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COVID-19 changes everything: What’s next for devices and IoT?

The COVID-19 crisis has accelerated some trends and slowed others. In IoT, the emphasis has shifted to a more strategic approach to achieve greater resilience and transparency, while projects largely aimed at increasing operational efficiency have be put on the backburner. At the same time, the crisis has accelerated a maturation in customer organizations that makes it easier to build IoT into digital transformation strategies. In devices, especially in PCs, the 2020 surge in consumer demand will be followed, TBR believes, by market saturation, reducing revenue and driving down margins.

Don’t miss:

  • The new division of labor in IoT customer organizations     
  • Specialized packages and bundles simplify vendors’ go-to-market strategies
  • How the increased PC total addressable market will affect the near-term PC market

Mark your calendars for Wednesday, Jan. 6, at 1 p.m. EST,
and REGISTER to reserve your space.

TBR webinars are held typically on Wednesdays at 1 p.m. ET and include a 15-minute Q&A session following the main presentation. Previous webinars can be viewed anytime on TBR’s Webinar Portal.

For additional information or to arrange a briefing with our analysts, please contact TBR at [email protected].

IoT is helping improve supply chains, smart city infrastructure and healthcare, with growth in energy, public and manufacturing

3Q20 vertical takeaways

Global organizations are battling supply chain issues due to COVID-19. IoT will continue to play a role in enhancing supply chains to help increase long-term resilience in the event of future pandemics or other disruptions. Automation in manufacturing and other verticals continues to be a major trend. Although some companies may have previously been reluctant to use robots due to concerns over the threat to people’s jobs, the pandemic has required businesses to find ways to maintain supply chains and productivity with less human interaction.

The healthcare vertical will continue to rapidly adopt IoT devices and solutions during the pandemic to help medical systems cope with the high volume of patients. Telehealth solutions remain in high demand, as do IoT solutions that are capable of monitoring changes in patient medical data as part of preventive medical treatments and otherwise delivering more efficient patient care.

Smart cities continue to look to IoT to increase public safety and assist with various public operations, including first responders and traffic equipment. However, smart cities increasingly need an overarching main IoT platform to better manage all the IoT sensor and camera deployments, which will help improve the real-time data analysis.

The Commercial IoT Market Landscape delivers overall market and top vertical insights, including identifying key use cases as well as trends in technology and buyer behavior. The landscape also captures the top public deals within those verticals and the lead vendors associated with them.

Commercial IoT market continues to grow during pandemic as demand for automation and security increases

Commercial IoT market continues to grow during pandemic as demand for automation and security increases

3Q20 vertical takeaways

Global organizations are battling supply chain issues due to COVID-19. IoT will continue to play a role in enhancing supply chains to help increase long-term resilience in the event of future pandemics or other disruptions. Automation in manufacturing and other verticals continues to be a major trend. Although some companies may have previously been reluctant to use robots due to concerns over the threat to people’s jobs, the pandemic has required businesses to find ways to maintain supply chains and productivity with less human interaction.

The healthcare vertical will continue to rapidly adopt IoT devices and solutions during the pandemic to help medical systems cope with the high volume of patients. Telehealth solutions remain in high demand, as do IoT solutions that are capable of monitoring changes in patient medical data as part of preventive medical treatments and otherwise delivering more efficient patient care.

Smart cities continue to look to IoT to increase public safety and assist with various public operations, including first responders and traffic equipment. However, smart cities increasingly need an overarching main IoT platform to better manage all the IoT sensor and camera deployments, which will help improve the real-time data analysis.

The Commercial IoT Market Landscape delivers overall market and top vertical insights, including identifying key use cases as well as trends in technology and buyer behavior. The landscape also captures the top public deals within those verticals and the lead vendors associated with them.

The COVID-19 pandemic is causing a dramatic slowdown in the implementation of IoT

The COVID-19 pandemic is causing a dramatic slowdown in the implementation of IoT

Key takeaways

The COVID-19 pandemic is causing a dramatic slowdown in the implementation of IoT. TBR believes the consequent recession will be deep and long and will inhibit the growth of IT generally and IoT specifically. The current slowdown and ensuing slow recovery come on top of slower-than-expected growth of IoT in 2019, resulting in a dramatically lower estimate of IoT-related revenue.

