IoT undoubtedly offers significant cost savings, improved efficiency, reduced downtime, enhanced supply chain and new business opportunities. However, the market value for IoT solutions has been dramatically inflated.
Strategy Analytics latest report “Global IoT: A Billion not Trillion Dollar Opportunity” concludes that IoT deployments remain limited and largely in trial or development phases.
Strategy Analytics interviewed IT decision makers across 9 vertical markets in the U.S., UK, France, and Germany in January 2017.
Key findings include:
- Over 70% of current IoT deployments in the U.S. for example involve less than 500 devices. 2/3 of businesses spent less than $100K on IoT projects.
- Globally, 35% of firms with IoT deployments note fewer than 100 devices connected.
- Primary Processing, Security and Utilities are the three largest vertical markets accounting for almost half of the global IoT market today. By 2025, Security, Primary Processing and Automotive will each generate over $50 Billion annually in IoT revenue.
- Services will continue to be the biggest revenue opportunity accounting for 64% of global IoT revenue or $219 Billion by 2025. The opportunity for professional services from vendors like IBM, HP, Cisco, SAP, Microsoft as well as Accenture, Cap Gemini and others is significant but competition is intense.
Harvey Cohen, President of Strategy Analytics, commented:
“Estimates that put the IoT market value at $3T or more have a credibility problem. Can IoT really be bigger than the entire IT industry? The economic value potential of IoT is indeed huge, but the opportunity for suppliers of products and services is likely to be measured in $US Billions not Trillions. Nevertheless, the opportunity for professional services is attractive for firms who are seeing enterprise software sales stagnating.”
David Kerr, a VP at Strategy Analytics, noted:
“Claims that the IoT market has progressed from experimental to mainstream are just not supported by Strategy Analytics voice of the buyer data yet. IoT must compete for a share of the total IT budget; businesses and public entities move slowly and are not easily convinced by vague claims of future economic benefit.”
The analysis also concludes that many roadblocks to IoT remain including security, integration with legacy systems, proliferation of standards, privacy concerns, compliance issues, and the skill sets needed to extract value from the huge volume of data produced.
Andrew Brown, Executive Director of IoT, summarized:
“No one vendor or supplier has all the skills needed to deliver, support, and maintain highly complex IoT solutions. Partnerships and alliances will be critical. While the opening moves have been taken we are still early in the dance. None of the barriers are insurmountable with the right partnerships, the appropriate understanding of business motivations and requirements, and an ability to provide consistent support across hardware, software and services.”