IoT Gateway Market

Market Overview

The global IoT gateway market size was valued at USD 1,325 million in 2021. It is expected to reach USD 4,200 million by 2030, growing at a CAGR of 13.7% during the forecast period (2022–2030). 

The IoT gateway integrates the networking protocols, storage, and edge analytics of the data, which also manages data flow between entry-point edge devices and the cloud. The need for IoT gateways has grown significantly as intelligent gateways and management systems have evolved to connect and bring together legacy equipment and next-generation devices for the IoT. The main factors driving the IoT gateway industry are the development of application-specific MCUs, adaptable SOC-type designs, and the emergence of smart cities. A system-on-chip (SoC) incorporating electronic circuitry offers many advantages, including faster development times, increased compatibility, and efficiency. IoT with SoC helps avoid implementation issues, including network integration, compatibility, and reliability problems. This includes wireless technologies.

Market Dynamics

Global IoT Gateway Market Drivers

• Rise of Application-Specific MCUs and Flexible SOC-Type Designs

The interoperations of endpoint devices are typically achieved by gateways on the Internet of Things (IoT) systems. However, the gateways primarily focus on networking communication, which lacks data logic control capabilities. The microcontrollers with embedded intelligence are poised to work as an intermediate device to help the interconnections of endpoint devices. IoT gateway hardware comprises a processor or microcontroller, protection circuitry, IoT sensors, and connectivity modules, such as ZigBee, Bluetooth, etc. Requirements for the MCU specific to the application and the growth of application-specific MCUs are poised to drive their deployment in IoT gateways.

SoC (systems on chip) use lesser power than socket PCs, but they understandably have less computing power. The small size of SoC designs provides significant flexibility for industrial applications and IoT deployment requiring low-power computing performance. For instance, Texas Instruments uses the AM335x processors in an IoT gateway design, which contains the programmable nature of the real-time unit subsystem and industrial communication subsystem (PRU-ICSS), along with its access to pins, events, and all SoC resources that offer flexibility in implementing real-time, fast responses, specialized data handling operations, and in offloading tasks from the other processor cores of the SoC.

• Emerging Development of Smart Cities

Smart city applications often require deploying vast numbers of IoT nodes over a large area, and efficient deployment and management of application devices and IoT gateways can offer functions, including data acquisition, remote monitoring, and device management. Utilizing low-power wireless technologies, IoT gateways can communicate with hundreds of sensors in an area of a connected smart city, ready for fully automated public services and driverless or autonomous transportation. This can be done with full integration with any internet-based technology, such as cell phones, computers, tablets, web browsers, etc.

Developing countries, such as India, are witnessing several smart city projects. In May 2021, India-based Serena and US-based Senet Inc., which partnered four years ago, announced plans to utilize LoRaWAN networks for smart city applications in more than 70 communities throughout India. Currently, more than 100 smart cities are planned in India, which creates an opportunity for LoRaWAN technology. IoT gateways utilize LoRaWAN to connect smart devices to the cloud for data processing and management.

Global IoT Gateway Market Restraint

• Concerns About Security and Privacy of the User Data

IoT gateway devices are significantly vulnerable to physical tampering since private keys can be extracted and cloned, leaving the gateway device susceptible to spoofing or even man-in-the-middle (MITM) attacks. To prevent this, the user must utilize tighter security measures, such as embedding a Trusted Platform Module (TPM) device into the gateway, using a PUF (Physical Unclonable Function). This would safely store all digital certificates' private keys, ensuring they never leave the gateway.

Security researchers working in Palo Alto Networks have discovered another Mirai malware variant targeting abilities. On February 16, 2021, researchers from Unit 42, the Palo Alto Networks cybersecurity division, found several attacks that leveraged vulnerabilities. In this case, compromised devices download binaries, adding them to a massive IoT botnet capable of carrying out network attacks on ales. Also, in December 2020, the latest series of vulnerabilities known as Amnesia:33 was found, which caused millions of IoT devices to be at risk of being compromised. Such vulnerabilities could hinder the market.

Global IoT Gateway Market Opportunities

• Adoption of IoT in the Manufacturing Industry

The adoption of IoT in the manufacturing industry is rapidly increasing as manufacturers seek production efficiency, reduce lead times, and deliver customized products to their customers. Manufacturers are also adopting IoT and other digital transformation technologies to stay competitive. Furthermore, companies are expected to increasingly adopt IoT mobile devices, owing to the exponential growth of connected devices, enabling the digitalization of various factory assets, such as vehicles, processes, and equipment.

Mobile connectivity also enables smart manufacturing with mobility, security, and reliability. However, 5G is expected to act as a catalyst to scale smart factory initiatives. Additionally, IoT is likely to enable connectivity of the factory with the third-party suppliers, forming a connected ecosystem of smart manufacturing centers around the world.

Regional Analysis

Region-wise, the global IoT gateway market is segmented into North America, Europe, Asia-Pacific, and LAMEA.

Predominance of Asia-Pacific Over Other Regions

Asia-Pacific occupies the largest market share and is expected to grow at a CAGR of 14.4% during the forecast period. Asia-Pacific is witnessing a demand for IoT gateway due to the rising number of connected devices and IoT adoption across several regional industries. As a result of the increase in connected devices, it will directly augment the need for IoT gateways in the region. With the rising smart city initiatives in recent years, it is leveraging the market growth. For instance, in January 2020, Serena, a PAN India LoRaWAN network service provider, announced it had deployed over 60 LoRaWAN networks in many cities. The company aspired to deploy network coverage across India in 100 cities by 2020, a part of the Government of India's Smart City Mission.

