2018 will beget a new way of thinking about how to use IoT, which will ultimately increase adoption across verticals

HAMPTON, N.H. (Feb. 12, 2018) — Technology Business Research, Inc.’s (TBR) Commercial IoT Market Forecast 2018-2023 finds that the hype around Internet of Things (IoT) will diminish in 2018 and be replaced with a more stepwise and outcome-based way of thinking. Customers now seek connected operations for their industry-specific operational functions and connected business tools for their horizontal enterprise functions. As vendors adhere to this new approach, it will enhance customer reception to IoT.

TBR estimates overall commercial IoT market revenue will increase from $370.3 billion in 2018 to $1.1 trillion in 2023, a CAGR of 24.4%. The IoT market is composed of many submarkets that are tailored to different types of businesses and experience varied growth. The overall market, however, grows at a steady rate. This type of market has been described as a “popcorn” market, where each submarket “pops” at its own pace, some explosively, but the overall market, the pot of popcorn, expands more evenly.

The evolution of IoT-related technologies to include more specialized and more business-relevant prepackaged components will lower costs and time to implementation, and provide more comprehensive solutions that will help gradually accelerate IoT growth in market verticals.

TBR believes the total market CAGR could swing higher and lower due to a number of factors:

High Estimate Drivers Low Estimate Drivers
•   Customers and vendors abandon expectations for big IoT transformation projects to refocus on smaller and incremental IoT tools.

•   IT embraces IoT, making adoption of the technology smoother and more commonplace, and cementing small IoT projects as the steppingstones to achieving business goals through IT modernization and digital transformation efforts

•   Vendors continue to hype IoT and total transformation, instead of easily understandable and tactical IoT techniques, causing IoT to stall.

•   IT departments that encounter IoT sprawl and shadow IoT seek to control, not foster, IoT projects.

•   Development of user-friendly artificial intelligence (AI) lags, leaving vendors and customers unable to prove the value of the large swaths of data generated from larger IoT deployments.

The public sector vertical has the highest CAGR at 27.6% (growing from $40 billion in 2018 to $135.4 billion in 2023):

We believe this is because the initial security, legal, privacy and data concerns, which kept this vertical at a lower revenue base in 2017 and prior, are beginning to be worked through as the public sector recognizes the potential of IoT to increase efficiencies and reduce stressors. TBR believes near-term deployments will be focused on optimizing essential functions in the near term.

In terms of the components of IoT, cloud services (cloud-based IoT platforms and/or IoT data storage, processing and SaaS) continues to lead in CAGR against the other seven technology components we track. We estimate cloud services will grow from $36.5 billion in 2018 to $137.4 billion in 2023, a 30.4% CAGR:

Cloud services grows rapidly as customers adopt “as a Service” vendor solutions and utilize centralized cloud for intense computing needs. Revenue drivers for cloud services include pricing flexibility, suitability for intense computing needs, and insights gained from consolidated data and analytics.

However, some small and midsize companies keep cloud on premises due to centralized cloud cost and security concerns, and many customers seek immediate results more suited for edge-based computing.

In terms of geographies, North America maintains a large lead in total revenue so far in 2018, and will continue to lead in revenue in 2023. Most North America-based commercial IoT spend to date has been in energy, manufacturing and transport due to the tight-knit relationship between digital and industrial businesses in the technological hubs. However, the region’s maturity will result in the lowest CAGR.

APAC giants indicated IoT is crucial to their global competitiveness. As APAC workforces change, countries are investing early to remain competitive globally. IoT offers a route to cost-competitive manufacturing amid a maturing economy and rising wages. APAC will continue to outpace EMEA and will close in on North America in total revenue by 2023.

The Commercial IoT Market Forecast 2018-2023 highlights the current and emerging revenue opportunities in the commercial IoT market for vendors. It leverages financial models and projections across a diverse set of IT and operational technology components, verticals and geographies. In addition, the report outlines the major component and industry drivers and trends shaping the market.

For additional information about this research or to arrange a one-on-one analyst briefing, please contact Dan Demers at +1 603.929.1166 or [email protected].

 

ABOUT TBR

Technology Business Research, Inc. is a leading independent technology market research and consulting firm specializing in the business and financial analyses of hardware, software, professional services, and telecom vendors and operators. Serving a global clientele, TBR provides timely and actionable market research and business intelligence in a format that is uniquely tailored to clients’ needs. Our analysts are available to address client-specific issues further or information needs on an inquiry or proprietary consulting basis.

TBR has been empowering corporate decision makers since 1996. For more information please visit www.tbri.com.

9 floors of innovation, intelligence and industry

Nine floors filled with experts, emerging technologies, partners and clients, all centered on a simple formula: innovation, intelligence and industry, plus rotation to the new while developing new skills.

Counting down to today; investing in tomorrow

A bit of history: Five years ago, Accenture dedicated its Bangalore assets to delivery, focusing on quality, productivity and lowering clients’ (and Accenture’s) costs. Four years ago, the company announced a “rotation to the new,” partially in response to a confusing world of emerging technologies. Three years ago, Accenture’s expectations for the future included everything becoming liquid, intelligent and connected. Last summer, the Bangalore Innovation Hub became an advanced technology center, focused on innovation, intelligence and industry. According to Accenture Technology Group Chief Executive Bhaskar Ghosh, expectations have become reality as Accenture, under one roof, combines those three elements with emerging technologies and a newly skilled workforce. The company invested more than $3 billion in fiscal year 2017 — in training, acquisitions and assets/IP — and will continue to invest this year to build further, cementing its market leader position.

One notable exception to nearly every innovation/experience/collaboration center TBR has visited over the last two years: Accenture has devoted two floors in Bangalore to technology partners, with dedicated professionals and space marked specifically for SAP, Oracle and Microsoft, three partners TBR highlighted in its October 2017 coverage of Accenture: “As Accenture strives to generate a vast majority of its sales from in ‘the new,’ a profitable relationship with the Big Three will be critical to success.” While unmistakably an Accenture facility — no client could be confused about where they are, even when seeing SAP- or Oracle-centric solutions — the investment in resources and physical space to technology partners may be unique across Accenture’s peers. One floor houses just Avanade, the company’s joint venture with Microsoft. TBR has argued for years that consultancies maintaining technology vendor agnosticism should still recognize their clients’ core IT systems will still be there even after the client spends a day being amazed by emerging technologies and all that digital transformation can do. Highlighting, or at least including, these technology partners should be part of any client workshop or design-thinking day. Combined with the “Business Groups” created with SAP, Oracle and, recently Pivotal, Accenture has taken a giant leap forward and literally built separate floors dedicated to these partners.

 

 

On Jan. 24, 2018, TBR attended Accenture Technology’s Analyst Day at the recently opened Innovation Hub in Bangalore, India. The event included technology demonstrations around specific industries and partners, as well as extensive discussions with Accenture executives.