The current crisis is slowing or stopping IoT implementation because of both tightly constrained budgets and restricted access to physical plants. Access will improve over the next four quarters, but budget constraints will continue for at least two years, as global economic growth will be limited by long-term negative effects on verticals such as travel, hospitality, retail and the public sector. IoT deployment in verticals such as healthcare and logistics will benefit from the crisis as organizations adapt to changed circumstances. Organizations will embrace digital transformation more quickly and thoroughly to become more resilient but will operate with reduced resources.

The slower growth prior to the crisis was caused by the increasing preponderance of smaller-scale IoT projects, often implemented within operational technology organizations, as fewer organizations adopted IoT for strategic change than expected. At the same time, lower prices for hardware and increasing use of automation have facilitated IoT project growth but hindered revenue growth.

TBR’s Commercial IoT Market Forecast includes current-year market sizing and a five-year market forecast for multiple commercial IoT market segments and geographies. This research projects growth by technology and vertical, enabling vendors to identify revenue opportunities that most closely align with their go-to-market strategies. The report also provides a view of growth drivers and the ways in which commercial IoT trends will influence the market.

Total commercial IoT market revenue is expected to grow from $385B in 2019 to $687B in 2025, a CAGR of 10.1%

Cloud services and IT services are fastest-growing component segments

Cloud services will continue to be the fastest-growing segment of the IoT market despite inroads from edge and hybrid architectures. IT services, primarily design and implementation services, is also a strong segment, playing a role in both custom solutions and in integration and deployment of packaged and bundled solutions. While budgetary constraints stemming from the COVID-19 pandemic will slow overall IoT growth, cloud-based solutions are often easier to implement and more resilient. They also facilitate remote and distributed development. New wireless communications technologies, including 5G and Narrowband IoT, contribute to IoT growth, lowering costs and making new solutions feasible. Wireless technology enables mobile and distributed solutions, which will be helpful as public and private organizations leverage IoT to meet new requirements.

TBR’s Commercial IoT Market Forecast includes current-year market sizing and a five-year market forecast for multiple commercial IoT market segments and geographies. This research projects growth by technology and vertical, enabling vendors to identify revenue opportunities that most closely align with their go-to-market strategies. The report also provides a view of growth drivers and the ways in which commercial IoT trends will influence the market.

The number of IoT use cases continues to grow, particularly those with smaller-scale and specific applications

IoT projects are proliferating across verticals and geographies, despite the reduced level of promotion and discussion among vendors. Customers, and therefore vendors, are focused on solutions, and IoT is a class of solutions, not a solution itself. Customers understand the broad concepts of IoT and are concentrating on using those concepts to solve specific problems. Vendors are addressing the market through vertically oriented products or vertically focused sales structures as well as technical and channel relationships with vertically oriented partners.

Though there are common use cases, they largely lack common vendors or offerings. TBR believes that the IoT market is continuing to evolve toward a large number of specialized offerings, increasingly self-contained as bundles and moving toward stand-alone solutions requiring less configuration and integration. Turnkey solutions and a market where buyers and sellers of specialized IoT solutions can easily connect are a long way off, however.

TBR’s semiannual Commercial IoT Market Landscape delivers overall market and top vertical insights, including identifying key use cases as well as trends in technology and buyer behavior. The landscape also captures the top public deals within those verticals and the lead vendors associated with them. Contact an account executive for more information.

Vendors are embedding IoT throughout their organizations

Vendors are rebuilding their IoT GTM strategies

Although vendors are deemphasizing IoT publicly, their overall businesses continue to grow at an accelerating rate slightly over 20%. While TBR is seeing more IoT-based projects than before, the average project scale is shrinking. And though a growing number of specialized solutions and components are entering the market, most still require substantial configuration and integration.

Many vendors enthusiastically embraced IoT as a way to open new markets and bring in new customers. Apart from the major IoT platform vendors — Amazon Web Services (AWS), Microsoft, Google and PTC — smaller vendors are now using IoT to enhance and promote their existing products and services, largely to existing customers. This reflects how IoT has become an often-implicit part of companies’ digital transformation offerings and go-to-market strategies. In many cases, IoT development, marketing and sales organizations have be folded into product, service and vertically oriented organizations.

The number of IoT use cases continues to grow, particularly those with smaller-scale and specific applications

IoT projects are proliferating across verticals and geographies, despite the reduced level of promotion and discussion among vendors. Customers, and therefore vendors, are focused on solutions, and IoT is a class of solutions. While customers concentrate on using IoT concepts to solve specific problems, vendors are turning to vertically oriented  products and sales structures as well as relationships with vertically oriented IT and OT partners.

