Emerging technologies such as the Internet of Things (IoT) are shaping our lives and disrupting traditional businesses at an unprecedented rate of change. Enabled by the exponential increase in computing power and availability of a large amount of data, machines are fast learning to replace humans in several areas. This “intelligence” is moving away from central server farms into devices and things that will soon become a part of our everyday lives. These devices will potentially negotiate their own way in our world via “smart contracts” and without any significant human intervention.
The IoT market is expected to grow steadily as billions of devices, services, and systems become connected, mainly driven by increasingly ubiquitous and cheaper sensors that convert physical data to digital content. The IoT use cases focused on delivering cost savings from fuel, energy and labor often have a significant financial impact and shorter payback time frames. In terms of the market size, IoT spending is expected to register 15.4% y-o-y growth to reach US$1.1 trillion by 2025.
As per a recent FICCI-EY report, ‘Future of IoT’, which outlines the future of IoT from a business potential and technology point of view, global IoT connections are predicted to increase with 17% CAGR from 7 billion to about 25 billion from 2017 to 2025. The industries forecasted to spend the most on IoT solutions in 2019 are manufacturing ($197 billion), consumer IoT ($108 billion), transportation ($71 billion), and utilities ($61 billion). IoT spending among manufacturers will be largely focused on solutions that support manufacturing operations and production asset management. More than half of IoT spending in transportation may go toward freight monitoring, followed by fleet management. IoT spending in the utility industry may be dominated by smart grids for electricity, gas, and water. Asia-Pacific region is forecasted to become the largest global IoT region in terms of both connections and revenue by 2025.
India is fast leapfrogging the deployment of emerging technologies. India offers an opportunity to deploy these emerging technologies at a large scale to bring efficiencies and economies of scale. Newer opportunities and ecosystems are developing every day. The Government of India is taking several steps to push the adoption of emerging technologies with innovative initiatives such as Digital India, Make in India, Smart Cities, etc. As per the NASSCOM report on IoT Landscape, India will be a front runner in IoT adoption in the Asia Pacific (APAC). The IoT market size in India is expected to grow at the rate of 62% CAGR and reach $9 billion by 2020.
It is predicted that IoT devices worldwide generate 90 zettabytes of data by 2025. This data is sent directly by sensors or via gateways to centralized platforms that aggregate, process, store, analyze and visualize this data to create insights and improve operational efficiencies of processes. The centralized architecture offers large-scale computing and storage tasks to be done centrally so as to increase operational efficiencies. However, centralized architectures increase the latency of data exchanged, increase the time to act on actionable intelligence, are less resilient to environmental disasters, more prone to security hacks, are more expensive to scale (e.g., building a new data center in new geography) and are designed using commodity hardware which may lack the versatility of appliances dedicated for specific tasks. These shortcomings are leading to the evolution of computing platforms from centralized architecture to distributed or decentralized architecture with a focus on fog computing and AI capabilities closer to sources of data.
Kurzweil curve predicts an exponential increase in intelligence and expects the advanced computing platforms to equal the intelligence of a human brain by the end of the coming decade. This is primarily being driven by a combination of exponential increase in data being generated by IoT devices, multifold increase in computational power, advanced AI algorithms, compact form factors, and low power requirements.
The key sectors for IoT are likely to be utilities (water and electricity), manufacturing, transport and logistics, automotive industries and healthcare, going forward. IoT devices and software are being deployed throughout a farm to monitor crop health, manage inventory and supply chain. IoT sensors have the ability to notify a farmer that an animal is sick so that the said animal could be separated from the herd and measures could be adopted to prevent the spread of the illness. Connected cars can lead to a reduction in maintenance cost by 10%-40% and a drop in insurance premium cost by 25% following the reduction in claims by GPS tracking of stolen cars.
The major enablers of IoT are drop-in sensor and electronic cost, rise in computing power, on-demand cloud computing, fall in the cost of connectivity, digital business models, evolving partnerships to leverage technical expertise, advancements in connectivity technologies, and flagship government programs such as Smart Cities.
IoT Global Market
The global IoT market is expected to reach a value of USD 1,386.06 billion by 2026 from USD 761.4 billion in 2020 at a CAGR of 10.53%, during the forecast period (2021-2026). With the development of wireless networking technologies, the emergence of advanced data analytics, a reduction in the cost of connected devices, an increase in cloud platform adoption, the market is expected to grow at a positive rate.