Furthermore, a survey by Honeywell India of 2,000 buildings across 10 Indian metros, which evaluated the building 'smartness' across the parameters of being green, safe, and productive, found that although the country's hotels and airports led the way with the smart building technologies, the overall smartness of buildings in India is considered to be very low. The study found that most facilities scored highest on the green elements (45), while safety was lowest (21). This indicates India's great potential to increase its investments in smart buildings over the forecast period. This is anticipated to provide growth opportunities for the IoT gateway.

North America is the second-largest region. It is estimated to reach USD 1,400 million by 2030, growing at a CAGR of 13.4%. Reducing energy consumption is one of the primary concerns among commercial building owners and managers to save money. According to US Energy Information Administration, almost 40% of the energy consumed in the country powers commercial and residential buildings. Also, the highest index scores of the leading smart cities in the US in 2019 are Boston (7.07), Washington DC (6.82), Los Angeles (6.81), and New York (6.65). With the increasing trend toward smart building adoptions, IoT gateway specifies its adoption in various applications, which caters to significant market growth.

Europe is the third-largest region. Germany can be identified as a technologically advanced country that is rapidly adopting the Internet of Things as a way of life in various sectors. The government is one of the leading nations in Europe in IoT adoption. The rise of IoT has driven the studied market due to the dependency on gateways for establishing bi-directional communications between the device-to-gateway and gateway-to-cloud. Furthermore, with the adoption of Industrial IoT in various sectors, IoT gateways have become increasingly popular in the country. Key companies have launched gateway devices targeting the growing need for Industrial IoT Gateways. Over the forecast period, industry-grade IoT edge gateways are expected to gain significant traction. Owing to the country's gaining popularity of edge computing, these hardware devices can support the need for fast application development.

Segmental Analysis

The global IoT gateway market is segmented by component, connectivity, end-user, and region. 

• Insights into Component

Component-wise, the global IoT gateway market is segmented into Processors, Sensors, Memory & Storage Device, and Others.

The Processor segment dominates the market and is estimated to grow at a CAGR of 14.2% during the forecast period. Intel microprocessors are being significantly incorporated into the newly launched IoT gateways. In August 2020, Taiwan-based Aaeon launched an edge IoT gateway built around an 800MHz Arm Cortex-A8 processor and allowed the system to be deployed with solar power or battery operation. Such instances drive the segment growth. 

Sensors are the second-largest segment. Multiple IoT gateways, such as the Dell Edge gateway 3000 series, come with integrated MEMS sensors such as accelerometer, pressure, temperature, humidity, and GPS. IoT gateways generally need to be wireless and battery-powered. Thus, any reduction in power utilization extends the life of the devices. MEMS sensors take advantage of several forces in electromagnetism or fluid dynamics to significantly reduce their power usage without comprising functionality. Such factors drive the segment growth.

• Insights into Component

Connectivity-wise, the global IoT gateway market is segmented into Bluetooth, WiFi, Zigbee, Ethernet, Cellular, and Others.

The Bluetooth segment dominates the market and is estimated to grow at a CAGR of 17.8% during the forecast period. Power consumption is one of the most critical issues in short-range wireless communication technologies. A device with high power consumption is unsuitable for mobile applications and must be used with a constant power supply instead of a battery. While comparing Zigbee and BLE power consumption, it is clear that BLE technology offers the lowest energy consumption. Further, Radio Direction Finding (RDF) and Received Signal Strength Indicator (RSSI) technologies have quadrupled Bluetooth's ability to locate devices by tracing the direction and strength of signals. This enables the adoption of advanced Bluetooth applications into many IoT devices. 

WiFi is the second-largest segment. WiFi is an obvious choice for IoT connectivity because, with in-building WiFi, the coverage is now vital. Standard WiFi (based on 802.11a/b/g/n/ac) is often not the best technology for IoT, but specific IoT applications can leverage the usual WiFi, especially for in-building or campus environments. The clear cases include building and home automation and in-house energy management, where an installed WiFi system can be leveraged as a communication channel, and the devices can be connected to electric outlets.

• Insights into End-User

End-user-wise, the global IoT gateway market is segmented into Automotive & Transportation, Healthcare, Industrial, Consumer Electronics, BFSI, Oil & Gas, Retail, Aerospace & Defense, and Others.

The Industrial segment dominates the market and is estimated to grow at a CAGR of 12.8% during the forecast period. Due to increasing emphasis on Industry 4.0 and the adoption of smart technologies, IoT gateways have become a crucial part of the entire industrial ecosystem. Owing to increasing demand, vendors in the market are introducing more enhanced versions of IoT gateways.

The Healthcare industry is expected to witness the fastest growth among all end-users. The healthcare industry is expected to witness considerable growth as hospitals, laboratories, and medical device manufacturers strive to maintain quality patient care under primary cost containment or even cost-cutting pressures. IoT gateway solutions safeguard and automate data collection and dissemination and facilitate remote patient monitoring, reduced service costs, and asset tracking.

Recent Developments

• April 2022 - Advantech (TWSE: 2395), a world leader in Industrial IoT, and Tsai Ying Clean Energy Co., Ltd. (TYCE) signed a letter of intent (LOI) for collaboration in developing the first "Made-in-Taiwan" hydrogen fuel cell electric bus (FCEB) management system and jointly exploring domestic and international markets for it. This was done in response to the goal of bringing global carbon dioxide emissions to be net zero by 2050.
• February 2022 - The Industrial IoT industry's leading company, Advantech (TWSE: 2395), held an online investor conference. Operating revenue and profit for Advantech both reached record highs in 2021, growing by 15% and 14%, respectively, year over year. The consolidated net income after taxes was NT$8.25 billion, the annual EPS was NT$10.67, and the yearly operating gross margin was 37.8% despite component shortages and rising prices.