IDC unveils internet of things spending forecast
Greatest initial growth opportunities available for the consumer, discrete manufacturing, and government vertical sectors
International Data Corporation (IDC) issued a new report, Worldwide Internet of Things Spending by Vertical Market 2014-2017 Forecast, which defines the IT opportunity for all vertical markets that comprise the burgeoning Internet of Things (IoT) market. The new report segments the IoT market as well as provides a forecast that illustrates which vertical industries show the greatest market opportunity over the next several years. The market and forecast is based on internal IDC models, analysis, and survey information, which was used to create segmentation models around the 18 vertical markets that IDC tracks.
As the Internet of Things (IoT) market starts to coalesce in both concept and solution offering, IDC recommends vendors take the next step and look at this huge IT opportunity in a more realistic framework. As exciting as the overall opportunity for the IoT market currently is, understanding the vertical ramifications is paramount. All of the greatest IoT IT opportunities – including the connected home, smart meters, the connected car, and the smart grid as well as personal wellness and connected health – are driven from a vertical market perspective.
“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,” said Scott Tiazkun, Senior Research Analyst with IDC’s Global Technology and Industry Research Organization. “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.”
IDC defines the Internet of Things concept as a wired or wireless network connecting devices, or “things,” that is characterized by autonomous provisioning, management, and monitoring. 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. In addition:
- IDC has looked at the components, processes, and IT support for IoT and expects the technology and services revenue to expand from $4.8 trillion in 2012 to $7.3 trillion by 2017 at an 8.8% compound annual growth rate (CAGR), with the greatest opportunity initially in the consumer, discrete manufacturing, and government vertical industries.
- 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.
According to the report, the first step to understand how vendors can position themselves will be to understand the components of the IoT/M2M IT ecosphere. Because this is a derivative market, there are many opportunities for vendors to offer parts or product suites that cover the needed IoT IT set. And vendors will have incentive to do so due to rapid growth, which will occur as industries see the convenience, productivity, and efficiency that IoT brings to business processes. Accordingly, while horizontal-focused IT vendors will look to offer IoT solutions that appeal to many industries, there will also be impetus to offer vertical-focused solutions that make IoT tangible for both industries applications (M2M) and consumer needs (B2B2C).
Tiazkun continued, “The IoT market will greatly impact and offer the potential for vertical-aligned businesses to improve both performance and profitability. 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’.”