As a result of multiple vendors having similar needs, there is a large variety of use cases from which common use cases in specific verticals are emerging. For instance, in manufacturing, there are production-related use cases that increase productivity and quality, as well as product-oriented use cases that help monitor and service products in the field. In the public and utilities verticals, there are many instances of smart metering of power and water. In the public vertical, use cases focusing on air quality, parking and lighting are common.

TBR’s semiannual Commercial IoT Market Landscape delivers overall market and top vertical insights, including identifying key use cases as well as trends in technology and buyer behavior. The landscape also captures the top public deals within those verticals and the lead vendors associated with them.

IoT settles in for the long haul

Insights from TBR’s 2020 Devices & Commercial IoT Predictions

Join Principal Analyst Ezra Gottheil and Analyst Eric Costa for a presentation on TBR’s predictions for 2020 and beyond, concerning both devices and commercial IoT. IoT is playing an increasing role in the application of IT to business, and in IT spending, but it is not drawing as much attention as it once did. The role of AI in IoT is somewhat less than first expected, but it is still important. In the world of devices, voice interfaces and other conversational interfaces are due for explosive growth.

Don’t miss:

  • How customers and vendors are treating IoT, and how treatment has changed
  • The more purposeful role of AI in IoT
  • How the conversational interface, and smart speakers, have only begun to demonstrate their relevance

TBR webinars are held typically on Wednesdays at 1 p.m. ET and include a 15-minute Q&A session following the main presentation. Previous webinars can be viewed anytime on TBR’s Webinar Portal.

For additional information or to arrange a briefing with our analysts, please contact TBR at [email protected].

TBR 2020 Devices & Commercial IoT Predictions: IoT settles in for the long hual

IoT becomes part of the digital transformation family, and conversational user interfaces become more common

IoT continues to mature. This is reflected in more powerful and easier-to-implement IoT software and cloud services as well as in a greater understanding of what IoT is and what it is good for. Vendors and customers now better understand the role of IoT and the more common use cases and expect IoT to be used where appropriate.

For most vendors, IoT is no longer a differentiating headline; instead, it is included as one of the techniques or technologies, either as part of larger offerings or as specific IoT-oriented components. An increasing number of offerings are complete packaged solutions or customizable bundles that include or feature IoT. Though IoT is maturing and growing as a percentage of vendor revenue, it is less often standing alone as a spotlighted capability.

TBR’s IoT predictions from 2019 were confirmed, and these trends will continue through 2020 and beyond:

The IoT ecosystem will sort itself out; vendors will find their niches

Increasingly, vendors are messaging their specific offerings as requiring the integration of other vendors’ offerings to create complete solutions, or they are joining with other vendors’ offerings to deliver bundled and packaged solutions.

Packaged and bundled IoT solutions will proliferate

There is an increasing number of bundled and packaged solutions on the market, offered by component vendors, integrators and operations technology (OT) vendors. One type of packaged solution is enhancements to existing software packages that tap IoT as an extension of their capabilities.

Not all data is valuable: Data economics will drive design

Several vendors, including Dell Technologies and a prominent India-based systems integrator, reported that most of the data generated in IoT solutions is discarded shortly after it is analyzed and used. We believe the challenge over the next several years will be identifying data worth keeping, condensing and summarizing, and then storing it, socializing it and discarding it according to a data life cycle plan.

In the past, IoT was intimidating to both vendors and customers, as the opportunities appeared endless while there were few demonstrated use cases. As a landscape of use cases emerged, as IoT component and platform offerings matured, and as vendors gathered experience in IoT, it has become easier for customers and vendors to identify opportunities for IoT, and to design and deploy solutions. IoT describes one broad class of use cases among the variety of possible non-IoT situation-specific solutions and has become part of the vast number of available digital transformation solutions.

2020 Predictions:

  • There will be less talk of IoT as it will be increasingly viewed as one technique among many for delivering digital transformation
  • AI in IoT will increasingly be encapsulated in specific functions like recognition and detection
  • Conversational user interfaces, based on voice or typed communication, will play an increasing role in business solutions

Register for TBR’s 2020 Devices & Commercial IoT webinar, IoT settles in for the long haul, Feb. 5, 2020.

Technology Business Research 2020 Predictions is a special series examining market trends and business changes in key markets. Covered segments include telecom, cloud, devices & commercial IoT, data center, and services.

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.