Technology and services revenue connected to the burgeoning “Internet of Things” (IoT) marketplace will grow at an 8.8% compound annual growth rate (CAGR) from 2012-2017, increasing from $4.8 trillion to $7.3 trillion, according to a new report from IDC. In its “Worldwide Internet of Things Spending by Vertical Market 2014-2017 Forecast,” the market research company defines IoT as “a wired or wireless network connecting devices, or ‘things,’ that is characterized by autonomous provisioning, management, and monitoring.” Connected homes and autos, smart meters and utility grids, as well as personal wellness and connected health, they are all categories in the emerging IoT sector of the global economy according to IDC’s classification schema. “IoT already impacts our everyday life down to the smallest processes. The vertical opportunity that arises from IoT is already in play, but only if the need for vertical expertise is recognized and offered. Realizing the existence of vertical opportunity is the first step to understanding the impact – and therefore market opportunity that exists – for IT vendors,” IDC explains in a press release. Initially, IDC sees the greatest opportunities in the consumer, discrete manufacturing, and government verticals. Key takeaways from the report include:
- The IoT/M2M market is growing quickly, but the development of this market will not be consistent across all vertical markets. Industries that already “understand” IoT will see the most immediate growth, such as industrial production/automotive, transportation, and energy/utilities. However, all verticals will reflect great opportunity.
- IoT is a derivative market containing many elements, including horizontal IT components as well as vertical and industry-specific IT elements. It is these vertical components where IT vendors will have to distinguish themselves to address industry-specific IoT needs.
- IoT opens up many IT vendors to the consumer market, providing B2B2C services to connect and run homes and automobiles – all the places that electronic devices will have a networking capability.
“The Internet of Things market must be understood in terms of vertical markets because the value of IoT is based on individual use cases across all markets,” elaborated IDC Global Technology and Industry Research Organization senior analyst Scott Tiazkun. “Successful sales and marketing efforts by vendors will be based on understanding the most lucrative verticals that offer current growth and future potential and then creating solutions for specific use cases that address industry-specific business processes.” “The IoT market will greatly impact and offer the potential for vertical-aligned businesses to improve both performance and profitability,” he continued. “The IoT solutions space will expand exponentially and will offer every business endless IoT-focused solutions. The initial strategy of businesses should be to avoid choosing IoT-based solutions that will solve only immediate concerns and lack ‘staying power’.”
$7 trillion? I think they mean billion. $7 Trillion is 1/2 of the entire U.S. GDP !!
No, they mean Trillion, with a T, and their estimate of $7T is conservative compared to other published industry research.
Like the internet, the value of information compounds as it moves down the value chain. Access to a myriad of data sets will make machines and complex systems more intelligent, adaptive & efficient and it's these efficiency gains that will drive the IoT economy.
But how much of those trillions would already be captured in other buckets. Aren't we just moving cells around in the same spreadsheet?
They are saying this industry was $4.8T in 2012…. no technology did that in 2012, not even all the mobile phones PCs/TVs and NASA/Boeing/Airbus combined sold $4.8Trillion of products!!
I think its a typo the "T" should be "B" — Andrew Burger/IDC please confirm..
Could they be referring to $7 Trillion GLOBALLY rather than here in the U..S? Still sounds high to me, but that seems the only possible explanation. Anybody able to verify this with real data? (And not just indirect such as total U.S. gdp; again, I'm pretty sure the author meant global UNLESS RPant is correct and it simply is a typo which s/b $7T after all.
Sorry – meant to say, .."is a typo which s/b $7B after all."
I guess there are two ways to compute market value. If their $7T number is accurate, it is simply adding together all industries involved with the supply and IP chain for anything remotely related to IOT. If we did that for ALL industry sub-headings, it would hundreds of times more than our total GDP. It's a silly way to do market analysis. I really don't want to include the value of the copper ore it took, or the value added by the copper smelter, or the revenue of the delivery truck and copper distribution company — I just want to know the value of IOT widget sold at market.
Ric, that's silly. U.S. GDP is a fixed number ($14T). You can't play games with that number. The value of IOT must be a subset of GDP. If you sell $1B in IOT widgets, then the value of IOT market is $1B. If you add $1B of IOT management services, then the value if $2B.
You can't say "IOT improved productivity by $1T, so the market value is $1T". That's like saying automobiles and trucks improved U.S. productivity by $1T, so the market for cars and trucks is $1T. That's silly. You base a market from the primary revenue generated by a good or service.
By your method of value analysis, U.S. GDP would be 100x higher.
but that seems the only possible explanation