Growth forecast for cellular routers and gateways

  • November 20, 2023
  • Steve Rogerson

Annual revenues from the sales of cellular routers and gateways are forecasted to have a CAGR of 12 per cent to reach $ 2.5bn by 2027, according to market watcher Berg Insight.

More than 5.6 million cellular routers and gateways were shipped globally during 2022, at a total market value of approximately $1.4bn. Annual sales grew at a faster rate than shipments at 19 per cent, reflecting strong demand in a constrained supply environment.

Several vendors reported that users had built inventories during the past year to mitigate disruptions and delayed deliveries, which resulted in a slowdown in sales growth in 2023. Even though long-term trends remain intact, cellular router vendors again face a more difficult operating environment in the short term due to uncertain economic conditions.

Cellular routers and gateways provide primary or failover cellular connectivity to devices in a local network. The product category has evolved over the past decades from simple networking devices to aggregation points for devices, implementing functionality for security and edge computing. The market is driven by the growing need to connect assets and workforces in remote and temporary locations as enterprises digitalise their operations.

Ericsson-owned Cradlepoint is the clear leader in the space and differentiates itself by selling its routers combined with software and services exclusively through a subscription model. Sierra Wireless, part of Semtech since early 2023, is the runner up and achieved strong sales growth during the year.

Other vendors that hold significant market shares are Teltonika Networks, Cisco and Digi International.

These five vendors generated $808m in combined annual revenues from the sales of cellular routers and gateways and hold a market share of 56 per cent.

Other important vendors include BEC Technologies, Belden, Casa Systems, Lantronix, MultiTech and Systech in North America; Advantech, Four-Faith, Hongdian, InHand Networks, Peplink and Robustel in Asia-Pacific; and Eurotech, HMS Networks, Rad and Westermo in the Emea region.

The European and Asia Pacific markets are fragmented with a large number of small and medium sized players that generate annual revenues in the range of $5m to $25m.

Routers and gateways for 5G account for close to ten per cent of annual shipments, but a higher share of revenues due to the price premium compared with 4G LTE devices. While many distributed enterprises are already taking advantage of the fast deployment time and ease of use of cellular, Berg believes the trend will accelerate in the 5G era.

As the cost per Gbyte decreases, 5G connectivity should become an increasingly attractive alternative to fixed broadband and, over time, reach a level in which the monthly fee is comparable with a fixed broadband subscription, thereby expanding the market for cellular routers, gateways and modems.

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