Posts

The IoT market continues to stabilize, with the overall market growing at a moderate accelerating CAGR of 24.8%

4Q18 Commercial Internet of Things Market Forecast infographic

TBR projects total commercial Internet of Things (IoT) market revenue will increase from $456.1 billion in 2019 to $1.4 trillion in 2024, a CAGR of 24.8%.

Topics covered in TBR’s Commercial IoT Market Forecast 2019-2024 include deeper examinations, such as trends, drivers and inhibitors of the seven technology segments we track (e.g., cloud services, IT services, ICT infrastructure, and connectivity), the 10 vertical groupings we cover (e.g., public sector, healthcare, manufacturing and logistics), and four geographies (i.e., APAC, EMEA, North America and Latin America).

In addition to a more in-depth examination of the aforementioned topics, we also delve into the rise of “bundles” and “packaged solutions,” and how vendor partnering is lowering cost of sales for IoT implementations.

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].

The IoT market continues to stabilize, with the overall market growing at a moderate accelerating CAGR of 24.8%

TBR projects total commercial Internet of Things (IoT) market revenue will increase from $456.1 billion in 2019 to $1.4 trillion in 2024, a CAGR of 24.8%.

It is important to remember that IoT is a technique for applying technology components, not a technology itself, which leads to certain drivers and inhibitors. Because it is a technique, IoT has an unlimited shelf life. Vendors that invest now and solidify their IoT go-to-market strategy will benefit in the long run. Methods for connecting equipment and solutioning may evolve, but the overarching technique is not going away. However, IoT growth is limited by the components and solutioning that compose the technique, including capabilities, standards and cost. This leads the numerous submarkets and sub-technologies of the IoT ecosystem to experience varied growth.

IoT revenue will accelerate as technological capabilities and standards mature and common solutions appear, culminating in lower cost and complexity.

Graph showing commercial iot market forecast alternative market performance scenarios 2019-2024

TBR believes an emerging growth accelerator is the fact that IoT offerings have evolved from the initial DIY stage to easily integrated components to component kits to, finally, almost complete solutions. At each point in this evolution, IoT becomes less expensive, less burdensome and less risky to customers, while still delivering business benefits. This greatly broadens the market, resulting in market growth and revenue growth for vendors that participate in this evolution.

However, customers remain concerned with the cost of IoT solutions, including the expense associated with transmitting, processing and storing data. The amount of data stored increases as IoT projects remain in operation, and a thoughtful data collection and storage policy is key to maintaining positive ROI.

The diversity of IoT solutions and their multicomponent and multivendor nature require new approaches from vendors

The Internet of Things (IoT) market is beginning to stabilize, if not mature, and this is a good time for vendors to focus on vertical markets and use cases within those markets, especially where there is a gap that aligns well with an IT vendor’s strength, such as telecom operators’ capabilities in logistics.

“We project total commercial IoT market revenue will increase from $370.3 billion in 2018 to more than $1 trillion in 2023 at a CAGR of 24.4%,” said TBR Analyst Dan Callahan.

Commercial IoT Market Forecast Alternative Market Performance Scenarios 2018-2023

Other topics we cover in the Commercial IoT Market Forecast 2018-2023 Update include the emergence of embedded IoT solutions, the rise of independent software vendors and independent hardware vendors as paths for propagating embedded solutions, and the drivers and inhibitors for select verticals and technology segments where we anticipate the most change.

The Commercial IoT Market Forecast 2018-2023 Update 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.

Time to get industrial about healthcare

Internet of Things (IoT) hesitation in the healthcare vertical stems from the industry’s complexity, as it is chained by liability and privacy issues, a general unease about change, legacy equipment, and unevolved processes. These complexities are all rooted in real concerns of customers and vendors in the healthcare space. However, the “Industrial IoT Analytics for the Healthcare Industry” presentation by Glassbeam employees Gopal Sundaramoorthy and Puneet Pandit at PTC’s LiveWorx event highlighted that it is time to shift how vendors go to market within the healthcare industry.

Sundaramoorthy indicated there are not a lot of high-level analytics, or grand-scheme IoT implementations, in healthcare. The challenges mentioned above, especially privacy issues, including healthcare organizations’ desire to keep data internal, prevent it. Instead, Sundaramoorthy explained vendors need to talk to healthcare organizations like they talk to manufacturers, focusing on how healthcare organizations can connect equipment to improve asset utilization, save costs and increase efficiencies. This is the operational technology (OT) discussion instead of the IT discussion.

With asset utilization, for example, how is a medical scanning device being used? How many scans are being done and in how much time, what types of scans are being done, and when are the scans happening? Or, a conversation around operator utilization could include aspects such as determining whether operators are fully trained by measuring what functions they are using and how long they take compared to average or trained users. Likewise, predictive maintenance, such as noting when a bulb needs to be replaced in an MRI machine, helps avoid costly or dangerous downtime. These simpler-to-implement OT-based measurements will help hospitals run more efficiently and save money just through connecting machines and adding straightforward analytics. It also helps medical device manufacturers better understand why things are going wrong and how to best improve diagnostic time, shorten repair time and relieve frustration for medical professionals.

