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We will research the Internet of things (IoT) and connected device industry (from a software development perspective), and provide an industry overview that includes market size trends.
The global Internet of Things (IoT) market is expected to grow from $2.99 trillion in 2014 to $8.9 trillion in 2020, with an annual growth rate of 19.92%. It is expected that 72% of the companies plan to increase their IoT spending by 2020, with $6 trillion invested in IoT solutions between 2015 and 2020. Industrial manufacturing is expected to spend $890 billion when it comes to IoT. Healthcare and life sciences are expected to inflate their spending from $520 billion in 2014 to $1.335 trillion in 2020, which amounts to a yearly growth rate of 17%. By 2020, half of IoT spending will be on discrete manufacturing, transportation, logistics, and utilities.
Current and FUTURE TRENDS
REVENUE
Most recent data depicts that the current global Internet of Things (IoT) market reaches a total valuation of $2.99 trillion, in 2014. This figure is forecasted to rise to a total of $8.9 trillion by 2020. Moreover, this equates to a projected annual growth rate of 19.92%. Similarly, this forecasted growth is mirrored in the growth of the IoT device market: "installed base of the Internet of Things devices is forecast to grow to almost 31 billion worldwide. By 2025 the installed base of IoT devices will be over 75.4 billion devices."
B2B IoT segments will be responsible for generating more than $300 billion each year, which includes about $85 billion in the industrial sector. A top advisory firm Bain offers great insight into future expectations in B2B IoT: "most competitive areas of IoT will be in the enterprise and industrial segments. Bain predicts consumer applications will generate $150 billion by 2020, with B2B applications being worth more than $300 billion. Globally, enthusiasm for the Internet of Things has fueled more than $80 billion in merger and acquisition (M&A) investments by major vendors and more than $30 billion in venture capital."
EXPENDITURE
When it comes to spending in the IoT industry, 72% of the companies plan to increase their IoT budgetary expenditures by 2020. Most of these companies plan to restrict this increase to 10% to 30%. On the other hand, some select companies are confident in expanding spending by more than 30%. In specific, industrial manufacturing is expected to spend up to $890 billion in 2020. Healthcare and life sciences are predicted to inflate their spending from $520 billion in 2014 to $1.335 trillion in 2020 amounting to a yearly growth rate of 17%, a far larger increase than that of industrial manufacturing expenditures.
In total, $6 trillion will be invested in IoT solutions between 2015 and 2020. IoT spending by businesses will also see an increasem, from $215 billion in 2015 to $832 billion in 2020. In the same period, consumer spending on IoT solutions will increase from $72 billion to $236 billion. These figures best reflect the overall market growth when it comes to expenditure, which consequentially fuels a boost in revenue figures.
areas of growth
GENERAL
When it comes to specific technologies, WiFi and Bluetooth low energy (BLE) are most preferred IoT connectivity tools. After these, the next inline are long-range, wide-area networks (LoRaWAN) and narrow band IoT (NB-IoT). Key decision drives are often discussed in regard to the specific technologies that vendors select, these key factors include"Data analytics, correlation, and pattern recognition capabilities at point-of-data creation."
Manufacturing is currently the main growth sector when it comes to IoT network connections. This sector of the industry experienced a growth of 84% in 2017. Verizon’s annual study of IoT adoption ranks manufacturing as the leader in network connection growth. After manufacturing comes energy and utilities, transportation and distribution, and smart cities.
FORECASTS
By 2020, half of IoT spending will be on discrete manufacturing, transportation, logistics, and utilities. The key to success in these fields is ofte described as securing "scalable and reliable end-to-end integration solutions that encompass on-premise, legacy and cloud systems, and platforms". Discrete manufacturing, transportation and logistics, and utilities will be the main fields in all industries when it comes to IoT spending by 2020, averaging $40 billion for each field. Supply chains present a large area of growth potential going into the future, as companies can often be seen to hold supply chains in high regard: "Improving the accuracy, speed, and scale of supply chains is an area many organizations are concentrating on with IoT. IoT has the potential to redefine quality management, compliance, traceability and manufacturing intelligence".
Looking further into the future, it is expected that by 2022, pressure and temperature sensors will take up 62% of all enabled IoT sensors in the world. Cisco, in specific, expects that there will be 3.3 billion machine-to-machine (M2M) global connections by 2021, which would mean a significant increase from 1.5 billion in 2018.
INDUSTRY Focuses
Today, there are two areas where enterprises are employing IoT solutions most often: customer service (70%) and safety (56%). These are followed by cost efficiencies, improving organizational capabilities, and supply chain visibility (all amounting to 53%). Overall, 53% of businesses expect the solutions from IoT to help them achieve bigger revenue streams in the next year. Another 51% expect solutions from IoT to open up new markets and 42% spend an average of $3.1 million per year on IoT.
According to a 2017 white paper by IDC, the four main industries going through IoT digital transformations are discrete manufacturing, healthcare, retail and consumer products. This statement is further backed by Frost & Sullivan, it is stated that IoT in the field of medicine is going to experience a yearly growth rate of 26.2% which will enable it to reach $72 billion by 2021. However, the largest area of focus through is security. This field is noted throughout and sees heavy scrutiny. Cybersecurity risk is expected to increase exponentially and companies need to find ways to ensure that their IoT solutions are on par with security threats.
One quotation of note sheds considerable light on the spread of industrial growth in the IoT market: "Sensor, medical device, fitness and wearable manufacturers, data analytics, cloud and data warehousing, cybersecurity and high-tech companies, hospitals and physician networks, health plans and payers, as well as regulatory and standards bodies are all excited with the potential that healthcare IoT brings, but are equally concerned about the challenges in privacy, cybersecurity, data interoperability, and patient engagement that come along with it."
CONCLUSION
The global Internet of Things (IoT) market is expected to grow from $2.99 trillion in 2014 to $8.9 trillion in 2020. Manufacturing is currently the main growth sector when it comes to IoT network connections, with a growth rate of 84% in 2017. Discrete manufacturing, transportation and logistics, and utilities will be the main fields in all industries when it comes to IoT spending by 2020, averaging $40 billion for each field.