Internet of Things

It might have a duff name, but there’s no escaping the Internet of Things

By Guy Daniels

Feb 11, 2014

Telecoms is awash with clumsy acronyms, unpronounceable brand names, and ludicrous terms and phraseology. So it’s not surprising that the biggest trend of the year looks set to be the ‘Internet of Things’. Even its abbreviation of IoT isn’t much better at describing this huge new business sector. Technology purists say we should stick with M2M, but ‘machine to machine’ communications doesn’t exactly excite their marketing colleagues.

So like it or not, Internet of Things is here to stay (and no attempt at trying to change it to Internet of Everything is going to catch on – are you listening, Cisco, Qualcomm ABI Research…?).

However, trying to define this market is not as easy as it looks. TelecomTV will be keeping a close eye on developments at MWC later this month, but in the meantime research firm IDC has published a report into the various vertical markets covered by the IoT. It expects IoT technology and services revenue (expressed as components, processes, and IT support) to expand from $4.8 trillion in 2012 to $7.3 trillion by 2017 at an 8.8 per cent CAGR. It believes the greatest opportunity initially will be in the consumer, discrete manufacturing, and government vertical industries.

Those are huge numbers, and far bigger than other research aimed at M2M and the IoT has suggested. To put this into perspective, the worldwide IT spending in 2013 was estimated at $3.6 trillion by Gartner. Is the total IoT market amongst all verticals really already bigger than this?

“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 at IDC. “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 as “a wired or wireless network connecting devices, or ‘things’, that is characterised by autonomous provisioning, management and monitoring”. It says that the vertical opportunity that arises from IoT is already here, but only if the need for vertical expertise is recognised and offered by IT vendors.

Whilst the IoT market (and really its M2M precursor or derivative – or however else you choose to define this relationship) is growing quickly, its development will not be consistent across all vertical markets – those that already ‘get it’, such as production, automotive and utilities, will see the most immediate growth. But the IoT also opens up many IT vendors to the consumer market, providing B2B2C services to connect and run homes and cars for example – in other words, all the places that electronic devices will have a networking capability.

So while horizontal-focused IT vendors will look to offer IoT solutions that appeal to many industries, there will also be a need to offer vertical-focused solutions that make IoT a reality for industries applications (via M2M) and consumer needs (via B2B2C). IDC says that all of the biggest IoT IT opportunities – from the connected home, smart meters, the connected car, and smart grid to personal wellness and connected health – are driven from a vertical market perspective.

“The IoT solutions space will expand exponentially and will offer every business endless IoT-focused solutions,” added Tiazkun. “The initial strategy of businesses should be to avoid choosing IoT-based solutions that will solve only immediate concerns and lack staying power.”

In December last year, rival research firm Gartner predicted that the IoT market would grow to 26 billion units installed by 2020, and that IoT product and service suppliers will generate incremental revenue exceeding $300 billion, resulting in $1.9 trillion in global economic value-add.

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