Cumulative revenues from the sale of RedCap-based IoT modules will reach $1.2 billion over the next five years, according to a new forecast by ABI Research. Sales of slimmed-down eRedCap modules, available later in the cycle, will reach $615 million in the period, from 2024 to 2029, it said. The firm noted that, despite “keen interest” from IoT manufacturers, high prices will hold sales of reduced-capability (RedCap) 5G units back in the short-to-medium term. RedCap modules, based on new 5G NR technology, are currently going for about three times the price of their LTE-based (4G) Cat-4 equivalents, which they will displace, nominally, in terms of performance features for IoT use cases.
The company reckons it will take until RedCap module prices halve, in 2027, and also until the arrival of further-reduced (enhanced) RedCap (eRedCap) modules at a lower price-point in 2026, for the sales to jump. The latter will enter the market at a more manageable 25 percent premium versus current LTE Cat-1 modules, which they rub up against in terms of functionality – and compared with the 300 percent premium for RedCap modules currently, versus Cat-4 units. “Most IoT OEMs will not pay [much more] for a technology they do not yet need,” remarked Jonathan Budd, industry analyst at ABI Research.
He explained: “IoT revenues will likely remain limited in the short term due to excessive module pricing. In 2024, 5G RedCap modules are expected to sell at around the $50 mark, equating in some cases to a three-fold price premium on LTE Cat-4 modules. Without the immediate threat of LTE network shutdowns, device OEMs are unlikely to upgrade, except for devices with longer lifecycles. Most IoT OEMs will not pay for a technology they do not yet need; as a replacement technology for LTE, 5G RedCap module ASPs must be driven down by at least 50 percent to make RedCap economically viable for manufacturers.”
5G RedCap is a simplified version of 5G, providing IoT device OEMs with an affordable migration pathway from LTE. As a natural replacement for LTE Cat-4 and Cat-6, 5G RedCap targets mid-range IoT devices that do not necessitate the full power of 5G; eRedCap, arriving in the market in 2026, is pitched more squarely for IoT applications that currently use LTE Cat-1 and Cat-1bis. Budd reckons eRedCap modules – “mostly going into security, telehealth, point-of-sale, and remote monitoring devices” – will be priced at between $10 and $15 per unit on arrival.
Budd said: “With more widespread 5G SA coverage expected by this time, eRedCap migration is projected to take off more immediately than 5G RedCap. 5G RedCap revenues are only expected to surge following the release of optimised second-generation chipsets in 2026. Coupled with greater manufacturing volumes, we should see 5G RedCap module ASPs halving by 2027, driving an additional wave of migration from LTE.”
For more about 5G RedCap from Jonathan Budd at ABI Research – as well as from Sequans, GSMA, and 1NCE – join the RCR Wireless webinar on October 24: Will RedCap be a boon for 5G and IoT? Sign-up here, or click on the image below.