- The internet of things technology helps in connecting various smart devices together to ease the operation and sharing of data amongst themselves. There are various smart devices, such as sensors, smartphones, and wearables, which collect necessary data from the devices which are further utilized to enhance customer’s experience. The increasing need for data analysis and integration of analytics is expected to propel the utilization of the Internet of Things market over the forecast period.
- Industry 4.0 and IoT are at the center of new technological approaches for development, production, and management of the entire logistics chain, otherwise known as smart factory automation. Massive shifts in manufacturing due to industry 4.0 and acceptance of IoT require enterprises to adopt agile, smarter, and innovative ways to advance production with technologies that complement and augment human labor with robotics and reduce industrial accidents caused by a process failure.
Key Market Trends
Retail Segment to Witness a Significant Growth
- The retail industry is witnessing significant growth in the last two years, especially with the massive expansion of the e-commerce industry, across the globe. Hence, the retailers are not only utilizing IoT solutions to improve their operational efficiency but also to enhance the customer experience to gain competitive advantages. Therefore, the reducing cost of IoT-based sensors and connectivity, customer demand for a better shopping experience, and increasing adoption of smart payment solutions are some of the major factors driving the adoption of IoT solutions in the studied segment.
- IoT is playing a significant role in process automation and enhancing the operational efficiency of retail stores. It is providing energy optimization, surveillance and security, supply chain optimization, inventory optimization, and workforce management. IoT is also gaining capabilities in cold chain monitoring for temperature-sensitive grocery and pharmaceutical goods.
- Retailers are also utilizing IoT to avoid security pitfalls, and are deploying IoT-enabled systems that can withstand jamming in their warehouses and stores. Recently, in 2020, UK-based RELX launched its first flagship store in China equipped with facial recognition cameras that can alert staff when a suspected person enters the store.
- IoT is also helping retailers to offer better customer experience, hence helping in gaining profit margins. For instance, US-based retailer Walgreens has been experimenting with IoT-enabled displays on refrigerator doors that utilize face detection technology to show ads based on approximate age and gender. Many retailers in Europe are also installing small, customizable, IoT-connected dashboards, or buttons to gather customer feedback and then use those insights to enhance customer experiences.
North America to Witness a Significant Growth
- North America is expected to be a prominent market, owing to the growing role of IoT among the significant revenue-generating end-user industries of the region, driven by the deployment of connected cars, smart energy projects, home automation, and focus on smart manufacturing. Additionally, rapid digitalization across industry verticals and technological advancements have further fueled the growth of IoT in this region.
- Moreover, the region has a strong foothold of IoT vendors, which contributes to the growth of the market. Some of them include IBM Corporation, Microsoft Corporation, Intel Corporation, Cisco Systems, Inc., and Google Inc, among others. In February 2020, Cisco announced enhancements to its IoT portfolio that enable service provider partners to provide optimized management of cellular IoT environments and new 5G use-cases. New wireless technologies such as 5G, Wi-Fi 6 – would lead to more devices and new IIoT use cases and would give service providers the tools to create competitive cellular IoT offerings for their customers. Machine-to-machine connections are anticipated to rise 19% and account for 50% of all connections by 2023, according to Cisco’s 2020 Annual Internet Report.
- Another primary market in the region is the home automation systems. The products consumers are looking to add to their homes include connected cameras (highest demand), video doorbells, connected light bulbs, smart locks, and smart speakers of late. According to a study at Stanford University and Avast, North American homes have the highest density of IoT devices of any region in the world. Notably, 66% of homes in the region have at least one IoT device. Additionally, 25% of North American homes boast more than two devices. The average household in the region would have an average of 9 devices by 2022, and nearly half (48%) of total devices and connections will be video capable.
Competitive Landscape
The Internet of Things (IoT) market is highly competitive owing to the presence of many large and small players in the market operating in the domestic as well as in the international market. The market appears to be fragmented due to the presence of many technological giants in the market. Key strategies adopted by the major players in the market are product innovation and mergers and acquisitions. Some of the major players in the market are Cisco Systems, Inc., Google, Inc., IBM Corporation, Microsoft Corporation among others.
Major Players: Cisco Systems, Inc., Google, Inc., IBM Corporation, Microsoft Corporation, Huawei Technologies Co. Ltd.
