According to a report by Forrester, 14% of small and medium-sized businesses are likely to use IoT technology, compared to 23% of global enterprises. Using triangulation and by making a few assumptions, we have formulated a handful of educated guesses for where small business interest in and adoption of IoT is likely to the highest across Latin America, Europe, Africa, and the APAC.
Of all countries in LatAm, Mexico likely has the highest level of interest in IoT for small business, specifically in the regions around the City of Tequila and Mexico City. Columbia and Chile are also likely to have high rates of IoT interest among small business, especially near the cities of Santiago and Medellin.
Germany is likely to have the highest level of small business interest in IoT in Western Europe, along with the U.K. and France. Additionally, Eastern Europe is showing high levels of interest in IoT overall, and the Czech Republic specifically has a very high number of small businesses, which could indicate significant small business IoT interest in this country as well.
Small businesses across Africa are showing a lot of interest in IoT technology, as this technology is known to be incredibly beneficial to the overall lives and businesses of African people. Specifically, South Africa and Kenya are likely to have the highest rates of interest in IoT among small businesses.
Within the APAC region, Singapore is known as the IoT hub currently. India is also likely to have a significantly high level of small business interest in IoT in the near future, as the country is undergoing massive numbers of IoT infrastructure projects, the country has an incredibly high number of small businesses, and programs are being set up to help support internet penetration among these small businesses.
After searching exhaustively though industry and market reports, government databases, and trusted media sites, we did not find a significant amount of direct, quantitative data pertaining to where small business IoT demand and adoption is highest. However, we have used any available information and related information to triangulate some educated guesses. In doing so, we have looked at this topic through several lenses: regions where there are the highest concentrations of small businesses, regions where IoT technology is expected to make the most significant impacts, regions and cities that are considered to be IoT hubs for development and innovation (including smart cities), and regions where IoT use is already high according to market share. While there is a lot of information pertaining to IoT in general, the main challenge came in locating direct findings which quantitatively outline rates of awareness, interest and adoption among small businesses specifically. Therefore, we have triangulated our findings regarding small business concentration overall, against our findings regarding IoT awareness/adoption concentration overall, and have identified areas of overlap in order to determine the regions in which we believe small businesses are likely to be showing the most interest. We have also used any helpful qualitative insights to support these findings.
Overall, we have aimed to provide information no older than two years, and have done so for the majority of instances. We did include a couple of older sources, however these sources were used more as supporting data to help understand the concentrations of small businesses. In these cases, we have used the most recent insights available as published by the most reputable sources we could find, for instance the World Bank. All information we provided pertaining to IoT specifically is from the past two years, minus one or two insights located that are from 2015.
Below, you will find a breakdown of our findings by region. We have not included analysis on the North American region as we felt this information may be redundant, given that North America is the IoT market leader by far, and has a 44% share of the IIoT market specifically. However, some interesting insights on small business IoT adoption in the U.S. can be found here for further reading.
With regard to IIoT specifically, LatAm is expected to have well below a 9% market share through 2022, considering that North America, Europe, and APAC make up the largest shares the market, and the rest of the world falls within the remaining 9% share. Despite this, we believe that small business general IoT interest in the LatAm region could be quite promising given that Latin America is expected to see the fastest growth of all regions in IoT spending at a rate of 21.7% CAGR through 2021, and around 85% of all businesses in LatAm fall into the small business category. Around 33% of small businesses are in the manufacturing sector, which we believe is promising for IIoT small business interest specifically. Of all regions located within LatAm, Mexico likely has the highest level of small business IoT interest, given that Mexico has a large agricultural industry which makes up 3.71% of Mexico's total GDP, and the agriculture segment makes up 4% of the IoT market. Mexico is also the "sixth largest auto part producer in the world," and given that the IoT manufacturing segment makes up 16% of the global IoT market, it is likely that these technologies are peeking the interest of small businesses operating within this space. Within Mexico, the City of Tequila is a hub of smart city innovation, therefore we assume it is likely that small businesses within this region have a high level of IoT awareness. Overall, the smart city market in LatAm is looking very promising, with expected growth of 19.4% per year through 2020, landing at a market size of $758 billion. Santiago (Chile), Mexico City (Mexico), and Medellin (Columbia) are all rising smart cities in the LatAm region, and given the high number of small businesses in LatAm overall, we would assume small businesses located near these regions are likely becoming interested in and beginning to adopt IoT technology. Paraguay and Ecuador are also likely to show high concentrations of small business IoT interests, as they have the third and fifth highest concentrations of MSMEs per capita, respectively, out of every other country in the world. Paraguay has 95 MSMEs per 1,000 people, and Ecuador has 84 MSMEs per 1,000 people.
