The Internet of Things (IoT) has well established itself as the next huge growth area in business and industry. For business leaders and investors looking to profit in the near future, this area has huge significance. The players who best position themselves to take advantage of this rapidly growing field will benefit tremendous and get a leg up on their competition. With that in mind, it is important to look at where IoT is growing most rapidly and which businesses are leading this push.
In its analysis of IoT units sold and installed in 2016, renowned analyst Gartner, Inc. breaks IoT devices into three significant categories: Consumer, Cross-Industry Business and Vertical-Specific Industry. Consumer devices primarily include: automotive, television and wearables. The Cross-Industry segment mostly includes devices targeted at smart buildings that include LED lighting, HVAC and security systems; while the Vertical-Specific segment primarily includes manufacturing devices, process sensors (for electrical energy generating plants) and real-time location devices associated with healthcare.
Units Installed and Dollars Spent in 2016
According to Gartner, at roughly 3,963 million units, 63% of the 6,381.8 million IoT devices sold in 2016 fall into the consumer category (“Gartner Says 8.4 Billion Connected ‘Things’ Will Be in Use in 2017, Up 31 Percent From 2016,” February 7, 2017.) By comparison, Cross-Industry IoT devices accounted for approximately 17% (at 1,102 million devices) and Vertical Specific devices accounted for 20% (1,316.6 million devices).
Gartner projects that the 6,381.8 million figure will rise to 20,415 by the year 2020, more than tripling in the next three years. In terms of dollars spent, Gartner puts the 2016 total at $1.38 billion and projects that total revenue will jump to $2.9 billion in 2020.
IoT Service Area – Growth Potential
The Gartner report adds that services associated with IoT technology has the potential to grow at a tremendous rate as more devices get implemented and businesses diversify their offerings, estimating that services associated with IoT products will generate approximately $273 billion in revenue in 2017. These numbers should catch the attention of both business leaders and investors, as old business models get disrupted in ways that nobody could conceive just a few years ago.
Echoing these sentiments, Louis Columbus of Forbes estimates that B2B spending on IoT alone will reach $267 billion by 2020 (“Internet Of Things Market To Reach $267B By 2020,” January 29, 2017). Columbus reiterates the growth potential for IoT-related services, indicating that IoT analytics and applications for businesses will capture 60% of the growth between now and 2020 (approx. $64.1 billion).
Biggest B2B Contributors
With regard to specific players in the IoT sector, Columbus identifies General Electric’s Predix as a critical end-to-end IoT platform designed to help GE customers’ machines run more efficiently. According to Columbus, this system makes GE one of the clear leaders in the field. He also highlights Siemens, with its MindSphere platform as another leader; and mentions Microsoft’s Azure IoT Suite, SAP HANA Cloud Platform, IBM Watson IoT Platform, and Cisco IoT System as examples of companies working to redefine their business models as integral IoT providers. He adds that Intel and Bosch are offering hardware and complementary operating systems to provide customers with a more comprehensive IoT ecosystem as well.
Growth in Consumer Market
As it relates to the consumer market, the leading categories fall into a few major areas: wearables, smart-home appliances, transportation/automotive, healthcare and retail. Each of these areas has big players staking a claim to the lucrative consumer market, but we can also see that the field has significant potential for new entities as well.
Taking a look at who is leading the wearable market, Gadgets and Wearbles.com provides the following data:
What is noteworthy about this data is that from 2015 to 2016, “Others” increased in market share from 33.4% to 42%. This shows us that while the biggest players have an inherent advantage, smaller more agile players are coming on strong. Entrepreneurs and business leaders should take note that this field is highly fertile, and recognize that there is plenty of room for growth among smaller entities.
Going forward, insightful business leaders will identify which specific areas, as described above, have the greatest potential for growth and find seams in the market that will allow them to make a lucrative entry. While some of the more well-known brands have already begun to move in this direction, the data provided here shows that there is still significant room for growth and opportunities abound for insightful, forward-thinking players in the rapidly evolving field of IoT.
About the Author
Richard Meyers is a former high school teacher in the SF Bay Area who has studied business and technology at Stanford and UC-Berkeley. He has a single-digit handicap in golf and is passionate about cooking, wine and rock-n-roll.