According to ABI Research, a global technology intelligence firm, 5G RedCap technology offers IoT device manufacturers a cost-effective way to migrate from LTE to 5G. However, its widespread adoption may not be smooth sailing.
5G RedCap is designed as a natural alternative to LTE Cat-4 and Cat-6. It targets mid-range IoT devices that don’t require the full functionality of 5G. ABI Research predicts that revenue from IoT RedCap modules will reach $1.2 billion between 2024 and 2029.
Despite the promising outlook, widespread adoption in the short term still faces challenges.
Jonathan Budd, an industry analyst at ABI Research, stated, “While device OEMs have shown strong interest in 5G RedCap, IoT revenue will likely remain limited in the short term due to the high price of the modules. It is expected that by 2024, the price of a 5G RedCap module will be around $50. In some cases, this is equivalent to three times the price of an LTE Cat-4 module.”
This significant price difference poses a major barrier for manufacturers.
“Unless there is an immediate threat of LTE networks shutting down, device OEMs are unlikely to upgrade, except for those with longer lifecycles,” Budd explained. “Most IoT OEMs won’t pay for technologies they don’t currently need. As an alternative to LTE, the average selling price of 5G RedCap modules must be reduced by at least 50%. This reduction will make RedCap economically viable for manufacturers.”
The market landscape will become even more interesting with the launch of eRedCap modules in 2026. eRedCap modules are expected to be only 25% more expensive than Cat-1 modules. Their price will be between $10 and $15 per unit.
With 5G standalone (SA) network coverage expected to be more widespread in 2026, eRedCap adoption is projected to be faster than 5G RedCap. ABI Research predicts that cumulative sales of eRedCap will reach $615 million between 2026 and 2029. This growth will be primarily in applications such as security, telemedicine, POS machines, and remote monitoring equipment.
However, the competitive advantages of 5G RedCap should not be underestimated.
“With the release of the optimized second-generation chipset in 2026, 5G RedCap revenue is expected to grow significantly. Coupled with increased production capacity, we anticipate that the average selling price of 5G RedCap modules will halve by 2027. This reduction will drive a new wave of migration from LTE to 5G,” Budd concluded.
(Image provided by Blocks Fletcher)