IoT expected to grow, create unique value for companies in 2017
The Internet of Things (IoT) is expected to grow rapidly in 2017 and innovation is driving new models and consolidation amongst companies, according to a report by IHS Markit.
Fueled by lightning-fast demand for ubiquitous connectivity, the number of connected Internet of Things (IoT) devices globally will jump by 15% year-over-year to 20 billion in 2017, according to analysis from IHS Markit (Nasdaq: INFO).
In their report "IoT Trend Watch 2017," IHS Markit technology analysts identified four key trends that will drive the IoT this year and beyond. Increasingly, the report says, businesses see the IoT as a tremendous opportunity to create unique value propositions by linking disparate systems of connected devices that range from multiscreen content sharing to smart city networks.
IHS Markit defined IoT as a conceptual framework, powered by the idea of embedding connectivity and intelligence into a wide range of devices. "These internet-connected devices can be used to enhance communication, automate complex industrial processes and provide a wealth of information that can be processed into useful actions – all aimed at making our lives easier," said Jenalea Howell, research director – IoT connectivity and smart cities for IHS Markit.
According to the report, the industrial sector—led by building automation, industrial automation and lighting—will account for nearly one half of new connected devices between 2015 and 2025. IHS Markit highlighted four trends as leading the IoT evolution in the coming years:
1. Innovation and competitiveness are driving new business models and consolidation
To date, the focus on IoT monetization has rightly revolved around the way in which suppliers earn revenue selling components, software or services to IoT application developers. Increasingly, however, the focus is shifting to the IoT developers themselves and how they will monetize new streams of data delivered by their IoT deployments. A wide range of monetization models are being tested, reflecting the fragmented nature of the IoT market across numerous vertical industries. Successful models will revolve around "servitization" and closer, ongoing relationships with end customers, the report says.
2. Standardization and security are enabling scalability
With the high growth in IoT deployments and much hype surrounding the promise of the IoT marketplace, scaling the IoT is highly dependent on two factors: first, the pace at which devices are connected and second, the ability to manage a large number of devices. Currently, diverse standards and technologies make it difficult to evaluate the many technology options available. Stakeholders also must take a holistic, end-to-end view of securing systems comprehensively and move beyond focusing only on device security. By 2020, the global market for industrial cybersecurity hardware, software and devices is expected to surpass $1.8 billion as companies deal with new IoT devices on business networks as well as a new wave of mobile devices connected to corporate networks.
3. Business models are keeping pace with IoT technology
The methods used to monetize the IoT are almost as diverse as the IoT itself. Many pioneers of the IoT sold products to build it. That is still happening, of course, but now there is a shift to reaping the benefits of the data that’s been created. An overabundance of business models are being tested to determine which models work and for which applications. Advertising, services, retail and big data are just a few of the areas that have spawned many innovative experiments in monetization. In the coming years, the pace of innovation will slow as successful business models are identified.
4. Wireless technology innovation is enabling new IoT applications
Advances in wireless technologies will continue to extend the IoT at both the low and high ends. At the low end, low-power wide-area network (LPWAN) promises low cost, low power and long range, connecting millions of devices that previously could not be unified in a practical way. At the high end, 802.11ad makes it possible to wirelessly connect very high performance applications such as 4k video. Beyond 2020, 5G has the potential to address new, mission-critical use cases, particularly where mobility is essential. By 2020, IHS Markit expects around two billion device shipments by integrated circuit type will feature integrated cellular technology.
Jenalea Howell, research director – IoT connectivity and smart cities for IHS Markit. IHS Markit is a CFE Media content partner. Edited by Chris Vavra, production editor, CFE Media, firstname.lastname@example.org.
– See additional stories from IHS Markit linked below.