Sundaramoorthy indicated that simple connectivity is healthcare’s biggest problem. To break the hesitation barrier, vendors should focus on solving the first step in IoT: connecting the often woefully out-of-date machinery and building in IoT, in the spirit of OT, to prove ROI to medical organizations. After machines are connected and OT-based IoT is proving consistent ROI, the discussion to move to more transformative IT use cases will be a much easier sell.

Smart city solutions have to think outside the trash bin

The “Connecting Your Business to the Smart Cities We All Live In” panel during PTC’s LiveWorx event included ideas consistent with TBR’s previous views on smart cities. One of the most interesting speakers was Nigel Jacob, the co-founder of the Mayor’s Office of New Urban Mechanics, an R&D organization within Boston’s City Hall. Jacob gave a presentation on the “Boston Smart City Playbook,” compiled by his organization, which lists the following rules for vendor engagement:

  1. Stop sending sales people.
  2. Solve real problems for real people.
  3. Don’t worship efficiency.
  4. Better decisions, not (just) better data
  5. Platforms make us go ¯\_(ツ)_/¯.
  6. Toward a “public” privacy policy

All of these points align well with TBR’s view of how vendors need to improve their go-to-market strategy, but a few stood out. “Stop sending sales people” translates well inside and outside smart city applications. Internet of Things (IoT) is a complex technology, and it is difficult for end users to really understand what IoT can do for them. Public sector officials, just like the CEO, CIO or CTO of any private organization, do not want to listen to a sales pitch about why a technology is great. Instead, in the example of Boston, decision makers desire vendor engineers or consultants to be on-site to explain why IoT is good for their city’s particular challenges, how it can be implemented and how it has worked for others, as well as to provide concrete evidence of what Boston can expect to gain in the long run. Only then will a vendor’s solution be taken seriously.

“Better decisions, not (just) better data” is a point TBR believes vendors should take to heart. Data is a building block to insight, but piles of data with no feasible way to turn the data into actionable insight is little more useful than no data at all. Customers seek insight through data, but if there is not an easy path to achieving insight, its value is significantly reduced. Customers believe that to get value out of IoT, they need to bolster their IT, operational technology (OT) and data scientist staff. TBR believes incorporating artificial intelligence and improving user interfaces to simplify IoT products is a path to unlocking value for business decision makers, enabling them to make better decisions without incurring huge selling, general and administrative expenses.

“Platforms make us go ¯\_(ツ)_/¯” is also parallel to customer concerns recorded by TBR. Platforms are exciting to techies, but they do not mean much to customers. Instead, they generally raise fears of platform lock-in, where customers will be unable to access outside technologies or risk becoming a member of a dying standard. Also, the platform level is often too high for customers to understand how IoT will benefit them. Vendors must continue to boast interoperability and focus on use cases or small deployments. Small deployments that solve immediate problems — not technical and platform-based discussions — will be vendors’ gateways to customers. After a few successful small projects, vendors can introduce customers to the grander view centered on a wide platform.

Bigbelly vice president of North American Distribution and Global Marketing Leila Dillon, another presenter during the panel, explained how Bigbelly solved multiple problems for individual cities by thinking outside the box. The company sells solar-powered waste systems, mostly bins, that automatically compact trash and alert waste management when they need to be picked up. This granted cities substantially increased efficiency not only because automatic compacting eliminated waste buildup but also because the alert system saved wasted time having trucks on routes checking all bins instead of only those that are full. Additionally, Bigbelly observed that by thinking creatively, it could further cities’ smart city goals. It started working with cities to equip waste bins with small-cell technology to enable ubiquitous citizen connectivity. In other cases, the company equipped cameras or sensors to track foot or street traffic to help cities understand congestion. Bigbelly is a great example of a company helping to solve a pointed problem — in this case, making waste collection more efficient — and then working with the cities to build additional IoT use cases one success at a time.

‘Popcorn market’ and ‘shrink-wrapped’ IoT: TBR gets creative with industry terms

Observers of emerging tech trends often seek the “hockey stick” moment, or that period when the market takes off following an explosion of activity. However, as TBR Principal Analyst Ezra Gottheil explains in his special report ‘Shrink-wrapped’ IoT will drive accelerating growth; an explosion of activity, or huge moment of growth, will likely never occur in the overall commercial IoT market. Gottheil writes:

Each IoT [Internet of Things] solution comes to market at a different time, meaning that as more packaged solutions become available and as some experience rapid growth, the total growth accelerates. The IoT market has been described as a “popcorn” market, in which each submarket “pops” at its own pace — some smaller markets grow explosively, but the total market (the “pot of popcorn”) expands more uniformly.

A popcorn market leads to slowly accelerating overall growth, generating frustration for companies that had anticipated rapid adoption. This is especially true in the IoT market for horizontal IT companies such as Hewlett Packard Enterprise (HPE) and Dell EMC that are finding themselves selling into new markets, including product development, operational technology (OT) and data science organizations, instead of traditional IT department constituencies. Gottheil notes that for organizations that are seeking to benefit from IoT, the key to accelerating growth is developing packaged “off the shelf” — or “shrink-wrapped” — IoT solutions. The increased availability of IoT solutions targeting specific use cases and business processes in industry subverticals will be key to generating IoT-driven vendor revenue for the foreseeable future.