communications Commission (FCC) has issued new rules for spectrum use, which affect the LPWAN operators and which must be met by the service providers.

Environmental

The LPWAN market is increasingly being affected by the environment, particularly in terms of energy efficiency and sustainable development. According to the study, LPWANs will use up to 90 percent less energy than cellular networks in 2023, and batteries will last 10 years. Furthermore, the campaign against e-waste is gaining momentum, with over 50 percent of LPWAN manufacturers already committing to sustainable practices, such as the provision of a take-back program and the use of eco-friendly materials in their products.

Porter's Five Forces

Threat of New Entrants

Low-power wide-area network (LPWAN) is a medium-barrier market, with a need for substantial technical and financial investment. A growing demand for IoT solutions attracts new entrants, but established companies with existing networks and customers are a challenge to newcomers. Competition for the attention of consumers and the need to establish relationships with telecommunications operators are also obstacles to new entrants.

Bargaining Power of Suppliers

The bargaining power of the suppliers in the LPWAN market is relatively low, as a result of the availability of many suppliers for key components such as chips and software. This market is characterized by a large number of suppliers for the different technological components, which reduces the influence of any one supplier. Also, the increasing number of manufacturers and technological developments have contributed to a highly competitive market.

Bargaining Power of Buyers

The buyers in the LPWAN market have a high bargaining power because they are usually large companies or service suppliers with specific requirements. The existence of various LPWAN solutions gives them the opportunity to compare the offers and obtain advantageous conditions. Furthermore, as the market matures, the buyers become more knowledgeable about the available technology and therefore demand better conditions in terms of price and service.

Threat of Substitutes

A medium level of competition is expected in the low-power wide-area network market. This is because other communication technologies, such as cellular networks, Wi-Fi, and satellite communications, can be used for similar purposes. But the unique advantages of low power consumption and wide coverage may limit the extent to which direct competition will develop. Also, the choice of technology is often based on specific applications, which can reduce the threat of substitutes.

Competitive Rivalry

The level of competition in the LPWAN market is high, driven by the presence of many players, both large incumbents and new entrants. The rapid technological developments and the race for market share drive aggressive marketing strategies and continuous innovation. The competition for partners and customer loyalty is fierce, which increases the level of competition and can lead to price wars.

SWOT Analysis

Strengths

• Low power consumption, enabling long battery life for devices.
• Wide coverage area, allowing connectivity in remote and rural locations.
• Cost-effective deployment and maintenance compared to traditional networks.
• Scalability to support a large number of connected devices.
• Robust security features to protect data transmission.

Weaknesses

• Limited data transmission rates compared to other network technologies.
• Potential interference from other wireless technologies.
• Dependency on specific frequency bands, which may be regulated.
• Challenges in achieving high reliability in urban environments.
• Initial setup costs can be high for infrastructure development.

Opportunities

• Growing demand for IoT applications across various industries.
• Expansion of smart city initiatives requiring extensive connectivity.
• Increased investment in LPWAN technology by telecom operators.
• Emerging markets showing interest in low-cost connectivity solutions.
• Advancements in technology leading to improved performance and capabilities.

Threats

• Intense competition from other wireless technologies like 5G.
• Rapid technological changes that may outdate current LPWAN solutions.
• Regulatory challenges affecting frequency usage and deployment.
• Market saturation in developed regions limiting growth potential.
• Cybersecurity threats that could undermine network integrity.

Summary

The LPWAN market will continue to grow through 2023. Its advantages in terms of energy efficiency and widespread coverage make it ideal for IoT applications. However, its data transfer speed is limited and it may be subject to interference. Opportunities exist in the form of smart city applications and increased investment. However, the market faces competition from other technologies and regulatory risks. Strategic innovation and addressing security concerns will be key to ensuring the market's future growth.