IoT continues to contribute moderately to vendor revenue growth, as vendors embed IoT in their offerings

IoT is becoming more deeply embedded in vendors’ offerings and messaging

IoT continues its moderate revenue and gross profit growth as vendors and customers become more familiar with what IoT is and how it can be applied. Increasingly, IoT is an expected part of vendors’ offerings, one of a set of tools that can be used to solve business problems and address business opportunities. IoT continues to be viewed more as a technique than a specific market or technology, but increasingly familiar use cases and more mature packaged solutions and components have made it easier to work with.

TBR expects the IoT market to continue to grow, gradually accelerating over at least the next five years. This means IoT will constitute an increasing percentage of vendors’ revenues. Because IoT is just one tool, however, less attention will be paid to its role. It is embedded in messages as well as in products and services, and customers have come to expect its availability.

Customers are increasingly addressing the costs of moving and storing data and are therefore beginning to migrate to a hybrid edge-cloud architecture

IoT has the potential to generate enormous amounts of data, depending on what is being measured, how often, and how precisely. Without data life cycle policy and management, data accumulates without limit and project costs increase over time. An edge-cloud hybrid architecture processes data near the edge and transmits a limited amount of summarizing data to a central data center or cloud service for further analysis and long-term storage. The hardware and software tools for this approach are available but will become much easier to implement going forward.

While IoT revenue and IoT projects are growing, IoT is less prominent in vendors’ marketing communications

IoT is transforming from a product or service line to a capability or a product or service extension. Marketing IoT as a capability or extension allows vendors to scale back marketing and sales costs to a level commensurate with lower-than-first-expected IoT revenues. Successful vendors have repositioned IoT to support their main product or service line and to reinforce, rather than confuse, their main message. This results in a simpler message that is easier for salespeople and customers to understand and evaluate. It has also resulted in more differentiated IoT offerings, because the offerings are specific to each vendor’s overall strategy.

TBR’s Commercial IoT Benchmark is a semiannual publication that highlights current commercial IoT revenue and gross profit for a select list of 28 vendors. The benchmark leverages financial models and projections across a diverse set of IT and operational technology (OT) components. In addition, it outlines the major vendor-based drivers and trends shaping the market. The benchmark examines multiple IoT segments, including business consulting, IT services, ICT infrastructure, software, security, cloud services and connectivity.

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