IoT Market to attain $267B milestone by 2020
- B2B spending on IoT technologies, apps and solutions will reach €250B ($267B) by 2020.
- By 2020, 50% of IoT spending will be driven by discrete manufacturing, transportation and logistics, and utilities
- Spending on IoT applications is predicted to generate €60B ($64.1B) by 2020.
- IoT Analytics spending is predicted to generate €20B ($21.4B) by 2020.
- 40% of today’s IoT customers prefer to use traditional and well-established software companies for their IoT solutions.
These and other insights regarding the future of Internet of Things (IoT) adoption and spending are from the recent Boston Consulting Group market analysis, Winning In IoT, It’s All About The Business Processes. BCG predicts that by 2020, €250B ($267B) will be spent on IoT technologies, products, and services. The greatest two sources of revenue growth in the IoT market will be from services and IoT applications investment. Key takeaways from BCG’s latest IoT market research are listed below:
- Between 2015 to 2020, BCG predicts revenue from all layers of the IoT technology stack will attain a least a 20% Compound Annual Growth Rate (CAGR).B2B customers are the most focused on services, IoT analytics, and applications, making these two areas of the technology stack the fastest growing.By 2020, these two layers will have captured 60% of the growth from IoT. Each of these two top two layers is predicted to generate €60B ($64.1B) in spending by 2020.
- Predictive maintenance, self-optimizing production, and automated inventory management are the three top uses cases driving IoT market growth through 2020. Business leaders are asking how IoT can help their companies increase customer satisfaction, improve quality, support new business models (such as data-driven services), and reduce costs. In response to this, BCG completed an extensive analysis of use cases. They found the ten most valuable use cases include the ability to use sensors to predict when machinery will need to be repaired, self-optimizing production, automated inventory management, remote patient monitoring, smart meters, track and trace, connected cards, distributed generation and storage, fleet management and demand response. The following graphic compares the ten use cases by predicted spending level by time to maturity.
- By 2020, 50% of IoT spending will be driven by discrete manufacturing, transportation and logistics, and utilities BCG predicts that IoT will have the most transformative effect on industries that aren’t technology-based today. The most critical success factor all these use cases depend on are secure, scalable and reliable end-to-end integration solutions that encompass on-premise, legacy and cloud systems and platforms. Companies to watch in this area include enosiX who has a growing base of B2B customers who are using real-time integration to connect legacy ERP, on-premise systems to cloud apps and platforms, enabling faster operational performance as a result.
- 40% of today’s IoT customers prefer to use traditional and well-established software companies for their IoT solutions. This represents a challenge for major industrial companies whose future depends on their ability to transition into IoT providers. General Electric’s Predix platform is an end-to-end IoT industrial operating system designed to help GE customers’ machines run more efficiently. GE has made it clear it plans to be a global leader in Industrial Internet of Things (IIoT) and be a leading IOT provider. Siemens is also pursuing a similar path with its MindSphere platform. Microsoft’s Azure IoT Suite, SAP HANA Cloud Platform, IBM Watson IoT Platform, and Cisco IoT System are all examples of companies working to redefine their business models as IoT providers. Device makers including Intel and Bosch are offering hardware and complementary operating systems to provide customers with a more comprehensive IoT ecosystem as well.