The “Internet of Things” (IoT) has been labeled as the next industrial revolution for its ability to hyperconnect the world and leverage big data from connected devices in order to create evidence-based practices across industry verticals. This article will examine the market forecast for IoT, while looking at market drivers that will facilitate growth, while taking into account market barriers that will inhibit IoT proliferation.
The main market drivers of IoT are:
- Large IoT investments
- Expanded Internet Connectivity
- High Mobile Adoption
- Low-cost sensors
The main market barriers are:
- Security concerns
- Privacy concerns
- Implementation problems
- Technological fragmentation
High Compound Annual Growth Rates
Multiple industry analysts have voiced their opinions regarding the growing IoT sector. Top leaders in private industry, particularly those in the industrial, production, automotive, transportation, and energy/utilities (sectors most familiar with IoT) see the potential capabilities of the technology and estimate the CAGR of IoT to be 41 percent. Markets and Markets estimate the CAGR to be 33.3% from 2016 to 2021. In the Asia-Pacific region CAGR growth is projected at 18% from 2015 to 2022 (Source).
Billions of Connected Devices
Research firms throughout the world, including Gartner, Ericsson, McKinsey, and IDC estimate that nearly $6 trillion will be spent on IoT solutions over the next five years. Business Insider finds that “there will be 34 billion devices connected to the internet by 2020, up from 10 billion in 2015” (Source).
Who Will Move into IoT First?
Businesses will be the top adopter of IoT solutions, followed by the government. Businesses see three ways the IoT can improve their bottom line by 1) lowering operating costs; 2) increasing productivity; and 3) expanding to new markets or developing new product offerings. Governments are focused on increasing productivity, decreasing costs, and improving their citizens’ quality of life. Governments will start adopting devices, data collection, and data mining methods once private industry evaluates the technology as safe for public use. Following business and government, consumers will be the last segment to be affected.
Targeted Consumer Advertising
Advertisers will certainly want to get their hands on IoT devices and have already done so with smart homes and mobile fitness technology like the Fitbit. The “open-sharing” methodology that drives IoT is something that will not be neglected by savvy advertisers, who are constantly looking for ways to interrupt daily living in order to get consumers to think about their products. One can already start to see this happening with Video on Demand and internet protocol TV technology, which allows media companies to segment audiences like never before (Source). And with Cisco estimating that there will be 50 billion connected devices by 2020, the hyper-connected world of the internet of things, will see customer attention stretched thinner than ever.
Growth at the Cost of Privacy?
Notwithstanding all this growth, there are serious concerns voiced by more conservative individuals, particularly those with a security background. IoT gives everything an IP address so that everything can communicate with more or less anything and anyone else. Some pundits claim that usability is outpacing security - which is often the case with technology. The impetus to create new things, including new systems, new patents, and new intellectual territories - particularly now in the digital world - is too big of a temptation not to resist. And with large multinational companies like GE, Bosch, and Cisco investing heavily into the market, there will likely be a rush to get into the space before competitors. Network World recently named these companies the most powerful IoT companies in the world, and noted that the multi-trillion dollar market will mean everyone wants a slice.
Overall, the larger picture looks promising. We just need to be careful that we don’t hand the information to our robot overlords too quickly.
About the Author: Tim Green has been designing OTT and IPTV solutions since 2005. The founder and CIO of TikiLIVE, Tim has bootstrapped the small company from a concept and turned it into an industry leader in just over 8 years. When he is not designing cool modules for TikiLIVE, he enjoys blue water free dive spear fishing from his front yard in the Florida Keys and throughout the Caribbean.
Edited by
Ken Briodagh
