Knowledge is power, so let's stay in the know about the current state of affairs on the global Internet of Things (IoT) market and what opportunities it opens up for businesses in different industries and niches. Verizon will help us size the IoT market opportunity in 2016, as its recently published "State of the market: Internet of Things 2016" Report contains some of the answers!
IoT goes mainstream
According to Verizon, IoT gained its legitimacy in 2015 when many businesses budged off a “start small think big” mindset. In 2016, many corporate leaders are already integrating IoT into their strategies and business models. Literally every industry has IoT on its radar now and it's predicted that the worldwide IoT market spend will reach $1.3 trillion in 2019 from $591.7 billion in 2014 with a compound annual growth rate of 17%. The installed base of IoT endpoints is expected to grow from $9.7 billion in 2014 to over $30 billion in 2020.
Verizon's research suggests that energy and utilities have seen the largest growth of the IoT network connections since 2014, followed by home monitoring and transportation (see below).
Today, of all companies that are using IoT, only 8% admit using more than 25% of their IoT data, while nearly 50% of companies that are already on the IoT journey will be using more than 25% of their IoT data in 2 to 3 years from now.
"Revenue growth is the biggest driver of the IoT worldwide!" Verizon
5G promises to deliver on such IoT opportunities as robotics and autonomous (driverless) vehicles.
The situation has changed with IoT startups' funding this year, too. In 2014, consumer facing IoT startups were able to raise 15% more VC funding than their enterprise-focused peers. This year, however, enterprise IoT startups are expected to attract 2-3 times more VC funding than the consumer-focused ones. As such, enterprise will push IoT forward, not consumer.
Devices, connectivity, and IT services will make up the majority of the projected $1.3 trillion IoT market in 2019. Modules, sensors and actuators alone will account to 23% of that total value.
2015 saw a boom of the IoT platforms and microcontrollers that address the problems of complexity and fragmentation software developers were faced in the past. Before, developers had to go through cumbersome processes and multiple channels to create and launch IoT apps. The availability and maturity of platforms both simplifies the development process and drives creation of new products and services for future contextual experiences of consumers, organizations and citizens.
Looking ahead, Verizon predicts that manufacturers and tech companies will roll out application program interfaces for developers who, in turn, will create custom apps for local and global markets by adding a new layer of economic value to the IoT ecosystem (the same has already happened with smartphones, remember?). In short, once opened for developer community, these platforms would attract thousands of developers resulting in millions of IoT applications to emerge.
Verizon found out that 75% of business leaders believe IoT provides great opportunities to improve customer experience and 74% believe the greatest power of IoT is to gain insight into consumer preferences and habits.
Speaking about the IoT security, Verizon points to 4 layers of IT security that should be considered in the first place:
- Governance, risk and compliance - risk preparation layer
- Threat management - perimeter protection layer
- Authentication and privacy - ecosystem trust layer
- Professional security services - threats response stage
Speaking about smart and sustainable communities, Verizon says that 76% of public sector IoT adopters believe that to improve IoT performance, an organizational structure that would encourage flexibility and cross-functional work is needed. Additionally, 81% of public sector IoT adopters believe their citizens expect them to offer enhanced services using IoT generated data.
Regarding the future of IoT application development, developers will see more platforms host a growing library of APIs and will be challenged to get in-depth industry specific expertise prior to building IoT apps. This expertise may include the following: device management, integration, security, protocols for data collection and data analytics, predictive analytics, etc.