With regard to IIoT, Europe currently holds a 29% share of the market, with 34% of small businesses in Eastern Europe operating in the manufacturing sector, which could indicate some significant IIoT small business interest in Europe's eastern region. The Czech Republic has the fourth highest concentration of MSMEs per capita, at 85 MSME per 1,000 people. In looking specifically at Western Europe, 99% of businesses fall into the small-medium category, and Europe is definitely a hotbed of IoT activity as shown by this map. Therefore, we would expect to see a highly significant rate of IoT interest among small business in Western Europe. This is further compounded by the fact that Western Europe is expected to reign in $247 billion in IoT spending through 2021. Within Western Europe, Germany is perhaps the region likely to show the overall highest level of interest among small business, as IoT awareness in general was posted at 88%, as of 2015. By 2020, the U.K., Germany, and France "are expected to have the largest market size for IoT in Europe."
Overall, our research findings show a very high level of IoT interest among small businesses, as IoT technology is understood to be able to make very significant positive impacts on small businesses in this region. Furthermore, around 95% of businesses in Sub-Saharan Africa fall into the small business category, with 35% of these small businesses operating in manufacturing. South Africa likely has the highest level of IoT interest among small businesses, as "African Analysis forecasts that the IoT installed base in South Africa will reach 35 million by 2020." We believe Kenya to be another African country where small business interest in IoT is likely to be high, as "Kenya has been putting a lot of effort and resources into growing ICT related businesses to foster innovation and develop a dynamic and sustainable ICT sector," and Nairobi, Kenya recently hosted the 2017 IoT Africa conference. Overall, the Middle East and Africa are expected to see a growth of 21.6% CAGR in IoT spending through 2021.
The APAC region has an 18% share of the IIOT market specifically, a very high number of small businesses, especially in the manufacturing sector. Of all business in East Asia-Pacific, 95% are in the small business category. The same holds true for 85% of businesses in central Asia, and 83% for South Asia. Percentage of manufacturing small business in these regions are 33%, 34% and 50% respectively. Brunei Darussalam and Indonesia have the first and second highest concentration of small business per capita out of every country in the world, with 122 and 100 small business per 1,000 people, respectively. Overall small business interest in IoT would likely be significantly high in this region given the high number of small businesses tied together with the fact that "Asia/Pacific (excluding Japan) will be the IoT investment leader [between 2017 and 2021] with spending expected to reach $455 billion in 2021." Within the region, Singapore is currently known as the IoT hub, however India is currently undertaking a rather impressive smart city project, the full scope of which can be seen here. According to this map, the highest concentrations of smart cities will be located on India's southern tip, as well as in the central-northern region of the country. The first 20 smart city developments are planned for Bhubaneswar, Pune, Jaipur, Surat, Kochi, Ahmedabad, Jabalpur, Vishakhapatnam, Solapur, Davangere, Indore, New Delhi, Coimbatore, Kakinada, Belgaum, Udaipur, Guwahati, Chennai, Ludhiana, and Bhopal. Additionally, as of 2017, India has 52 million small businesses, up from 48 million in 2015 (which was twice as many as the number of small businesses in the U.S. at the time). It is important to note that only 32% of these businesses have an online presence, which might indicate low internet penetration, however we believe the development of a large number of smart cities in the country would signal growing awareness and adoption of internet and IoT technologies in this country. For instance, Google has recently launched a series of free training programs to help these businesses get online.
In closing, we have provided a triangulated analysis of the global regions in which we believe small business interest and adoption in IoT is likely the highest. We have conducted in depth analysis across Latin America, Europe, Africa, and the APAC regions.