IoT security is a big opportunity, not a cost

Analysts at Beecham Research see security and data management presenting the biggest revenue opportunities for IoT platform service providers over the next five years. In the first phase of a new multi-part study published today, Beecham Research focuses on the changing requirements for IoT enabling services and in particular, looks at how intelligence can be brought to the ‘edge’ of the network, beyond cellular connectivity.

“Due to the growing complexity of IoT applications and trend to consumer-driven, multi-service environments such as smart cities, cars and homes, there is a growing need to manage edge devices such as sensors, switches, smartphones and tablets, connected using a variety of short range wireless and fixed line technologies,” said Saverio Romeo, principal analyst at Beecham Research and author of the report. With this pace of change, companies will increasingly rely on outsourcing and we expect that revenues from device authentication, device management, data management, billing and security will exceed $3billion by 2020. And out of these, we see security and data management services generating some $1.8billion alone.”

While data management for IoT is currently a small market, Beecham Research believes that it has the most potential for high gross margins. But out of all the enabling services, the new report highlights IoT security as the most strategic, across the network, device and services domains. “While many market players still see security as a cost rather than a business opportunity, this is changing and we see IoT security providers offering high-value, end-to-end security to service and application providers,” says Romeo.

The report also looks at authentication, device management and billing/charging, as leading indicators of the growth potential for enabling services in an IoT environment. “Service Enablement Services, usually configured as cloud-based platform services, cover all enabling services for IoT solutions,” said Robin Duke-Woolley, CEO at Beecham Research. “We see many changes in requirements for these enabling services in the IoT market now compared with just a few years ago. Our current research is assessing the impact of this on the Connectivity Services layer, the Application Enablement layer, and on other services that span both these.”